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"Legally cancel credit card debt! You will be debt-free in 4-6 months!" Advertisements such as this are for a brand new type of system that has spread via the Net in the last several years. It is named "Credit Card Debt Termination," and victims are paying $1,000s with this phony company. One victim I spoke with lost more than $15,000! In this article, why it is a scam to be eliminated I will review the principles behind this system and explain.

First, let us get our definitions straight. The program I am describing here shouldn't be confused with Debt Consolidation or Debt Settlement (also known as Debt Negotiation), both which are moral and legitimate options for debt resolution. The best way to distinguish the Credit Card Debt Termination scam from other appropriate plans is founded on the central claim that you really do not owe anything!

With Debt Consolidation, you pay back all your debt balances. With Debt Settlement, you pay back a lesser volume (usually around 50%) whilst the lender agrees to reduce the residual balance. Nevertheless, with the bogus Personal Credit Card Debt Termination plan, marketers claim that you'll not need to pay for anything more (except their outrageous expenses, normally). They make the surprising claim that you are able to legally wash away your obligations simply by utilizing their super-duper secret files. Centered on some authorized mumbo-jumbo, the claim is created that you truly didn't use any money from your creditors!

In order to appreciate this scam, a little history is important. Remember the tax protest movement in the 1970s? Individuals were claiming that the IRS tax collection system was unconstitutional, and predicated on their misinterpretation of the tax code, they refused to pay for taxes. The IRS came down hard on the tax protest movement, and through the court system, holes were blown by them in all the legal arguments put forth by the demonstrators. The Personal Credit Card Debt Termination fraud is such as the tax protest movement. In fact, among variety specialists, it's called the "monetary demonstration movement."

Exactly like the tax protest movement, there is a common theme that runs through every one of the promotional materials given by the fiscal protestors. The fundamental idea is that generally speaking accepted accounting principles (GAAP) and our Federal Reserve monetary system don't permit banks to loan out their very own money. For that reason, in accordance with their model, the credit card banks are the ones working the fraud on the American public.

Stick with me here, because the reason is very odd. How does a card bank extend credit, if a bank cannot lend its own money? The claim here is that your charge card contract itself becomes a kind of money (called a promissory note) the minute you sign it. The concept is that the bank "deposits" your agreement being an asset on their publications, and then any credit you use is offset as a against that asset. Put simply, the key idea listed here is that you practically lent your own money from the credit card bank.

So let us say your harmony with ABC Credit Card Bank is $10,000, which you lent contrary to the card to make everyday expenditures. The fraud supporters say all you need to do is tell the financial institution that you want your original "deposit" back. But, you will let the bank to offset the amount you borrowed against the amount you have on "deposit." Presto! That you don't owe the total amount anymore!

Now, as imaginable, the banks do not take kindly to such tactics. Most of the customers applying this method are receiving sued by their creditors. Nevertheless the scammers have significantly more tricks available, as though the "smoke and mirrors" economic nonsense wasn't enough. Among their methods could be the utilization of phony "arbitration" boards. Settlement is of course a legitimate program that allows firms and individuals to resolve disputes without going to trial. What do the scammers do? They coach people on the best way to setup a phony mediation community, for the specific intent behind building a argument against their creditors! Naturally, the creditors will not send representatives with a non-existent arbitration community, and so the customer reaches rubber-stamp their particular arbitration award. If they get sued in a normal court, they present their phony award to the judge in the hopes that the creditor's lawsuit will undoubtedly be dismissed.

You will find other methods employed by promoters with this structure, however the key point to consider could be the central claim that your personal credit card debt doesn't really exist. Needless to say, it is all nonsense predicated on a misinterpretation of our financial system, and if you move back and think of for a moment, the truth seems fairly obvious. What these scammers are saying is that the whole $700 million credit card market is running on an illegal basis! Even when the legal theory utilized by the supporters were true (which it is not), do you think for a moment this giant industry would be allowed by the government to go under? That is precisely what would happen if the promoter's claims were proven true and utilized on a common basis.

The Federal Trade Commission, which has jurisdiction here, has not stomped on these people yet, nonetheless it is just a matter of time. Unfortuitously, in the meanwhile, consumers are being bilked out of vast amounts for a worthless plan that'll only have them into serious trouble using their creditors. If you're approached by someone offering to wipe away your debts using this process, I strongly recommend you run in one other direction while you hang on tightly to your wallet or purse.

Remember, you can eliminate your debts if you take a disciplined approach to your money, produce a budget and stick to it, and don't use your bank cards every month until you can pay off new bills in full. jt foxx