Did you know that your credit card balance, no matter how large, is actually illegal? In fact, banks and credit card companies don’t have the authority to lend money or issue credit. By borrowing from the Federal Reserve, lenders use your signature when you open a credit card account to “create” money they lend back to you! You can’t owe ever truly owe the bank any money because they never really lent you their money in the first place. Pretty clever, huh?

This is very hush-hush information the banks and credit card companies definitely don’t want you to know. But I can show you how to legally eliminate your debt forever without paying a penny to your creditors -- and without filing for bankruptcy. My fee to teach you this system is only $2000 and if you want my one-on-one help it is only $5000. Don’t worry if you don’t have that kind of money. I accept credit cards, and you will be able to eliminate the fee when you wipe out your debt.

All right, so I don&39;t really promote or sell debt elimination programs. (I could probably retire in a couple of years if I did -- though it might be to a jail cell.) But if you got even a bit excited about my proposition you’ll see how enticing those arguments can be. And if you were immediately skeptical, then it will come to no surprise to you that debt elimination is not a “completely legal” easy way to wipe out your debt. Here’s what you don’t hear:

1. You may wind up with more debt when you factor in the debt elimination fee (usually several thousand dollars).

2. Debts you eliminated may come back to haunt you years after you complete the program. (And the company that sold it to you may be gone.)

3. You may have to file bankruptcy anyway.

4. The removal of an item off your credit report does not mean the debt is eliminated.

Debt elimination is not the same thing as credit counseling or debt settlement, which involves negotiating lower interest rates or a lower pay-off on your debt.

It’s true the Federal Reserve’s monetary policy – and the Federal Reserve itself – are controversial. I am also well aware that some consumers have had some success with these types of programs. Over the past few years lenders have been enjoying record profits, and they were willing to write off some challenged balances rather than get embroiled in lengthy and costly disputes.

But I strongly expect to see more of these programs challenged, for a number of reasons:

1. The Office of the Comptroller of the Currency has recently published a warning about debt elimination programs that has been distributed to member banks. A higher profile will lead to more awareness, and challenges to these methods. 

2. Many card issuers today have arbitration clauses in their contracts with consumers, which force consumers into an arbitration setting where a jury is less likely to be susceptible to one of the convoluted elimination arguments.

3. Issuers are suffering higher losses as a result of the credit crunch, and that means they are going to have to get more aggressive about collecting bad debt – including challenged debts -- or face disgruntled investors.

Don&39;t just listen to me. Here are just a few others who are warning about these scams:

The Federal Reserve (I know, the debt elimination folks will say they are not telling the truth but it&39;s only fair to hear their side of the story),

The Federal Deposit Insurance Corporation (FDIC),

Debt settlement expert Charles Phelan, the

Better Business Bureau...and others.

In a future post, I’ll share an interview with a consumer who spent two years in a debt elimination program. In the meantime, I’d like to hear from consumers who have been involved in debt elimination. What has your experience been? Please be sure to tell me how long it’s been since you enrolled and the specific results or problems you’ve run into. How much did the program cost you? Where do things stand now?

As for how to legally eliminate your debt...I think you know the answer there, but if you&39;re still not sure, start here.

Gerri Detweiler – Personal finance author, radio host and credit expert. Gerri contributes budgeting, debt recovery and savings information online.