Q: I heard a friend complaining about a credit card debt termination scam that she was almost involved in. I’ve never heard of this type of scam. What is it?
A: A credit card debt termination scam is where a company claims that they can make your debt disappear through an “administrative process” that proves you never owed the debt in the first place. Even when you did.
The theory behind this scam is that, based on the way the banking and credit system works. Credit card companies are using your signature to create money, which they will then loan back to you.
Essentially, the claim is that banks are loaning you your own money, so you should not have to pay it back.
As one of these companies states, it is not debt negotiation, as you are not actually paying back the debts.
Those promoting this scam claim that it is totally legal, and guarantee that your credit score will not be harmed.
Who wouldn’t want that?
If you are suffering under a load of debt that you cannot pay back, you want a way to get out from under it that won’t hurt your credit score. Bankruptcy won’t do that. Negotiating with the credit card companies can also hurt your score since you are not paying back the entire debt.
Debt termination seems like the perfect option.
These companies charge thousands of dollars and will probably cost you thousands more in lawsuits when the credit card companies come after you for not paying.
One of these companies charged over 2,000 clients upwards of $4,000 apiece, and didn’t terminate a single debt.
Don’t fall for the scam. Your credit score will tank, and you will owe thousands more than you owed to begin with. If you are struggling with debt, there are other solutions, such as stricter budgets, debt negotiation, and as a last resort, bankruptcy.