The Credit Card Debt Elimintion Program is based on the enforcement of federal consumer protection laws under the Fair Credit Billing Act (FCBA), the Truth In Lending Act, (TILA), Fair Credit Reporting Act (FCRA), Fair Debt Collections Procedure Act (FDCPA)as well as usury violations by the lender.

If you are considering a debt consolidation, read this first

"The ugly truth about why consolidation is a very bad idea."

• FACT: The so-called non-profit debt consolidation services make thousands of dollars from the money you do pay toward the settlement to your creditors.

• FACT: Your creditors will report the unpaid settlement portion to the IRS as imputed income and you will have to pay income taxes on the money you did not pay to the creditor through consolidation.

• What!? That is insane!

• Wait, it gets worse! The creditors in your consolidation agreement will continue to report your account to all credit bureaus as a bad debt that was never repaid. What incentive do you have to make any deals with them?

• Did you know that 98% of the people who qualify for debt consolidation programs never complete them? They can't afford to continue the payments and when they finally give up, they find that their debts are much higher than when they began debt consolidation.

• What if you just stopped paying? Gee, who ever thought of that? There are no more benefits or incentives to continue paying, the only thing you can look forward to is wasting more money until you realize it's hopeless.

If you are considering working with a company that does Arbitration, read this first

There are several companies marketing debt termination programs. The credit card banks continuously are finding ways to fight back. They are not idle. All this talk about them not really loaning you anything can be countered with clever legal chess moves. They are as tireless as we are determined, but they have a bigger stake - they are fighting for their existence. They do make small incremental gains and a good company will be able to adjust and follow procedure that is successful. A great number of the debt elimination companies use a process called ARBITRATION. An arbitration, as defined by the debt elimination industry, is the implementation of a series of legal correspondence sent to a credit card issuing bank in an effort to demonstrate a legal basis to petition for a relief of debt.

Upon completion of a series of correspondence and their related responses, the collected evidence is brought before an arbitration council in your area. Generally, a bank is unable to bear the burden of proof required to validate the debt in dispute as we have discussed above.  An arbitration is usually found in favor of the applicant, forwarded to the bank and an appeal for relief requested. However, this older methodology has several inherent weaknesses.

What are the problems with arbitration?  Initially, years ago, 5-6 letters were adequate to complete the process and Arbitraion worked.  The banks would discharge the debt.   Now, it is not less than 20 perfectly constructed correspondence, with their required acknowledgments, to overcome bank responses.  The banks are now, as of the end of 2003, ignoring arbitration findings and counter-suing the client.  If the client, bearing the burden and cost of a lawsuit, does ultimately win, the banks have begun sending an IRS form 1099c for the full aggregate amount of the cards disputed.  A federal tax liability is now due upon receipt. Consolidation, debt reduction and mediation companies, without exception and as a result of their processes, can and have caused this exposure their clientele.