Debt Elimination Scams

Debt elimination scams are illegal schemes that offer to eliminate people's debt. For an up-front fee, the organizers of these schemes create phony legal documents based on people's loan(s). Individuals present these documents to their bank, mortgage company, finance company, or other lending institution in an attempt to satisfy the loans.

The documents used in these scams include fake financial instruments that claim to eliminate the borrower's loan(s) obligation. The documents usually question the legitimacy of the financial obligations and often refer to a specific government agency in an attempt to support claims that the debt is false. For example, some of the information provided questions the legitimacy of the Federal Reserve and even the validity of United States currency. The literature may selectively cite passages of government publications, statements by politicians, constitutional provisions, court decisions, various statutes, and private newsletters to support claims and to conclude ultimately that a specific government agency supports these debt elimination programs. Some of the documents specifically refer to the elimination of debt through the use of a "Federal Reserve approved" procedure.

These schemes are common on the Internet, and scam artists are charging borrowers substantial up-front fees and commissions based on the total amount of the loan that can be forgiven. What often happens is that people pay a lot of money without eliminating or reducing their overall debt obligations. Also, because people involved sometimes stop making loan payments, based on advice from the scam artist, they run the risk of foreclosure or other legal action, which can result in damaged credit ratings.

Tips for Preventing

• If it sounds too good to be true, it probably is.

• The Federal Reserve has not approved procedures to eliminate debt.

• Know with whom you are doing business, and use caution when dealing with businesses that operate from P.O. boxes or mail drops.

• Do not provide personal information blindly. Know with whom you are dealing before you provide personal information.

• Contact the Better Business Bureau to determine the legitimacy of the company.