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File Segregation - Adding Legal Problems On Top Of Debt

Like it or not, we all run into financial roadblocks once in a while. With the average American holding a balance of at least $7000 on his/her credit card, it's really unsurprising. And when debt levels start to grow, and the "minimum payment spiral" begins and hits a point where those payments can no longer be handled, things can get really tough. Certainly, the effects are only worsened when your accounts are past due, and you fear picking up the phone because it might be another creditor looking for money.


When you finally hit a wall, you are going to need help. Simple as that. There is certainly no shame in it, and it will definitely ensure your finances will be put back on track, albeit with some work. Some people choose credit counseling, others debt consolidation, others bankruptcy to handle these issues, each of which works for certain people in certain situations. What others may do, sadly, is quite illegal. It is called, in a lot of cases, "credit repair". This is also called file segregation, and it claims to "erase bad credit" and wipe your credit history clean. It is an option which can hurt not only your wallet, but could ensure you end up in jail!


Credit Repair - Some Firms Do It Illegally!

Although no credit repair firm will tell you this, file segregation is actual illegal. In fact, they will generally portray this in a different light, instead claiming that it is perfectly legal, and that you are entitled to receive a new social security number. This, of course, would mean you are starting clean. What they then do is instruct you as to the process of receiving an EIN number, which look similar to social security numbers, but are actually used by the business sector for tax reasons. Then, once you have your own EIN, they tell you to use this number whenever you apply for credit, possibly in conjunction with an alternate address. The goal here is to "trick the system" into thinking you are a different person than yourself (remember, the person who owes a lot of money in debt!). In some cases, these companies even take the fraud as far as to provide you with false credit references for your new identity.


Don't Risk Jail Time

The file segregation process is unbelievably illegal, and can land you in serious trouble. By attempting to "defraud" your creditors, you are committing an offense punishable by law. What's more, you could find yourself in deeper federal trouble if you use the mail or telephone to apply for new credit. You may find yourself with wire or mail fraud charges, which will ensure you'll be in jail for a long time to come.


So the next time somebody offers you the ability to "wipe the slate clean" or repair your credit, remember this article. Despite the claims a credit repair company may make, decide for yourself whether eliminating your debt temporarily is worth jail time. Probably not, we would say.


Having issues with credit card debt? Contact us here for free debt help. We may be able to provide you with the tools you need to consolidate your debt.

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