Eliminate Financial Worries Through Debt Management Help

By Admin, 2 September, 2010, No Comment

Any borrower can accumulate debts in this age of consumerism. Even lenders take a sympathetic view in offering loan to these people. But debts should be controlled at certain label for financial comfort of the borrower. Therefore debt management help has become norm of the day. It is through debt management help that debts are first not allowed to rise any more and than eliminated.

People under debt burden can seek Debt Management Help from companies having expertise in this field. These companies offer you debt management help in two ways. They offer you tips or techniques for managing debts and thus play advisory role. These professional companies can even directly interact with lenders on behalf of the borrower. One should make efforts to take all possible management help from experts.

When debt ridden person asks professional debt management companies to directly intervene in softening debt burden, these companies reach to different lenders of the borrowers. The lenders are approached with a fresh plan of debt payment action by the borrower. Normally lenders are not interested in repossession of borrowers property as it is expensive and time consuming. So lenders generally agree to the plan in order to get back the loan. The companies can ask lenders to reduce interest rate and various penalties or charges on the borrower so that debt repayment is made easier.

In its advisory role, the professionals offer techniques for eliminating debts. Debt consolidation and mortgages are two major ways of immediate elimination of debts. In debt consolidation, borrower is suggested to take a fresh debt consolidation loan at least equal to the amount of debts. Normally previous debts are of higher interest rate. The loan is taken at lower interest rate and therefore saves money when debts are cleared in one go.

Advantage with debt consolidation mortgages is that borrower can settle debts at the rate of mortgage which again is cheaper source of finance. Another technique is home equity loan under which you take loan on the basis of equity in your home. Home equity loan again is very cheap finance source for clearing debts.

Whatever may be the technique, be very serious in implementing it as a half hearted approach may complicate your financial matters. Do not forget simple basics like restricting yourself from over spending so that you have extra money for various purposes including paying monthly installments of loans. Make efforts to increase income simultaneously. Main aim of any debt management help is to ultimately eliminate debts and secure you financially which is possible only when you coordinate well with the experts.

While searching for debt management help provider companies make sure that it has adequate experience and expertise in the field and it offers counseling services which is a must in making one aware of pitfalls of incurring debts for long.

Eliminate Debts Cheaply Through Secured Debt Consolidation Loans

By Admin, 26 August, 2010, No Comment

If you think it is high time that you pay off all those debts, otherwise you may be inviting all sorts of troubles; secured debt consolidation loans can do the rescue job for you. Through availing secured debt consolidation loans you get rid of debt burden instantly as this new loan provides the finance at least equal to previous debts.

On taking secured debt consolidation loans, borrower gets rid of various monthly payments that he or she was making to different lenders. Previous debts are generally of higher interest rates and surge the burden of debt. Secured debt consolidation loan is taken at lower interest rate and therefore save money.

Secured debt consolidation loans are utilized also in clearing credit card bills, medical bills or other pending payments. One can use the amount also for home improvements, wedding or any expenses.

Borrowers are required to place collateral with the lenders in order to get secured debt consolidation loans. The collateral may consist of any property of the borrower such as home, car, and valuable papers. Main aim behind collateral is to provide a sense of security to the lender regarding the loan

Collateral can be an effective instrument in getting the required loan deal. It is the equity in the collateral that matters the most to lenders while deciding on loan amount and interest rate. Equity is value of the property minus the borrowings of the loan seeker. So, in case greater amount of secured debt consolidation loan is required, the lender will evaluate the equity. Higher equity makes it easier for the borrower to get a loan deal of higher amount at lower interest rate.

Lenders normally provide an amount anywhere in the range of 5000 to 75000 under secured debt consolidation loans. For availing higher amount of loan, financial standing and credit history of the borrower also becomes important.

Secured debt consolidation loans are availed at lower interest rate. The borrowers can get a loan deal at cheaper interest rate if they search for the lenders online. Numerous lenders have showcased their secured debt consolidation loans products. Choose the loan package that best suits your budget.

