National Legal Debt Centers, Inc., Consumer Alert - Beware of Bogus Debt Elimination Scams

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Consumers need to know there are legitimate legal options available to avoid a bankruptcy.

National Legal Debt Centers, Inc. - Now that the holidays are over, many consumers are faced with excessive credit card debt and are being assaulted with numerous debt elimination scams.

Consumer debt is at an all-time high. A record number of consumers, more than 1.6 million in 2004, filed for bankruptcy. Whether your debt dilemma is the result of an illness, unemployment, or simply overspending, it can seem overwhelming. In your effort to get solvent, be on the alert for advertisements that offer seemingly quick fixes. While the ads pitch the promise of debt relief, they rarely say relief may be spelled bankruptcy. And although bankruptcy is one option to deal with financial problems, it's generally considered the option of last resort. The reason: its long-term negative impact on your creditworthiness. A bankruptcy stays on your credit report for 10 years, and can hinder your ability to get credit, a job, insurance, or even a place to live.

Also, be wary of any advertisement that offers to sell you a document you can use to "legally" eliminate an outstanding credit card balance or other debt, don't believe it. U.S. government and banking industry reports indicate a variety of schemes on the Internet and elsewhere promoting programs that, for a significant fee (sometimes thousands of dollars), fraudulently claim to enable borrowers to stop payments on a debt simply by giving the lender a specially-prepared document.

Many of these offers also cite false claims about the Federal Reserve System, U.S. currency or other federal or state government programs as the legal justification for their debt elimination program. The bottom line: These documents are bogus and a waste of money.

People are often confused between the various solutions to turn to when seeking debt reduction. What are your options when debts become overwhelming?

One of the biggest concerns is how is your credit affected. The truth is, if you are in financial distress, the first thing to handle is your debts. If your credit is impaired, it can be repaired later. But, the first priority is handling the overwhelming debt. Here are the options available, followed by a thorough explanation of each;

1. Hope for the best and do nothing

If your debts are unmanageable, this is no longer an option. There are always better alternatives then doing nothing.

2. File Bankruptcy

Bankruptcy is not always an option and, while it may eliminate debt in the most desperate cases, it can have disastrous long-term consequences that are worse than the current problems.

3. Use Consumer Credit Counseling

Consumer Credit Counseling organizations can help some distressed debtors, who can afford the minimum payments. If your debt is small, they can offer good advice, but often result in costing you 110% of your debt.

4. Debt Consolidation Loans

This is a secured bank loan or mortgage used to consolidate and pay off other debts. If your credit rating and assets make this possible, it may be an option.

5. Debt Negotiation and Settlement Program

If you have severe credit card debt problems, this is your best debt reduction option. It can reduce the stress and may drastically reduce what you owe through debt negotiation with savings to 70%. And, by retaining an attorney supervised firm, you can be assured your debts will be handled by a licensed professional. Find out if they charge a flat fee or contingency fee. Some charge a flat or fixed fee which is paid upfront and gives them no incentive to settle your debts later. A retainer and percentage of savings will be less costly and assure you get the best deal.

Contact: National Legal Debt Centers, Inc. http://www.nldc.us
References: Debt Reduction Alternatives http://www.nldc.us/debtoptions.html
Debt Elimination Scams - Fraud Warning http://credit.about.com/od/shamsandscams/a/082504.htmFTC
Consumer Alert:

Advertisements Promising Debt Relief May Be Offering Bankruptcy http://www.ftc.gov/bcp/conline/pubs/alerts/bankrupt.htm

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Jonathan Hernandez
NLDC
818-238-0036
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