Beware bogus 'debt experts.”

I ran across the following question and answer the other day while doing a little research. I just had to respond. But, beware, I'm biased. I'm one of those “murky” debt-elimination people.

Beware bogus 'debt elimination' companies

Question:

Dear Debt Adviser,
I keep getting e-mails about legal debt elimination. Could you advise if these kinds of e-mails are a scam or not? -- Harry

Answer:

Dear Harry,
Thanks for your question. Many people who find themselves overwhelmed by debt seek any means available to ease their anxiety and to help eliminate their debt. Many organizations out there are willing to take advantage of their plight. Unfortunately, my advice about the claims made by the debt-elimination companies fall under the category of "if it sounds too good to be true, it probably is."

Debt-elimination companies claim that they can eliminate your debt and that you do not have to make any more payments with no repercussions. Sounds good, huh? Too good! The bottom line alleged by these companies is that the debt that you have incurred using credit cards is not legal debt. The murky debt-elimination process is said to be based on information from Title 15 United State Code -- section 1692, the Fair Debt Collections Practices Act -- section 1601, the Fair Credit Billing Act and the Uniform Commercial Code -- section 203.

Debt-elimination companies, sometimes for a steep fee ($2,995 for one company), will send you materials explaining what they assert is your legal right not to pay your debt. Many of them promise to support your debt-elimination process with "experts" that understand the laws that pertain to credit card companies issuing you credit.

What is missing from the Web sites and advertising of these companies is that if laws are in place that make it illegal for a credit card company to extend you credit, why are there billions of credit cards in circulation? If these debt-elimination companies have found out that it is illegal for credit card companies to extend credit to consumers, don't you think that it would have come to the attention of lawmakers who would then enforce this law?

The saying, "there is no free lunch," comes to my mind. For those people who have accumulated credit card debt and are enjoying the sofas, clothing, artwork and other possessions that they purchased using credit, the time comes when you must pay for what you bought. Just because you may have overextended yourself and are now having trouble making payments to your creditors, does not mean you do not owe the money.

My advice to those who are receiving spam e-mail from debt elimination companies is to delete the messages and continue to make good on your promise to your creditor that you will repay your balances as agreed. You'll not only sleep better, but as my dad used to say, "You'll be building character!"

For those having trouble making debt payments, legitimate help is available to repay your debt, but not to totally eliminate it.

The Debt Adviser, Steve Bucci, is the president of Money Management International Financial Education Foundation and the author of Credit Repair Kit for Dummies. Visit MMI for additional debt advice or to ask a question of the Debt Adviser go to the "Ask the Experts", page to ask a debt question.

Posted Dec. 12, 2003

You're probably wondering why I take exception with this article. Several reasons.

The article is NOT based on fact; but, innuendo.

The argument:

Unfortunately, my advice about the claims made by the debt-elimination companies fall under the category of "if it sounds too good to be true, it probably is."

Based on what evidence? Where are the facts to support this advice? There are none. Mr. Bucci can't furnish them. His advice is a cliché disguised as expert opinion.

When Mr. Bucci does decide to offer evidence, it turns out to be bogus:

The murky debt-elimination process is said to be based on information from Title 15 United State Code -- section 1692, the Fair Debt Collections Practices Act -- section 1601, the Fair Credit Billing Act and the Uniform Commercial Code -- section 203.

The “murky” evidence offered is not relevant. Not even an incompetent scam artist would suggest his program is based on the section of the laws Mr. Bucci references. But, decide for yourself.

Mr. Bucci's first bit of proof:

§ 1692. Congressional findings and declaration of purpose

(a) Abusive practices
There is abundant evidence of the use of abusive, deceptive, and unfair debt collection practices by many debt collectors. Abusive debt collection practices contribute to the number of personal bankruptcies, to marital instability, to the loss of jobs, and to invasions of individual privacy.
(b) Inadequacy of laws
Existing laws and procedures for redressing these injuries are inadequate to protect consumers.
(c) Available non-abusive collection methods
Means other than misrepresentation or other abusive debt collection practices are available for the effective collection of debts.
(d) Interstate commerce
Abusive debt collection practices are carried on to a substantial extent in interstate commerce and through means and instrumentalities of such commerce. Even where abusive debt collection practices are purely intrastate in character, they nevertheless directly affect interstate commerce.
(e) Purposes
It is the purpose of this subchapter to eliminate abusive debt collection practices by debt collectors, to insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to promote consistent State action to protect consumers against debt collection abuses.