Borrowers who are going through a bad phase can also avail secured debt consolidation loan. The loan enables the borrower to improve credit history when they pay off debts. Such borrowers should first pay off easy debt and get this development included in their credit report. To judge the risk involved in offering loan, the lenders give credit score to the borrowers. A credit score of 620 and above is viewed as safe while lower score makes lenders hesitant in deciding loan terms largely in favor of the borrower.

To gain maximum benefits from secured debt consolidation loans, borrowers must give special attention to the interest rate and loan amount and keep both of them lower.

Eliminate Credit Card Debt – Reduce Debt Without Bankruptcy

By Admin, 19 August, 2010, No Comment

Acquiring too much debt can put a major strain on a household. To eliminate debt, many people consider bankruptcy. With the new bankruptcy laws, it has become difficult for some people to eliminate debt. However, many will continue to qualify for bankruptcy protection. The effects of bankruptcy are long term.

Before considering bankruptcy, it helps to explore solutions to debt elimination. Here are three tips that can help reduce debts.

Limit Credit Card Use and Pay More than Minimums

People file bankruptcy with varying credit amounts. Some have acquired over 10,000 of credit card debt, whereas others only have about 2,000. Individuals with small debts can usually payoff the balances without bankruptcy. However, these persons must be willing to make sacrifices.

If attempting to eliminate debt, stop using the credit card. Paying only the monthly minimum, and then going on a shopping spree defeats the purpose. Before you can successfully eliminate credit card debts, you must commit to using cash for all purchases. Additionally, the majority of minimum payments barely reduce the finance fees. To notice a significant reduction, endeavor to pay the minimum payment, plus an additional 50 – 100.

Negotiate a Lower Interest Rate

If you have maintained a good payment history with a credit card company, attempt to negotiate a lower interest rate. When contacting the credit card company, highlight your history with the company such as length of credit account, payment history, etc. If your credit is good, the company may consider a reduction. Before approving the request, you must consent to a credit check.

In addition to evaluating your history with the company, they will also assess whether you maintain a good payment record with other creditors. If your credit score is low, it may require the help of a debt consolidation agency to convince creditors to lower interest rates.

Once your credit card interest rate is lowered, you pay less finance fees. Thus, a larger portion of your monthly payments will help reduce the outstanding balance.

Consolidate Debts with a Home Equity Loan or Refinancing

Owning a home provides a huge advantage. Homes increase in values, thus they gain equity. As a homeowner you have the option of tapping into your home’s equity. Through a home equity loan or refinancing, you have the chance to get hold of a lump sum of money that can be used for different purposes. One such purpose includes debt consolidation.

Dont make these seven mistakes when dealing with debt collectors.

By Admin, 12 August, 2010, No Comment

Dont make these seven mistakes when dealing with debt collectors.

The number of complaints about debt collectors is on the rise. From 13,950 reported to the Federal Trade Commission in 2000, the number has ballooned to over 66,000 in 2005. And these are just the ones reported–the greater number of complaints go unreported. But this isnt the worst; a significant number of complaints are coming from consumers who do not even owe the debt.

So whats going on here? It is apparent that debt collection agencies are becoming increasingly competitive and that they are getting more aggressive in an effort to improve their bottom line. And to do this, they have to put more pressure on the one who owes the debtthe consumer, you.

What can you do if you are caught in the crosshairs of a debt collector? Enforce your rights. As a consumer, you have rights under the Fair Debt Collection Practices Act (FDCPA.) These rights mean that you cannot be lied to, abused, or harassed when a debt collector is trying to collect from you. And these rights have teeth. When a debt collector violates the provisions of the FDCPA. when he or she violates the rights you have under the FDCPA, you can sue for damages and for attorneys fees.

But when dealing with debt collectors under the FDCPA, dont make the following four mistakes:

1. Not knowing your rights. You need to remember that you have rights even when you havent paid what you owe for whatever reason. We dont have debtors prisons anymore and debt collectors cant buy a license anywhere to have any kind of open season on anyone who is delinquent in paying debts. This is true because of those rights. So make sure you understand just what those rights are. You cant claim them if you dont know them.

