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Debt Elimination Can Cause Major Headaches

Posted on Jul 5, 2007 by Michelle Pastor

Here’s another scheme that I often see.  Many of my clients have complained that debt elimination (also called debt settlement) companies take their money and run.  The victims I’ve worked with were lucky that they only lost money, because according to The Internet Crime Complaint Center, debt elimination is a scheme that not only scams the victim out of the money you pay up front, but also opens them up to identity theft.

DEBT ELIMINATION
Debt elimination schemes generally involve websites advertising a legal way to dispose of mortgage loans and credit card debts. Most often, all that is required of the participant is to send $1,500 to $2,000 to the subject, along with all the particulars of the participant's loan information and a special power of attorney authorizing the subject to enter into transactions regarding the title of the participant's homes on their behalf. The subject then issues bonds and promissory notes to the lenders that purport to legally satisfy the debts of the participant. In exchange, the participant is then required to pay a certain percentage of the value of the satisfied debts to the subject. The potential risk of identity theft related crimes associated with the debt elimination scheme is extremely high because the participants provide all of their personal information to the subject.