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WARNING: The Latest Internet Scam is Credit Card Debt Termination.

Too good to be true because it is 100% False.
Consumers be warned- “credit card debt termination” scams are spreading like wildfire right now on the Internet. It usually goes by the name “Credit Card Termination or some variation on that name, and victims are paying thousands of dollars for this bogus service with the false belief that their debt will dissipate and their credit scored will not be damaged. By presenting a phony interpretation of banking and accounting laws, these con artists claim that they can legally terminate all of your credit card debt. They will go as far as hosting phony arbitrations and presenting victims with fake court documents.

This scheme has its roots in the income tax protest movement of the 1970s, where people were claiming that paying taxes was unconstitutional. Among professionals in the collection industry, the “Credit Card Termination” scam is called the “monetary protest movement.” The common theme with these programs is that our banking system prohibits banks from lending out their own money. So how does a credit card bank extend credit then? The protesters claim that the credit card agreement itself becomes a form of money the moment you sign it. Their premise is that the bank “deposits” your agreement as an asset on their books, and then any credit you use is offset as a liability against that asset. The scam promoters claim that all you need to do to wipe out your debt is demand your original “deposit” back from the bank, which will be offset against what you borrowed. THIS IS NOT TRUE or LEGITIMATE!! Just as the IRS shut down the tax protesters, the Attorney General’s Offices are actively prosecuting businesses and individuals for their participation in these fraudulent “debt termination” services.

Individuals in financial crisis may be tempted and lured in by the false promises and bogus testimonials advertised on the web pages of these, only to find themselves in worse trouble and greater debt. As I have advocated in other articles, investigate the credibility of any debt service providers you are considering. Are they licensed attorneys? Do they belong to the Better Business Bureau? Is there a physical office and address you can verify? Though you may feel stressed out, hopeless and think that things could not get any worse- trust me, get involved with one of these bogus “debt termination” scams and things will get a lot worse as your creditors, assuming that you have blithely ignored them, come after you.

As the Baby Boomer workforce faces retirement, personal debt will be a problem for many. Baby Boomers have earned the moniker “Sandwich Generation” as they are the first generation to face significant financial obligations for the previous generation as well as the future generation. Medical bills and assisted care for aging parents and skyrocketing education expenses are just a few examples of costs that will force a growing number of Baby Boomers to carry more debt into retirement. This debt will drain further an already underfunded retirement savings and force many Boomers to work longer or accept a lower standard of living.

The recession and weak economy have further hindered Baby Boomers in their quest to retire and enjoy the fruits of their lifetime of labor. 401K account balances have dwindled and have mockingly referred to as “201K’s”. On top of this, Social Security and Medicare will be going through many changes, which may further complicate future plans for Baby Boomers.

While most financial guides advocate the best way to prepare for retirement is to “save more money”, this advice is not particularly helpful or feasible for many Baby Boomers, given the financial realities they face. Neither are the traditional principles of curtailing spending or increasing earnings. 

* Save More – If they could, they would. Baby Boomers are the most driven and successful generation in terms of goal attainment and focus; patronizing, irrelevant advice such as this is both unhelpful as well as irritating.

* Spend Less – This works only on discretionary spending and is not particularly applicable to health insurance, medicine and medical care spending which is significant and ongoing for Baby Boomers caring for aging parents.
* Earn More – With soaring unemployment, organizational downsizing and cost cutting, it is more and more difficult for Baby Boomers to find paycheck which will cover their expenses and financial obligations AND fund retirement.

Most Baby Boomers ascribe to traditional values of honoring financial obligations and payments to their creditors, resulting in a highly stressful juggling act. Adding to the stress of the situation is the self imposed isolation; most Baby Boomers are ashamed to acknowledge, discuss or seek help with their debt.

If you are a Baby Boomer and have nodded in agreement while reading this article, let me ask for a few more moments of your time. There is nothing dishonorable about obtaining advice and assistance to manage financial hardship. If you are the sole supporter of your family, seeking help is the smart and responsible decision rather than suffering alone, letting the stress of the situation wear you down both physically and mentally. Recall airline safety demonstrations- place your own emergency oxygen mask on first before assisting your dependents.