2. Not keeping records. To be able to enforce your rights, youll need to keep some records. This will mean a phone log (the number of calls and when can both be violations of the FDCPA); notes from the calls (what they say to you may not be abusive, harassing or a misrepresentation); and all the letters they send to you (they must have the proper notices and may not confuse you about what you need to do) as well as the letters you send to them. All of these must be kept for you to better make your case.

3. Not responding on time. You have certain rights that must be exercised within a certain period of time or they are lost. (The right to verification information is one.) So be vigilant about any time limits. Respond when you need to and file suit on time–if it comes to that.

4. Avoiding the calls. Dont avoid the phone calls either. It is only by dealing with the debt collector that any of your rights under the law may be exercised. And exercising those rights–for example, the all-important right of verification– might just make the problem go away. (If the collector cannot verify the debt, he or she cannot continue to collect it.) So it is better to take the call and talk.

In dealing with debt collectors, it also pays to be smart. So, for example, dont also make the following three mistakes:

5. Not negotiating. Debt collection agencies most often buy the debt. And they buy it for less than you owe on it. Their profitability comes from getting you to pay more– and possibly a lot more– than they paid for it. So make sure you try to negotiate a lower figure. They just might accept it.

6. Ignoring the debt. Ignoring the debt is only going to cause more problems. If the debt collector understands that his or her efforts are not going to get you to pay, that may start the clock on any lawsuit they can bring on the debt. And that only gives the debt collector the advantage. Keep the advantage with you.

7. Paying by personal check. Paying by personal check gives the debt collector your account number and the name of your bank. That can create some problems with unscrupulous debt collectors who might be tempted to do something shady like setting up an electronic payment. (Its been done.) And that isnt good. But it also gives them information they can use if they want to enforce the debt through legal means. Why make it any easier?

If you are faced with any attempt to collect a debt, make sure you get all the information you can. If you do, youll be more able to enforce your rights–and they will be less able to intimidate you. Both of these come out on your side of the ledger sheet.

Don’t Delay In Managing IRS Tax Debt

By Admin, 5 August, 2010, No Comment

Debt Resolution, IRS Settlements Offer Help for Serious Tax Problems

San Mateo, Calif., – With tax day behind us, consumers and business owners who owe the IRS are not out of the woods. But while death and taxes are the big two inevitabilities, those with serious tax problems should know that it is possible to negotiate with the IRS to reduce past-due tax penalties and payments, according to Bradford G. Stroh, co-founder and CEO of Freedom Financial Network, LLC.

Americans, carrying more debt than ever, are also more likely to have tax problems than in the past. In 2004, the total of uncollected IRS taxes reached upwards of 250 billion. The number of levies (a key enforcement tool in which the IRS takes possession of assets to collect on unpaid taxes) topped 2 million during fiscal year 2004 – a 21 percent increase from 2003 and triple the 2001 number.

According to Stroh, taxpayers with tax debts under 10,000 usually can manage the payment on their own or via an installment plan arranged with the IRS. “Tax problems merit professional help when individuals cannot pay tax liabilities of 10,000 or more,” Stroh says. “At that point, specialists can negotiate directly with the IRS on behalf of these consumers, helping them obtain settlements.”

Tax relief specialists usually are attorneys or certified public accountants with special training and experience. Stroh explains that these experts can navigate the intricacies of IRS forms and calculations, help consumers understand the criteria the IRS imposes, and then help them get back into good standing with the IRS.

Depending on the severity of an individual’s situation, two types of IRS settlement are available:

An offer in compromise reduces the principal amount owed to the IRS.

An installment agreement is a payment plan for the amount due and often includes reduced penalties.

“Remember that you cannot let overdue taxes languish,” Stroh warns. “The IRS is serious — and increasingly aggressive — about tax collection and evasion. Tax debt can result in a lien on a house or garnished wages.”

Advisors can help consumers with the following steps:

Evaluate the situation and determine the amount of taxes owed to the IRS.

