Be Aware of Debt Elimination Scams and How They Work
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Be Aware of Debt Elimination Scams and How They Work

San Diego, CA - Debt elimination scams have been advertised on web sites like,, and for years. The debt elimination scams that were found on these sites provided debt-plagued consumers with a number of bogus tactics they supposedly could take to get out of paying debts.

These schemes are proliferating on the Internet, and the organizers are charging borrowers substantial up-front fees and commissions based on the total amount of debt that can be forgiven.
The Federal Reserve Bank warns consumers of various illegal schemes that purport to eliminate outstanding debt through the use of specially prepared documents. The organizers of these schemes concoct specious legal documents based on the borrower's debt, which are then presented to the borrower's bank, mortgage company, finance company, or other lending institution in an attempt to satisfy the debt.

The purported legal documents used in the current scams include fake financial instruments that claim to eliminate the borrower's debt obligation. Regulators warn consumers to be advised that worthless instruments entitled 'Bond for Discharge of Debt', 'Bill of Exchange,' 'Due Bill,' 'Redemption Certificate,' or other similarly titled documents, regardless of how such instruments or documents are titled or whether they appear authentic, they are worthless, have no legal validity, and are not payable through the United States Treasury, the Secretary of the Treasury, the Comptroller of the Currency, or any other federal or state agency.

Many of these schemes are premised on baseless or fraudulent claims against the United States Treasury. The instruments usually question the authenticity of financial obligations, and often refer to a specific government agency (such as the Federal Reserve) in an attempt to support their claims and some specifically refer to the elimination of debt through the use of a "Federal Reserve approved" procedure.

Debt elimination programs that claim Federal Reserve approval or acquiescence and the satisfaction of legitimate debts through the presentation of suspicious documents are totally BOGUS. The Federal Reserve does not approve and is in no way involved in any program aimed at eliminating anyone's debt obligations.
Borrowers who fall for these types of scams generally pay significant amounts of money without eliminating or reducing their overall indebtedness. Also, the Cessation of legitimate loan payments increases the risk of a foreclosure or other legal action that could be taken against the borrower, and it could also negatively affect the borrower's credit rating and score.

If you have a debt: 1.) pay it; 2.) negotiate it; 3.) or declare it in a bankruptcy. Importantly, avoid the ruse that somehow the debt is illegal because someone, for a fee promises to offer up some legal looking forms and documents. The FBI says. "...The perpetrators of these schemes offer to take advantage of 'loopholes in the system' that will eliminate your entire mortgage or other debts for an up-front fee. Don't believe it. There are no loopholes."

Should you come across debt elimination scams on the Internet or elsewhere, please consider reporting the details to the FBI by calling the regional office listed in your phone book.


About the ICFE:

The Institute of Consumer Financial Education (ICFE) was founded in 1982 by the late Loren Dunton (creator of the Certified Financial Planner (CFP) designation).  The ICFE is dedicated to helping consumers of all ages to improve their spending, increase savings and use credit more wisely. 
The ICFE is an award winning, nonprofit, consumer education organization that has helped millions of people through its education programs and Resources. It publishes the Do-It-Yourself Credit File correction Guide, which is updated annually. The ICFE has distributed over one million Credit/Debit Card Warning Labels and Credit/Debit Card Sleeves world wide.

The ICFE became an official partner with the Department of Defense/Financial Readiness Campaign in June of 2004.The ICFE was an active partner in the California Student Debt Resource Awareness Project (CASDRAP) which resulted in a new web site: (  CASDRAP disbanded in 2010, shortly after the web site project was completed.  In 2011 the ICFE assumed the single sponsorship of the ( web site and is now responsible for its content and operation.

The ICFE is also an on-line help for consumers who spend too much.  ICFE's spending help was featured in PARADE Magazine in the Intelligence Report section. The money helps and tips are from the ICFE's Money Instruction Book, our course in personal finance.

Visit the ICFE's other web sites at: and  Both sites helps consumers and students with mending spending, learning about the proper use of credit, budget and expense guidelines, how to set up and implement a spending-plan and also how to access financial education courses and how to teach children about money. Other ICFE services include: Ask Mr. G,  a free eNews, and an online resource center for students, parents and educators, plus financial education learning tools and a book store.

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