Consumers that are looking to improve their credit and credit score often look for ways to get their existing debt under control. Managing and reducing existing consumer debt is certainly one way to help manage debt payments, credit reports and credit scores. Unfortunately, too many consumers in need of debt relief fall victim to debt elimination scams.
Debt elimination will help with an individual’s credit score over time. With lower monthly payments, a consumer can now better manage their payments and improve their payment history as well as reduce the amount of debt displayed in their credit report. These changes in debt payments and debt load will help improve a credit score. But, quick debt elimination programs are not the solution are usually just scams.
The Office of the Comptroller of the Currency has recently produced a press release informing consumers that the number of fraudulent schemes supposedly designed to “eliminate” debt is increasing. As the credit crisis continues and consumers remain overwhelmed with credit card debt, collection agency calls and even foreclosures it is no surprise that debt elimination marketing has increased as well. These fraudulent debt elimination schemes are being marketed to ordinary consumers, not just those in foreclosures or with poor credit histories. The new targets of the debt elimination scams include borrowers who are current on their payments.
There are number of potential significant consequences to using these fraudulent services. The scams are generally designed to defraud the consumer with fraudulent fees that can ranges from a few hundred dollars to a few thousand dollars. Since the debt elimination plan is established as a scam and will not eliminate or reduce the consumer’s debt the end result often includes a worse credit report and lower credit score. Furthermore, the creditors that may be contacted under a fraudulent pretense by debt elimination company may take additional legal action against the consumer to resolve the fraudulent attempt to eliminate the debt.
Some of the debt elimination scams do more harm to an individual’s credit report and credit score because the intention of the scam artist to steal the consumers identity. A potential result of participating in the illegal scheme is that the fraudsters acquire personal information and the engage in theft of a victim’s identity. Once the personal data and identification is obtained, they may be able to run up substantial new debts before the victim is aware of the theft and further damage the individual credit score.
The deceptive processes are pitched and revealed to the consumer or borrower to con the consumer into paying money to eliminate the debt. Some of the scams used by the fraudulent debt elimination companies may include the following processes and notices:
A phony arbitration award from an arbitrator not authorized under the debt agreement.
The use of a nonexistent “trust account” supposedly held in a person’s name at the United States Department of the Treasury or some other part of the federal government.
The substitution of a fictitious U.S. government debt instrument, which claims to be payable or authorized by the United States Department of the Treasury or a related person or entity, for the obligor’s original note or account at the creditor.
A notice to the creditor that the contract or note is illegal and, therefore, the borrower does not have to pay the debt and may even be entitled to a compensatory award.
A notice to the creditor that the creditor does not have authority to “lend its credit” to the obligor and has violated the law, and therefore, the borrower does not have to pay the debt and may even be entitled to a compensatory award.
The sample fraudulent processes listed were listed by the Office of the Comptroller of the Currency Special Supervision Division.
There may be a number of variations on the elimination debt scams. Consumers should always be careful of quick fixed to eliminate debt or fix a credit score or repair credit. If it sounds to be good to be true, it probably is. Investigate unsolicited offers carefully before going any further.