Ascertain whether the situation meets IRS standards for “doubt as to collectability” (i.e., unable to pay the full tax burden), “doubt as to liability” (i.e., consumer might not owe the tax), or “economic hardship.”

Establish the full amount owed, including taxes, penalties and accumulated interest, and understand whether collection limitations or penalty cancellations are possible.

Determine the best method for managing and eliminating the tax debt.

Negotiate with the IRS to settle on an agreed course of action and resolve the debt.

While facing and handling tax debt can be painful, last year’s bankruptcy reform legislation made it even more crucial for consumers to act. Historically, consumers in severe IRS debt might file for Chapter 7 bankruptcy protection or wait for the 10-year statute of limitations on tax liability to expire. Now, people are much more limited in the ability to obtain Chapter 7 filings. The bill’s new “means test” leads many consumers instead to file Chapter 13 bankruptcy, which establishes a repayment plan, rather than wiping out all debt. Consumers with tax debt may find it much less costly and simpler to work with a debt resolution firm’s tax relief service, which allows individuals to set up tax payment plans while avoiding court fees, attorney fees and bankruptcy judgments on their records.

“Whatever means you choose, tax season means it’s time to face the inevitable and manage your tax burdens,” Stroh says. “Fortunately, experts are available to help you along the way.”

Freedom Tax Relief, LLC (http:www.freedomtaxrelief.com) provides consumer debt resolution services through its Freedom Debt Relief and Freedom Tax Relief divisions. The company works for the consumer, negotiating with creditors to lower principal balances due that can often result in savings of up to half the amount owed. Based in San Mateo, Calif., Freedom Financial Network serves more than 5,000 clients nationwide and manages more than 200 million in consumer debt, offering an alternative to bankruptcy, credit counseling, and debt consolidation.

Debt-to-Income Ratio – It’s Just as Important as Your Credit

By Admin, 29 July, 2010, No Comment

Debt-to-Income Ratio – It’s Just as Important as Your Credit Score When Buying a New Home

Your debt-to-income ratio (DTI) is a simple way of calculating how much of your monthly income goes toward debt payments. Lenders use the DTI to determine how much money they can safely loan you toward a home purchase or mortgage refinancing. Everyone knows that their credit score is an important factor in qualifying for a loan. But in reality, the DTI is every bit as important as the credit score.

Lenders usually apply a standard called the “2836 rule” to your debt-to-income ratio to determine whether youre loan-worthy. The first number, 28, is the maximum percentage of your gross monthly income that the lender will allow for housing expenses. The total includes payments on the mortgage loan, mortgage insurance, fire insurance, property taxes, and homeowners association dues. This is usually called PITI, which stands for principal, interest, taxes, and insurance.

The second number, 36, refers to the maximum percentage of your gross monthly income the lender will allow for housing expenses PLUS recurring debt. When they calculate your recurring debt, they will include credit card payments, child support, car loans, and other obligations that are not short-term.

Lets say your gross earnings are 4,000 per month. 4,000 times 28% equals 1,120. So that is the maximum PITI, or housing expense, that a typical lender will allow for a conventional mortgage loan. In other words, the 28 figure determines how much house you can afford.

Now, 4,000 times 36% is 1,440. This figure represents the TOTAL debt load that the lender will permit. 1,440 minus 1,120 is 320. So if your monthly obligations on recurring debt exceed 320, the size of the mortgage youll qualify for will decrease proportionally. If you are paying 600 per month on recurring debt, for example, instead of 320, your PITI must be reduced to 840 or less. That translates to a much smaller loan and a lot less house.

Bear in mind that your car payment has to come out of that difference between 28% and 36%, so in our example, the car payment must be included in the 320. It doesnt take much these days to reach a 300month car payment, even for a modest vehicle, so that doesn’t leave a whole lot of room for other types of debt.