You will notice this part of the law has nothing to do with credit, debt, payments, or whatever. It is nothing more than an explanation as to why Congress created the law. Why did Mr. Bucci reference it? What was his purpose?

And his second bit of proof:

§ 1601. Congressional findings and declaration of purpose

(a) Informed use of credit
The Congress finds that economic stabilization would be enhanced and the competition among the various financial institutions and other firms engaged in the extension of consumer credit would be strengthened by the informed use of credit. The informed use of credit results from an awareness of the cost thereof by consumers. It is the purpose of this subchapter to assure a meaningful disclosure of credit terms so that the consumer will be able to compare more readily the various credit terms available to him and avoid the uninformed use of credit, and to protect the consumer against inaccurate and unfair credit billing and credit card practices.
(b) Terms of personal property leases
The Congress also finds that there has been a recent trend toward leasing automobiles and other durable goods for consumer use as an alternative to installment credit sales and that these leases have been offered without adequate cost disclosures. It is the purpose of this subchapter to assure a meaningful disclosure of the terms of leases of personal property for personal, family, or household purposes so as to enable the lessee to compare more readily the various lease terms available to him, limit balloon payments in consumer leasing, enable comparison of lease terms with credit terms where appropriate, and to assure meaningful and accurate disclosures of lease terms in advertisements.

You will notice this part of the law also has nothing to do with credit, debt, payments, or whatever. It is also nothing more than an explanation as to why Congress created the law. Why did Mr. Bucci reference it? What was his purpose?

Mr. Bucci's third bit of proof: Uniform Commercial Code – section 203.

Problem here is, the UCC consists of 9 Articles. Each of which has a “section 203.” Which one is he referring too? Which one does he disagree with? Why is Mr. Bucci so vague?

I don't really know what Mr. Bucci's intent is. I can only speculate. Experience tells me Mr. Bucci is attempting to sound like an expert, but isn't, and is using generalities and innuendo in hopes that no one will take the time to investigate his references or question his argulments.

There's an old saying: “When you can't dazzle them with brilliance, baffle them with bullshit.” You'll have to decide which is appropriate here.

Next Mr. Bucci uses the good ole “Texas Sidestep” made popular in the movie “Best Little Whorehouse in Texas”:

What is missing from the Web sites and advertising of these companies is that if laws are in place that make it illegal for a credit card company to extend you credit, why are there billions of credit cards in circulation? If these debt-elimination companies have found out that it is illegal for credit card companies to extend credit to consumers, don't you think that it would have come to the attention of lawmakers who would then enforce this law?

Sounds convincing doesn't it? Only problem, this isn't the argument most debt elimination companies use. In fact, quite the opposite. All debt elimination companies I'm aware of argue that the banks/credit card companies say they will extend you credit, lend you money, but in fact, don't.

Mr. Bucci makes a good argument - just the wrong one, at the wrong time, in the wrong place, and for the wrong reasons.

Then, in true propaganda style, Mr. Bucci reverts back to clichés (“there is no free lunch,” - “You'll be building character!”) and that one argument that all true card-carrying propagandists use as their “coup de gráce:” GUILT.

Of course, Mr. Bucci then offers you a solution: “For those having trouble making debt payments, legitimate help is available to repay your debt, but not to totally eliminate it.”

What is Mr. Bucci's solution? Read his bio at the end of the article. He is the president of Money Management International. A non-profit organization that helps people repay their debts. And best of all, their services are free to the consumer.

Sounds good doesn't it?

Here's what's missing. These non-profit credit counseling companies earn their money by getting you to pay your debt. They earn a commission from the banks. If you pay they make money – if you don't pay – they don't make money.

Basically, credit counseling services are nothing more than third party debt collectors hiding behind “credit counseling” laws so they won't have to comply with credit collection laws.

Bottom line, if all debtors eliminated their debt, which is perfectly legal, rather than paying their debt, these companies would be out of business.

Author: Jim Bullock
email: jsbullock@bullockpublishing.com
website: http://bullockpublishing.com/