An amazing reader sent in a new debt relief mailer through my I Buy Junk Mail program.
This one is rather alarming. I doubt the average person would see through what I think is a smoke screen to understand what just landed in their mailbox.
From outside appearances the letter looks like some sort of legal documentation, maybe governmental with the use of the big eagle.
The envelope is even marked Legal and Documentation.
But the inside of the letter is a doozie in my opinion.
The letter leads off with a headline that if people didn't understand or miss the "RE:" would make it appear to be from the Department of the Treasury. As with many of these mailers that I write about, there is just enough to appear to be one thing but a disclaimer it is something else.
And I challenge anyone to determine who the company is behind this mailer. They identify themselves as Assistance Center. Can there be anything more generic?
This line sure seems misleading: "This letter is to advise you that, Pursuant to the Department of the Treasury Publication 4681, the IRS is now permitting tax-free credit card debt forgiveness for borrowers who are experiencing a hardship and deemed insolvent."
This is an IRS process that has been around for years. You can read the official IRS page on this, here.
The next underlined section is both a disclaimer and telling:
"It is important to note that Assistance Center is not a government or collection agency; this is not an attempt to collect a debt. The Assistance Center does not charge a fee for its initial consultation."
Well there might not be a fee of the initial consultation, but they don't say there are no fees at all. To me that means there will be fees.
Next is an odd line: "You do not need to be late to qualify for this hardship program, however late payments will expedite the qualification process." What hardship program are we talking about? If it is the IRS publication 4681, it does not say a qualification for income tax on forgiven debt is predicated on delinquency. So is the ever generic Assistance Center calling their pitch a hardship program?
The benefit section of the mailer reads like the typical debt settlement sales pitch and it proclaims the following benefits:
- An Immediate Reduction of Payments
- A Reduction of your overall Debt of up to 68 percent or more
- Complete Elimination of Your Credit Card Debt
- Finally put a Stop to Collection Calls and Letters with Debt Satisfaction
- Get This Debt Paid Off and Restore Your Credit Rating
Wow! So much alleged bullshit here. Let's go over it point by point:
- An Immediate Reduction of Payments - But this is typically accomplished by the commissioned sales rep of such marketing outfits asking what you can pay and then setting that as your payment. It is NOT a creditor approved reduction and generally tosses you into delinquency, collections, and potential lawsuits when you pay less than agreed to the creditor. And is the creditor even going to get paid? In most generic settlement program they will stop getting payments so the debt can be attempted to be settled.
- A Reduction of your overall Debt of up to 68 percent or more - There is no support to this statement and the Federal Trade Commission really frowns on this sort of claim. See this action against DebtPro 123 by the FTC over similar claims.
- Complete Elimination of Your Credit Card Debt - Again, this seems like a problematic statement that conflicts with the Telemarketing Sales Rule and limitations it makes on performance claims. For example, how many people who signed up for this program actually eliminated 100 percent of their debts. Actual performance results of such programs in general paint a much different picture. Click here to see overall results.
- Finally put a Stop to Collection Calls and Letters with Debt Satisfaction - I think this might be my favorite line of all because guess what, collection calls stop for everyone when the debt is satisfied.
- Get This Debt Paid Off and Restore Your Credit Rating - Wow! this mailer just landed in a nasty place. It sounds like it has now run into trouble with the Credit Repair Organizations Act (CROA) as the courts just recently ruled in another similar situation. Read this recent article
The following statement in the advertisement is interesting. Earlier the letter said you did not need to be late to qualify for the "hardship program" but here it says you need to call immediately "to avoid any possible legal action from your creditors." What legal action is a creditor going to take against someone who is current on their bills? The answer would be none.
In closing they say, "You need, and will receive, the full support of our organization to put this behind you for good." Only one problem with that. If they are so proud and supportive then why not actually disclose who they are and where they are located?
I would advise anyone who gets such a letter to follow my free guide on how to check out a debt relief company. See "The Ultimate Consumer Guide to Checking Out a Debt Relief Company Before You Sign On the Line" before you leap. An open and honest company won't hesitate to answer the questions in that guide.
This article by Steve Rhode first appeared on Get Out of Debt and was distributed by the Personal Finance Syndication Network.