The moral of the story here is that too much debt can ruin your chances of qualifying for a home mortgage. Remember, the debt-to-income ratio is something that lenders look at separately from your credit history. That’s because your credit score only reflects your payment history. It’s a measurement of how responsibly you’ve managed your use of credit. But your credit score does not take into account your level of income. That’s why the DTI is treated separately as a critical filter on loan applications. So even if you have a PERFECT payment history, but the mortgage you’ve applied for would cause you to exceed the 36% limit, you’ll still be turned down for the loan by reputable lenders.

The 2836 rule for debt-to-income ratio is a benchmark that has worked well in the mortgage industry for years. Unfortunately, with the recent boom in real estate prices, lenders have been forced to get more “creative” in their lending practices. Whenever you hear the term “creative” in connection with loans or financing, just substitute “riskier” and you’ll have the true picture. Naturally, the extra risk is shifted to the consumer, not the lender.

Mortgages used to be pretty simple to understand: You paid a fixed rate of interest for 30 years, or maybe 15 years. Today, mortgages come in a variety of flavors, such as adjustable-rate, 40-year, interest-only, option-adjustable, or piggyback mortgages, each of which may be structured in a number of ways.

The whole idea behind all these newer types of mortgages is to shoehorn people into qualifying for loans based on their debt-to-income ratio. “It’s all about the payment,” seems to be the prevailing view in the mortgage industry. That’s fine if your payment is fixed for 30 years. But what happens to your adjustable rate mortgage if interest rates rise? Your monthly payment will go up, and you might quickly exceed the safety limit of the old 2836 rule.

These newer mortgage products are fine as long as interest rates don’t climb too far or too fast, and also as long as real estate prices continue to appreciate at a healthy pace. But make sure you understand the worst-case scenario before taking on one of these complicated loans. The 2836 rule for debt-to-income has been around so long simply because it works to keep people out of risky loans.

So make sure you understand exactly how far or how fast your loan payment can increase before accepting one of these newer types of mortgages. If your DTI disqualifies you for a conventional 30-year fixed rate mortgage, then you should think twice before squeezing yourself into an adjustable rate mortgage just to keep the payment manageable.

Instead, think in terms of increasing your initial down payment on the property in order to lower the amount you’ll need to finance. It may take you longer to get into your dream home by using this more conservative approach, but that’s certainly better than losing that dream home to foreclosure because increasing monthly payments have driven your debt-to-income ratio sky-high.

Debt Settlement — Why the Critics Are Wrong

By Admin, 22 July, 2010, No Comment

A lot more people are becoming interested in debt settlement as an alternative to bankruptcy. That’s because a new bankruptcy law was enacted on October 17, 2005, which means a rude awakening for many consumers seeking a fresh start in bankruptcy court.

It used to be that 7 out of 10 people filing personal bankruptcy were granted Chapter 7 status, where the unsecured debts are totally wiped away. That has changed under the new rules. If your income is above the median for your state, or you can pay back at least 100 per month toward your debts, then you’ll be turned down for Chapter 7. Instead, you’ll be shifted into Chapter 13, where you pay back a portion of the debt over 3-5 years.

It gets worse. When the court calculates your allowable living expenses, it will use the approved IRS schedules, not your actual documented expenses. So even if you don’t think you can pay 100 a month or more, the judge will probably disagree. Instead of a fresh start, many people will be faced with the grim reality of a harsh 5-year plan, on a court-mandated budget that forces them to adopt a much lower standard of living. That’s where debt settlement starts to look pretty attractive.

Yes, I know debt settlement has its critics. I’ve criticized aspects of the industry myself. But what the critics don’t seem to understand is that this approach is for people who would otherwise go bankrupt! Let’s examine the three main complaints against debt settlement and see where the critics are missing the mark.

“Debt settlement has a negative impact on your credit score.”

Wow. Big deal! Pretend it’s two years from now. Would you rather have an A+ credit rating or be totally free of debt? Pick one please, because you can’t have both. All debt reduction programs have a negative impact on credit scores. That’s why only people who truly can’t keep up with their bills should go into one of these programs. But it’s pointless to worry about your credit while you’re being crushed with debt. That’s like worrying about how the yard looks after your house has burned down.

