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Debt Elimination Scams



Being overwhelmed by debt creates a great deal of stress and anxiety. Scammers know this and will devise many ways to take advantage of debtor vulnerability. "Debt Elimination" companies claim that they can eliminate your debt completely and that you can legally cease paying creditors with no repercussions.

Their reasoning is that the debt you have incurred using credit cards is not legal debt. This allegation is based on wording from the following legal documents:

  • Title 15 United States Code Section 1692
  • The Fair Debt Collection Practices Act Section 1601
  • The Fair Credit Billing Act
  • The Uniform Commercial Code Section 203

For a fee, often in excess of $2,500, the debt elimination company will send you materials with excerpts from these pieces of legislation; adding their own bogus interpretation of these laws. They convince unwary, and nave, debtors that it is their legal right not to pay their debt. Using such logic as: "The Federal Reserve, a branch of government made up by men, invented the U.S. dollar. The Federal Reserve doesn't have any real authority and the dollar is fictitious and doesn't really hold any value". They also claim that the Declaration of Independence supports their beliefs and allegations.

This line of thinking is comparable to anti-income tax theories where quotes from official documents, court rulings, and other authoritative-sounding sources are taken out of context to "prove" that tax payers have no legal obligation to pay the IRS. In fact, it is likely the same group of people who are behind both shenanigans.

Along with the "insightful" reading materials, you will also receive a certificate that you are instructed to take to your bank to let your creditors know that you are legally releasing yourself from any obligation to repay your mortgage, credit cards and other debts. In reality, the debtor who tries to turn in this phony certificate could be faced with federal fraud charges. And, because they have stopped paying their bills they have trashed their credit, are facing foreclosure and are on the road to financial ruin.

Alert the Feds


Debt Elimination scams have become so rampant that the Federal Reserve Board and the Office of the Comptroller of the Currency, which regulates national banks, have released alerts to the banks they regulate. The alerts warn banks to be on guard and confiscate any documents that the debtor presents and send a suspicious activity report to the FBI.

Whether it be out of desperation where the debtor is ignorantly convinced that this is the answer to their money woes or out of unethical irresponsibility where the debtor simply didn't want to pay back borrowed money. It is a sad commentary on our society that debtors resort to tactics of this nature.