How These Scams Work

• Credit balance write off scams offer you the chance to write off your debt, usually including your mortgage, car payment and other personal loans along with credit cards, in return for a fairly sizable fee. The reason people buy into this is the fact that the fee, which can be $2,500 or more, is far less than the total debt. In return for the money, the "debt help" company gives the consumer a form that supposedly clears all debts. The problem is that the form is worthless, and the consumer has no idea until the collection letters start coming.
  
  

How They Spread

• These scams spread in a variety of ways. The Internet is full of credit write off scams, and they often spread through email, often unsolicited. Sometimes free "get out of debt" seminars also offer these programs. Both of these formats offer anonymity. On the Internet, the consumer can rarely track the sender of the email or the website's human owner, and in the seminar, the presenter is long gone before the consumer realizes the setup is a scam.
  
  

The Risk to the Consumer

• These scams put the consumer at severe risk. Not only is the consumer at risk for collection action, as the mortgage provider and other lenders are not going to overlook missed payments, but it also puts the debtor at risk of federal fraud charges, according to CyberStreetSmart, an online safety website. Some of the get-out-of-debt scams have the victim file an improper motion to discharge their debt. Even though the victims file the motion at someone else's instruction, they are still guilty of filing an improper motion and can be prosecuted.
  
  

Other Common Credit Scams

• Another common debt-related scam is a debt-negotiation program. These companies charge high fees to "negotiate" lower credit card payments for you, promising to save you thousands. The company may or may not work with your credit card provider, but if they do they are charging you for something you can do yourself. Another scam is a fraudulent credit counseling company. These companies will take your money, sometimes in return for a little advice, but do nothing to help you with your actual debt problem.
  
  

Avoiding Scams

• The best way to avoid debt-relief scams is to pay your debts the normal way. Start making regular payments on time every month. Put your family on a budget so you can free up extra money to put towards those debts. If an offer comes your way, whether a credit consolidation offer or a debt write off plan, scrutinize it carefully. If it seems too good to be true, carries high upfront fees or does not have clear wording, do not fall victim. It is likely a debt write off or credit consolidation scam. If you need help, use one of the counselors registered with the National Foundation for Credit Counseling.