“You might have to pay taxes on the canceled portion of the debt.”

I’ve always been amazed at how frequently this lame criticism is repeated in article after article. Yes, it’s possible that you may need to pay taxes on forgiven debt balances, but the odds are against it. That’s because the IRS allows insolvent taxpayers to exclude canceled debts. So unless you have a positive net worth, you probably won’t need to pay taxes on your settlements. And even if you did, so what? You’d be paying taxes because you saved a bunch of money off your debts! And this is a problem?

“Collection activity will continue and you might get sued.”

Yes, if you fall behind on your bills, your creditors will most certainly continue attempts to collect what’s owed, and one or more of those creditors might sue you in civil court. But again, this criticism totally misses the mark. Collection activity is already a function of being in debt trouble. At least debt settlement allows the consumer to use the collection process to eliminate debt through negotiated compromises. Even lawsuits need not be cause for panic, since they can often be settled out of court. The only reason to allow a legal action to proceed to the point of wage garnishment, property lien, or bank levy is lack of financial resources with which to settle. And if that’s the case, the debtor should be talking to a bankruptcy attorney anyway.

In contrast, let’s look at some of the positives of debt settlement.

1. You can save 1,000s versus any other method of debt elimination (except for Chapter 7 bankruptcy, which is much more difficult to accomplish now that the new law is in effect).

2. You can get out of debt in 2-3 years, and much faster if there is some available home equity to work with. This is a lot better than 5 years in the financial boot camp of Chapter 13 bankruptcy, or 5-9 years in a credit counseling program.

3. You keep control over the process more than with any other approach.

4. You maintain personal privacy. With bankruptcy, your case file becomes a matter of public record, easily located via Internet search by future employers, landlords, or creditors.

5. You retain your dignity while working through your financial problems. Bankruptcy still feels like failure to a lot of people. Debt settlement represents an honest and ethical alternative to that extreme solution.

6. You can adjust your monthly funding into the settlement program up or down depending on real-world conditions in your financial life. If your income fluctuates from one month to the next, or you get hit with an unexpected expense, it won’t torpedo the whole program. The built-in flexibility of debt settlement gives it a huge advantage over other options, all of which require a fixed monthly payment.

Once you’re made the determination that debt settlement makes sense for your situation, you’ll need to decide whether to go it alone or seek professional assistance. For people who aren’t easily intimidated, there’s no question that the do-it-yourself approach is the way to go. For others who can’t handle the least bit of pressure or just want to focus their time and energy elsewhere, hiring a professional settlement company may be the correct choice.

If you do decide to take the do-it-yourself approach, follow these tips:

* Use a privacy manager on your telephone service to screen creditor calls so that you only speak to creditors when you’re ready.

* Make sure you have a solid game plan for building up money to settle with, and set the funds aside in a separate bank account.

* Do not send settlement funds until you have the deal in writing. No exceptions!

* After paying the settlement, follow up to obtain a zero balance letter from the creditor, so you don’t have bogus collection problems later on.

* Know your rights as a consumer by reading the free resource articles on debt, credit, and collections at the Federal Trade Commission website: www.ftc.gov

* Don’t be intimidated or pressured into accepting a settlement deal that you can’t handle.

Remember, thousands of people settle their own debts every year, without the need for lawyers or bankruptcy. You can do it too if you’re disciplined, determined, and prepared to ignore some of the crazy stuff that bill collectors say. When you’re finally debt-free, you’ll feel a lot better about having worked it out on your own. Good luck on your road to debt freedom!

Debt Money and Happiness

By Admin, 15 July, 2010, No Comment

Tips to help you get out of debt and stay out.

Fix the problem

If you are in debt, youve spent money more quickly than youve earned it!

In order to get out of debt or stay out, youve got to spend less than you earn (and apply the difference to savings & reducing debt).

You’ll need to reduce expenses or increase income, or a combination of both. Too often increases in income result in increased spending, so curb the spending first if possible.

Some have said: It doesnt matter how much you earn, but it does matter how much you spend.

