Recognize These Credit Card Debt Elimination Scams


These are some too-good-to-be-true credit card debt scams that you need to be aware of. These could cost you precious dollars when you can least afford it and cause you problems without providing you with any credit card debt relief.

We’ll buy your credit card account from you.

Avoid getting cleaned out by credit card debt scams

Credit card debt scams

This appears to be the latest in a long tradition of fleecing credit card debt scams. Here is how it works. A borrower pays the debt elimination company several thousand dollars to buy their credit card debt from them, which usually totals over $10,000. Every credit card agreement states the bank can sell the account to another entity. So, the faulty rational goes, if the bank can do that, then you can do it. Since the debt is unsecured and now owned by a corporation, the credit card banks are forced to charge it off.

What this can very likely come down to for the seller, is one day standing before a judge in a civil suit filed by the bank or JDB, holding up a bill of sale for the credit card account. What do you think the judge will say about that document’s legality?

This is a classic let-us-take-care-of-your-debt-problem-for-you credit card debt scams.


Those recommending this say,” if you re-contract with a credit card company, you can eliminate your debt.”   Their version of re-contracting is sending a check, a novation, for $20, or some other nominal amount. On the check is written, “if endorsed and deposited this is payment in full for account number #### #### #### ####.,” or language to that effect. So by endorsing the check, as this rationale goes, your credit card company has re-contracted with you on your terms and your present balance is now zero. The net effect of this is that you are simply not paying your bill without establishing a legal defense for doing so.

Accept for Value and Discharge

This is also known as a redemption certificate or bond for discharge of debt. The background to this one is involved. It has to do with the origination of the United States’ present monetary system and the Federal Reserve Bank. It maintains that the corporate U.S. and its monetary system are in bankruptcy receivership. Since, goes the rationale, they are in receivership, the way to eliminate a debt is to accept it for value and discharge it with a document resembling a bond generated by the debtor. The Federal Reserve Bank and the Office of the Comptroller of the Currency have issued warnings about this type of “fraud” (their word). This approach could potentially cause a debtor criminal liability. This approach is frequently associated with the Patriot Movement and radical libertarians. Anyone who follows this route and then ends up in front of a judge or judge and jury would be hard pressed to master and explain the arcane events and principles upon which Accept for Value and Discharge is based, let alone win their case. Again, this puts you in a difficult position to defend should one or more of your credit card banks file a legal claim against you.   It will also distract you from demanding sufficient documentation of your alleged credit card debt, which the banks have difficulty doing.

Arbitration Awards in Your Favor

Many credit card agreements from the large national credit card companies have an arbitration clause in them. Typically it states that you AND your credit card bank agree to settle any disputes with arbitration, not court action. So, these debt-elimination scammers charge you thousands of dollars to present you with an arbitration award from a licensed arbitration firm that says you don’t owe any money on your account. They help you dispute your debt and then have the dispute arbitrated in your favor.

What could happen then is your credit card bank could then dispute and get an arbitration award against you. They could dispute with the facts that arbitration agreements typically specify the arbitration forum to be used, or specify that both parties must agree to the selection of an arbitration forum. Anyone who uses this strategy again risks having a poor defense for any eventual court action.

Then, there are the credit-card-companies-do-not-lend-money scammers.

These debt eliminators maintain that credit card banks, create checkbook money out of your signature and good credit and lend it back to you each time you use your credit card. This happens to be true. In essence credit card banks are using your signature to create and borrow “new money” or “checkbook money” from the Federal Reserve to lend to you, albeit at deeply discounted rates, especially when compared to the interest rates they charge. This is the basis of our nation’s fractional reserve banking system.

Here is Wikipedia’s definition of money creation.

With this rationale these debt eliminators help you eliminate your credit card debt for any amount or more depending on your level of debt and number of credit cards. Since, according to their rationale, your balance is zero, (i.e. the credit card banks lent you none of their own money) they have you stop paying your credit card bill and write a letter to your credit card bank(s) disputing the balance of each card. The Fair Credit Billing Act (FCBA) says the creditor must respond within 30-45 days with something more than a form letter or the debt becomes questionable. Typically the credit card company does not respond, and you have a legal reason not to pay the debt. The FCBA was intended to enable disputes over specific transactions. The validity of disputing the entire amount of a credit card account is open to interpretation. Also, it is important to draw a distinction between the checkbook money rationale and the FCBA dispute strategy. Simply disputing the amount of your balance and asking for a complete accounting is probably more effective than disputing it because the credit card bank hasn’t really lent you any of its own money. Remember the Federal Reserve allows it to create new money and lend it to you, as long as it pays back any principal collected from you.

In the past these firms have suggested you pay their fees with a cash advance from one of your credit cards, then have you wait a few months to dispute that card’s balance and stop paying the balance.   Typically, they help stop your monthly payments with form letters (written by them and sent by you) to your credit card banks disputing your balance. They also counsel you on how to handle collection calls and letters. This approach works, but not 100 percent of the time. Eventually you may end up in the arbitration mill run by some credit card banks to reduce their cost of handling bad debts. Where most of these companies leave you high and dry is at the arbitration claim and award stage and at the state court claim to confirm the arbitration award; or, if a credit card bank sues you outright for the debt which you have disputed, which these firms untruthfully maintain won’t happen when they sign you up.

Be careful you don’t fall prey to credit card debt scams.  The promise of credit card debt relief can be used against you.


  1. Susan says

    few years ago I enrolled with a company my $28 thousand debt owed on 7 credit cards. They made a new deal with the creditors, and from then on they made the payments. I never made another payment to any of the banks. The company handled all the collection calls and everything, and 2 of the banks sued. But the company I enrolled with just showed the attorney the paper work they had with the bank, and the both banks asked for dismised. Never heard any more from them. the way it worked caused my credit to go down, but it took me about a year get that fixed. When I enrolled everythin I was paying over $500 mo minimum payments. By the time it was all over, about 3 years, I saved about $18k in interest payments to the banks, and I would have still owed the $28k after 3 yrs of min paymnts. But this way, they charged me I think it was $10k, so I got rid of the $28k debt and didn’t have to pay the $18k in payments, so looks like there is $46k that went away for $10k. big load off my mind, so i way ahead, tho the crdit fixing was the part that was hardest, over now thank god. No more credit cards for me. lucky for me was a good compny and really did it for me.

    • says

      You are lucky you could afford $500/month. Most people who stop paying their credit cards do so because they cannot afford the minimum payments. They cannot afford to pay for monthly expenses and credit card debt. They have other debts, like a mortgage, car payment or education loans that use up any extra money.

  2. Susan says

    “Remember the Federal Reserve allows it to create new money and lend it to you, as long as it pays back any principal collected from you”. When and how do card holders get back any principal?

    • says

      That is the reality of the money system this country runs on. That is also why it is easy for credit card banks to plan ahead for a certain percentage of accounts to go unpaid. When the debt goes bad, here is no collateral to chase after.

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