“I feel like I can breathe again”, many of my clients say after learning about the debt relief options available to them. Legitimate debt relief providers, such as licensed attorneys and non-profit organizations, can give the information, guidance and planning individuals in financial crisis need to end the spiral of mounting debt and move towards financial wellness. Baby Boomers, make happiness the main ingredient in the generational “sandwich” of your lives.

(This report contains items about companies both in bankruptcy and not in bankruptcy. Adds Westland Devco in New Filings; Lehman and Barclays in Other Updates; Icahn’s Trump Entertainment in Briefly Noted; rental vacancy rates in Statistics; high-yield, high-risk debt issues in Commercial Debt Activity.)

By Carla Main

April 6 (Bloomberg) — Gems TV (USA) Ltd., the television retailer of gemstone jewelry products, yesterday sought Chapter 11 protection from creditors, citing as much as $500 million in debt. The television retailer of gemstone jewelry products, sought bankruptcy protection to sell its assets, after shutting down operations last month.

In papers filed in U.S. Bankruptcy Court in Wilmington, Delaware, the Reno, Nevada-based company listed less than $50 million in assets and said DirecTV was one of its largest unsecured creditors, owed $2.67 million.

DirecTV, based in El Segundo, California, the largest U.S. satellite-TV provider, asked a federal court last month to partially freeze Gems TV assets, the retailer said in a statement.

The company is seeking “an orderly liquidation of its assets,” Gems TV President Diane Schneiderjohn said in bankruptcy papers filed yesterday.

Schneiderjohn said the company’s “troubles were exacerbated this past year as nationwide economic conditions resulted in decreased discretionary spending.”

The case is In re Gems TV (USA) Ltd., 10-11158, U.S. Bankruptcy Court, District of Delaware (Wilmington).

For more, click here.

New Filings

New Mexico Developer Westland Devco Files Bankruptcy

Westland Devco LP, a New Mexico real estate developer, sought bankruptcy court protection after its lenders sued to foreclose on its assets.

The company, based in Albuquerque, New Mexico, listed assets of $361 million and debt of $198 million as of Dec. 31, in Chapter 11 documents filed yesterday in U.S. Bankruptcy Court in Wilmington, Delaware.

Westland owns 55,000 acres of real estate in Albuquerque, which it planned to develop into residential lots, according to court documents. The company hoped to subdivide about 19,000 acres of that land into 40,000 parcels to sell to homebuilders over the next 20 years.

Barclays Capital Real Estate Inc., a unit of London-based Barclays Plc, sued Westland in December, seeking to foreclose on the project.

The case is In re Westland Devco LP, 10-11166, U.S. Bankruptcy Court, District of Delaware (Wilmington).

Other Updates

New York Racing Appeal from Order Allowing OTB to File Chapter 9

The New York Racing Association has filed a notice of appeal from a March 22 order by U.S. Bankruptcy Judge Martin Glenn in Manhattan that granted the New York City Off-Track Betting Corp., or NYC OTB, permission to file for relief under Chapter 9 of the U.S. Bankruptcy Code, according to court files.

The Racing Association had objected to the request for Chapter 9 p

The Obama administration on Friday will announce a broad new initiative to help troubled homeowners, potentially refinancing several million of them into fresh government-backed mortgages with lower payments.

The escalation in aid comes as the administration is under rising pressure from Congress to resolve the foreclosure crisis, which has put millions of Americans at risk of losing their homes. But the programs are likely to provoke protests among those who have kept up their payments and are not in trouble.

A major element of the new program, according to several people briefed on it, will be to encourage lenders to write down the value of loans for borrowers in modification programs. Until now, modification programs have focused on lowering interest rates.

In another major element, the government, through the Federal Housing Administration, will refinance loans from borrowers who have seen the value of their homes sink below what they owe. More than 11 million homeowners are in this position, known as being underwater. That aspect of the plan would apply even to borrowers who have not fallen behind in their mortgage payments.

The investors who own the loans would have to swallow losses, but would likely be assured of getting more in the long run than if the borrowers went into foreclosure. The F.H.A. would insure the new loans against the risk of default.

Many details of the administration’s plan remained unclear Thursday night, including the precise scope of the new programs and the number of homeowners who might be likely to qualify.