Analyze your spending habits. What caused your debt? Do you need to fix a leaky wallet? Some people need to record on paper everything they spend for a month to find the leaks.

A pound a day for soda is 365 a year. The estimated long-term cost of a pack of cigarettes is ~40.

Scrutinize your needs and wants. Be willing to forego some of your wants, and postpone others in order to get out of debt. Only borrow for things which increase in value, not toys.

Seek to eliminate some of your expenses, especially recurring expenses. Many who are buried in debt have expensive cell phones, satellite TV, expensive phone options, internet service, storage units, and other monthly conveniences which prohibit them from reducing their debt burden.

There is nothing magic about getting out of debt. If an offer sounds too good to be true, it is! Many companies who claim to be able to help you, will worsen your finances if you let them.

If you are an impulsive buyer, hide your credit cards at home in a safe place.

Debt Elimination Through Financial Management

By Admin, 8 July, 2010, No Comment

Debt elimination needs a bit of financial management. Analyze your expenses and the debts that you have taken. This will help you in debt elimination. The debts can be classified as short-term loans, medium term and long-term loans. Short-term loans are loans, which must be repaid within a year. Medium term loans are those, which have to be repaid within 1 to 10 years, and long-term loans are the loans, which are longer than 10 years. Even the payment that is unpaid on the credit cards qualify for the debts that you have. Many people have the tendency to pay only the least amount. The remaining portion is then charged a rate f interest, which is on a compounding basis. Thus credit card dues should be paid in full

It’s difficult to eliminate long-term loans; it’s certainly possible to eliminate short-term loans. Stop buying and spending on credit in short term. This will lead to short term debt elimination. For example don’t buy groceries on the credit card. This will automatically lead problems, this advice will be useful for you. Use cash to buy and use coupons for getting a few pounds off on various products. Thus there will be less credit card bill at the end of the month. Use a credit card only when you must.

It’s a great policy to save and then spend. If it makes you a miser, so be it, at least you won’t go bankrupt paying your debts. This is also one of the ways of debt elimination. By not having debt in the first place, you are doing yourself a favor. Therefore make it a point to do debt elimination whether you are home or office, only in this way can you rid yourself of debt. “Only when I have cash will I spend” should be your motto for all the transactions in your personal as well as professional life to the maximum extent possible.

Debt Elimination Scams — A Growing Problem for Consumers

By Admin, 1 July, 2010, No Comment

Consumers seeking debt assistance are faced with a bewildering assortment of debt companies, services, programs, books, ebooks, and websites. How to tell the scams from the legitimate options? The purpose of this article is to help consumers easily spot and steer clear of one particular scam that is growing through network or multi-level marketing schemes. It goes under different names, such as debt elimination, debt termination, or debt reduction. Such names can certainly apply to legitimate programs as well, and the scammers purposely name their bogus programs with the intention of deceiving consumers and stealing them away from legitimate companies. For the purpose of this article, I’ll refer to it as the debt elimination scam, but be aware that it may be called something different.

So how can you tell this scam from legitimate debt elimination techniques? It’s pretty easy, actually. The scam is based on the bogus “no money lent” argument, where the claim is made that credit card banks cannot loan money legally. Through strange leaps of logic, the scammers claim that credit card banks are actually operating illegally, and so you never really borrowed any money when you used your credit cards! Therefore, you don’t really need to pay anything back. You just have to follow their system and the debts will go away because the banks don’t want this knowledge disclosed to the public!

I realize this may sound ridiculous at first glance, but the con artists are very convincing, and there are dozens of websites promoting this dangerous scam. They refer to publications by the Federal Reserve Board, the Uniform Commercial Code, the Truth in Lending Act, and other public laws to bolster their claims and give an aura of legitimacy to their “program.” I’ve talked with numerous consumers who have been conned out of 2,500, 5,000, even up to 15,000 because they believed the hype that these snake-oil salesmen were peddling. If you’re 30,000, 50,000, or 100,000 deep in credit card debt, it can be very tempting to believe in a magic pill. What if you could pay someone 15% of the debt and make the rest of the debt disappear?

