Watch Out for ” Freedom-Financial” — another enterprise that says they will get you out of debt when they make money by getting you deeper in debt.

You get an email soliciting you to call or submit information. If you don’t look at the return email address you might think it was coming from a licensed company. It even has a “Disclosure box” at the bottom name-dropping various banks and financial entities to make it look good.

First of all, this is probably a fishing expedition to steal your financial reputation and identity.

Second, even in cases where they provide “credit counseling” they might make money from such services (paid by the banks) but in all probability they are looking to originate a new loan that “consolidates your arrearages on other “loans” (whether they exist or not).

Third, they will lure you into asking for extra money and thus increasing your debt. This sometimes includes presenting you with a settlement statement that includes far more than they thought you owed including creditors you never heard of. If you sign the papers, here is what happens:

  1. The old creditors might or might not ever get paid. If you do not get proof that the company offering these “services” is authorized by a bona fide creditor (see below for definition) then the entire deal is irrelevant and you still owe the old creditor in addition to having issued paper that is at least enforceable on its face to the new “entity.”
  2. The new creditors you neer heard of will get some fee or might not get paid either. It could be the use of sham entities that get paid just for the purpose of creating multiple layers and fields of inquiry.
  3. The party offering you this deal will get paid an absurdly high fee for selling this financial product. Payment will be indirectly from an investment bank operating through more sham intermediaries. The investment bank will issue securities that are bets or hedges on the performance of the deal without ever selling the debt — just like mortgages.

BOTTOM LINE: Consumers are food. Government agencies charged with protecting consumers are not doing their job. They’re looking for low-hanging fruit so that can announce meaningless settlements, get promoted, and then join the people against whom they brought regulatory action. And we the people, are letting it happen either because we don’t take note until it affects us personally or because we have some “ideology” that causes us to invoke “no government” when it is about our behavior and “more government” when it provides an opportunity to exercise power over people we never meant. The answer is to focus on real issues that cost us trillions of dollars as taxpayers and to vote for people that pledge to look out for the consumer and then vote them out of office when they breach their promise.

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