This much was clear, however: the plan could put taxpayers at increased risk. If many additional borrowers move into F.H.A. loans, a new downturn in the housing market could send that government agency into the red.

The F.H.A. has already expanded its mortgage-guarantee program substantially in the last three years as the housing crisis deepened, insuring more than six million borrowers. Those briefed on the plan said the agency would receive $14 billion in funds from the Troubled Asset Relief Program, cash it could dangle in front of financial institutions as incentives to participate in the new program.

A third element of the White House’s housing program will require lenders to offer unemployed borrowers a reduction in their payments for a minimum of three months.

An administration official declined to speak on the record about the new programs but said they will “better assist responsible homeowners who have been affected by the economic crisis through no fault of their own.”

The plan would essentially supplant the government’s earlier mortgage modification plan, announced a year ago with great fanfare. It has resulted in fewer than 200,000 people getting permanent new loans. As many as seven million borrowers are seriously delinquent on their loans and at risk of foreclosure.

While fewer people are beginning default, the number of borrowers who are seriously distressed is rising. In the fourth quarter, the number of households at least 90 days past due on their mortgages swelled by 270,000, according to a report issued Thursday by the Office of the Comptroller of the Currency.

“The government is seeking to persuade people to stay in their homes by aligning the mortgage debt with the asset value, which is only viable path to real housing stability,” said one person briefed on the government’s plans. Several people who described the plans would speak only on condition of anonymity, since they had not been authorized to disclose details ahead of a White House briefing scheduled for Friday morning.

The number of foreclosures in the fourth quarter rose 9 percent, to 128,859. Another 38,000 owners disposed of their homes in short sales, where the lender agrees to accept less than it is owed. Starting this month, the Treasury Department is promoting new rules to facilitate short sales. Borrowers who are trying to sell their homes in short sales can also put off foreclosure for many months.

Both lenders and the Obama administration have been under pressure to save many of the homeowners now in foreclosure limbo. Bank of America, the country’s biggest bank, announced this week that it would forgive principal balances over a period of years on an initial 45,000 troubled loans.

Lenders began offering principal forgiveness last year on loans they held in their own portfolios. In the fourth quarter, however, this process abruptly reversed itself. The number of modifications that included principal reduction fell by half.

A person briefed on the plan said it was unclear how many of the 11.4 million underwater borrowers in the country would qualify for the new program, but the number could well be in the millions.

The administration recognizes that some people’s finances have deteriorated so far that they are beyond help, the person said. People in that situation simply cannot afford the houses they are living in, the person said, even if the mortgages were reduced to match the current value of the homes.

“All these programs are geared toward people for whom it makes sense, for whom it’s workable when all is said and done,” the person said. “Some people are too far gone.”

In the current economic environment, many people have fallen into debt. As the debts continue to multiply, the ability to pay them becomes virtually impossible. As the reasons and causes of the debt vary from each individual, so do the solutions. It is important to understand that Bankruptcy is NOT a one size fits all solution.

Contrary to popular belief, not everyone is eligible to declare bankruptcy. In October of 2008, the means test established by the 2005 Federal Bankruptcy Reform act was adjusted. This means test compares your income with the median average monthly income in your state to determine whether you are eligible to have your debts discharged in bankruptcy or whether you must participate in a repayment plan and/or file Chapter 13 bankruptcy instead of Chapter 7 bankruptcy. Median income figures were adjusted by the Department of Justice on October 1, 2008, altering the numbers at which you would be considered eligible for discharge of debt. If you have questions about these laws or the impact on your case, consult with an experienced bankruptcy attorney in your state who can provide you with relevant local information and rules.

While bankruptcy should be considered as an option, it should not be recommended immediately as the ONLY option. Without a detailed, personal financial analysis and application of the Federal Bankruptcy Means Test, it is impossible to truly know if the individual even qualifies to file bankruptcy. If a service provider instantly pushes for bankruptcy as the only solution- this should be a red flag to individuals that they may need to get a second opinion.

About the Author: Joseph M. Bochicchio, PLLC. is a licensed Charlotte, NC Bankruptcy Lawyer with nearly 2 decades of experience in finance and law. His Charlotte Debt Settlement Law Firm is committed to providing legal and ethical guidance for North Carolinians facing financial hardship.