Debt Elimination

Methods and Dangers of Debt Ellimination

In one short sentence debt elimination is no more than a hoax set up to lure people who are overburdened with debt into paying out yet another lump of money to a company who will not help them one bit.

The Approach

The "theory" behind debt elimination is that your accumulated debt is not legal, based upon a few laws like the Fair Debt Collections Practices Act and The Fair Credit Billing. This sounds very good, but what happens when you purchase something with your credit card. Let's say you're in a local mall and they swipe your card and hand you a receipt. You now have two options. You can sign the receipt and take what you bought or not sign it and leave the stuff there. The fact that you signed it means that you acknowledge and accept the fact that you are now a debtor of the bank. If the bank asks you for 60% interest that is illegal, but the fact that it asks for its money back is not.

The Lure

The lure is usually an email. Is it not interesting that you have never seen an ad in TV stating that a corporation will just erase your debt from history? These emails are just designed to lure your money to a company, erase them automatically. You may also see ads on websites or pop-ups.

The Solution

Strictly speaking, there may be legal ways to eliminate your debt, but you are better off speaking with a lawyer who specializes in finance. This is because you yourself may have one or two debt sums that may be illegal and this can be helped by a specialist's advice. Don't really count on erasing the whole thing, but you may receive some sort of help. This advice really only applies to companies, as legal action is much more varied there, debts may not be so clear and clean, with individuals this is rarely the case.

Another solution would be to use debt consolidation. This is a very legal and very clean way, but it still holds some dangers. A consolidation loan means that a bank will pay all your debts, in turn you will have to pay the bank. Effectively the bank is just a middleman between the creditor and the debtor. However, you may find that overall you get a better interest rate and maturity from the bank and of course you don't need to keep track of all your loans. Beware of the dangers of this, it is not a magic solution. Be sure to receive better terms than without consolidation, if you are overburdened, the time needed to look after each debt is a small price to pay if you would get a really bad deal!

If you can't consolidate, the best solution is to just get on with it and pay your debts. The best way to get out of a bad debt situation is to pay on time and regularly. This may impose a worse burden on you, but will keep your credit report spotless and enable you to be in a better situation after maturity, than when you started.