As tempting as the promoters make it sound, the debt elimination techniques they are using simply do not work. About the only thing they accomplish is getting you sued by your creditors. As you might expect, creditors hate this scam, and they come down hard on people trying to use this bogus “no money lent” system. You don’t need to take my word for this. Check out the complaints on ripoffreport.com about Liberty Resources, a debt elimination scam that was shut down in Ohio. Or do some research on New Leaf Associates out of Florida, a scam that was shut down by the Florida Attorney General after consumers were ripped off for millions of pounds. I’ve personally talked to people who were caught up in both of these scams, as well as others who were involved in scams that have not yet been shut down.

I also sometimes receive calls or emails from people promoting this system. Because I am easy to reach and I’m a well-known debt expert, they seem compelled to convince me of the worth and merit of their system. Often, the people contacting me are ignorant of the nature of the scam. That’s because this program is frequently sold through MLM or network marketing systems, and a lot of the people involved simply don’t know any better. I respond by making a simple request, and any “true believers” in this system who happen to read this article can take this as a challenge. All I ask is for a single verifiable court case where a judge agreed with the “no money lent” argument and ruled in favor of the debtor. It’s really that simple. After asking this question for several years, I’m still waiting. No such case exists, despite false claims to the contrary. The response is usually that the company must protect the clients’ privacy, but they have “hundreds of success stories” and have dismissed “millions of pounds” of debt.

Nonsense! The only way this system could possibly work is if a judge ruled on it in court. And since court cases are public record by definition, privacy cannot be an issue here. The “client” gave up any right to privacy when he or she tried to convince a judge that the 50 grand they owed on their credit cards was really just “funny money.” And yet the con artists cannot provide a single solitary case in support of their outrageous claims. (Note to scammers: Don’t waste my time emailing me with your threats or your legal mumbo-jumbo. I’ve heard it all before. Just send me the civil docket number for a single case where your “client” won in court using this system, and identify the court venue so I can look up the case myself online. Simple enough, right? I won’t hold my breath though.) In fact, the “no money lent” argument has been shot down in court on multiple occasions. When confronted with this embarrassing fact, the scammers simply reply that the courts are part of a “conspiracy” to keep this information from the public!

The absence of any verifiable documentation is the red flag that tells you this scheme simply doesn’t work. But let me take this a step farther. Let’s set aside for a moment the whole question of the legal basis for the “no money lent” argument. Let’s take a huge silly leap for a moment and say that the system is valid from a legal perspective. Well, it’s STILL not going to work for the average consumer! Why? Two reasons. First, it requires a fight in court, and the average consumer wants to go to court over debt-related matters about as much as they want to have multiple root-canals without anesthetic.

Second, nothing gets resolved this way. I’ve worked with thousands of people struggling with serious debt problems. I talk to people in this situation every day. I can’t think of a single instance where the person’s priority was anything other than to GET THE MATTER RESOLVED PERMANENTLY. The techniques used by the debt elimination scammers do not achieve any resolution at all. Even if the debtor successfully gets a creditor to back off from its collection effort, all that will happen is the creditor will sell the account to a debt purchasing company, who will then try to collect all over again. So the whole process will have to be repeated, over and over again as the debt gets sold multiple times down the line. There is no resolution here. Just a bag of useless tricks. Boil it all down and here is what the debt elimination scammers are telling you: Walk away from your debts, don’t pay, and duck and cover. That’s it. It’s a lot of hot air and bogus nonsense, and it only exists because debt-weary consumers are desperate for solutions.

If you have become the victim of a debt elimination scam, I urge you to take action. Demand a refund in writing. Complain to the Better Business Bureau where the company is located (assuming you can even find them), complain to your state Attorney General and the Federal Trade Commission. And then get on the phone with your creditors and explain that you were misled and that you would like to work things out in good faith. It may be necessary for you to formally retract any documentation that the scammers sent to your creditors. Consumers may also feel free to email the author for further advice or information on this subject.