File Segregation is not a Viable Solution

Often people do not worry about their financial situations until they are in trouble. When debt levels have risen to incredible heights and monthly payments can no longer be made then panic begins to set in. This condition grows steadily worse as accounts become past due, collection agencies begin to call, and in some instances bankruptcy is filed. At this point individuals are desperate to find a solution to their financial problems and they are often vulnerable to the amazing claims being made by a handful of disreputable credit repair companies. These companies claim to have the ability to erase bad credit and wipe an individual. s slate clean through a process called file segregation.

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File Segregation is illegal and should never be considered as a legitimate option. Unfortunately it is often portrayed in quite a different light. There are companies that will present convincing arguments that this procedure is completely legal and they are actually affiliated in some capacity with the Federal Government. These companies will claim that you are entitled to receive a new social security number. At this point you are instructed how to go about receiving a number called an EIN. These numbers look similar to SS numbers but are actually used by businesses for tax purposes. Once you have obtained an EIN you are told to use this number each time you apply for any kind of credit. They will often tell you to use an alternate address as well. In affect what they are doing is trying to trick the system into believing that you are a different person. At times these credit repair companies will even provide individuals with credit references to use for their new identities.

The problem with this technique is that not only is it highly illegal but the unknowing individual can be held legally accountable. The consequences can be even worse if you use the US postal system or the telephone to apply for new credit. In these cases charges of mail or wire fraud may apply. Ignorance is no excuse for breaking the law. Beware of this scheme and do not fall for the impressive sales pitch and the big promises. Remember, there is no quick way to regain solid credit. This comes through time and financial responsibility.

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About the author:

Mark Carney is a professional consultant with First American Debt Consolidation and Loans, a debt consolidation service specializing in financial education, credit counseling, and debt management services nationwide.