| "Legally terminate credit card debt! You can be | | | | In other words, the core concept here is that you |
| debt-free in 4-6 months!" Advertisements like this are | | | | literally borrowed your own money from the credit |
| for a new type of program that has spread via the | | | | card bank. |
| Internet over the past few years. It's called "Credit | | | | So let's say your balance with ABC Credit Card Bank |
| Card Debt Termination," and victims are paying $1,000s | | | | is $10,000, which you borrowed against the card to |
| for this bogus service. One victim I spoke with lost | | | | make everyday purchases. The scam promoters say |
| more than $15,000! In this article, I'll review the principles | | | | all you need to do is notify the bank that you want |
| behind this program and explain exactly why it's a | | | | your original "deposit" back. However, you will permit |
| scam to be avoided. | | | | the bank to offset the amount you borrowed against |
| First, let's get our definitions straight. The scheme I'm | | | | the amount you have on "deposit." Presto! You don't |
| describing here should not be confused with Debt | | | | owe the balance anymore! |
| Consolidation or Debt Settlement (also known as Debt | | | | Now, as you can imagine, the banks don't take kindly |
| Negotiation), both of which are legitimate and ethical | | | | to such tactics. Many of the consumers using this |
| methods for debt resolution. The easiest way to | | | | technique are getting sued by their creditors. But the |
| distinguish the Credit Card Debt Termination scam | | | | scammers have more tricks available, as if the "smoke |
| from other valid programs is based on the central | | | | and mirrors" financial nonsense wasn't enough. One of |
| claim that you really don't owe any money! | | | | their techniques is the use of bogus "arbitration" |
| With Debt Consolidation, you pay back all of your debt | | | | forums. Arbitration is of course a legitimate system |
| balances. With Debt Settlement, you pay back a lower | | | | that allows businesses and individuals to resolve |
| amount (usually around 50%) while the creditor agrees | | | | disputes without going to court. What do the |
| to forgive the remaining balance. However, with the | | | | scammers do? They coach people on how to set up |
| bogus Credit Card Debt Termination program, | | | | a fake arbitration forum, for the express purpose of |
| promoters claim that you won't need to pay anything | | | | making a dispute against their creditors! Naturally, the |
| at all (except their outrageous fees, naturally). They | | | | creditors will not send representatives to some |
| make the surprising claim that you can legally wipe | | | | non-existent arbitration forum, so the consumer gets to |
| away your debts simply by using their super-duper | | | | rubber-stamp their own arbitration award. If they get |
| magic documents. Based on some legal | | | | sued in a regular court, they present their bogus award |
| mumbo-jumbo, the claim is made that you really didn't | | | | to the judge in the hopes that the creditor's lawsuit will |
| borrow any money from your creditors! | | | | be dismissed. |
| In order to understand this scam, a little background is | | | | There are other techniques used by promoters of this |
| necessary. Remember the tax protest movement | | | | scheme, but the key point to remember is the central |
| back in the 1970s? People were claiming that the IRS | | | | claim that your credit card debt does not really exist. |
| tax collection system was unconstitutional, and based | | | | Of course, it's all nonsense based on a |
| on their misinterpretation of the tax code, they refused | | | | misinterpretation of our monetary system, and if you |
| to pay taxes. The IRS came down hard on the tax | | | | step back and think about for a minute, the truth |
| protest movement, and through the court system, they | | | | seems pretty obvious. What these scammers are |
| blew holes in all the legal arguments put forth by the | | | | saying is that the entire $700 billion credit card industry |
| protesters. The Credit Card Debt Termination scam is | | | | is operating on an illegal basis! Even if the legal theory |
| a lot like the tax protest movement. In fact, among | | | | used by the promoters were true (which it isn't), do |
| collection professionals, it's called the "monetary protest | | | | you think for a moment the government would allow |
| movement." | | | | this giant industry to go under? That's exactly what |
| Just like the tax protest movement, there is a common | | | | would happen if the promoter's claims were proven |
| theme that runs through all of the promotional materials | | | | true and used on a widespread basis. |
| issued by the monetary protestors. The basic idea is | | | | The Federal Trade Commission, which has jurisdiction |
| that our Federal Reserve monetary system and | | | | here, hasn't stomped on these con artists yet, but it's |
| generally accepted accounting principles (GAAP) do | | | | only a matter of time. Unfortunately, in the meanwhile, |
| not permit banks to loan out their own money. | | | | consumers are being bilked out of millions of dollars for |
| Therefore, according to their interpretation, the credit | | | | a worthless program that will only get them into deep |
| card banks are the ones running the scam on the | | | | trouble with their creditors. If you are approached by |
| American public. | | | | someone offering to wipe away your debts using this |
| Stay with me here, because the logic is pretty strange. | | | | system, I strongly recommend you run in the other |
| If a bank cannot lend its own money, how does a | | | | direction while you hold on tightly to your wallet or |
| credit card bank extend credit? The claim here is that | | | | purse. |
| your credit card agreement itself becomes a form of | | | | Remember, you can eliminate your debts if you take a |
| money (known as a promissory note) the moment | | | | disciplined approach to your finances, make a budget |
| you sign it. The idea is that the bank "deposits" your | | | | and stick to it, and don't use your credit cards unless |
| agreement as an asset on their books, and then any | | | | you can pay off new balances in full each month. |
| credit you use is offset as a liability against that asset. | | | | Good luck in your financial future! |