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A Credit Line?

With Inflated Fees, Shaky Advice and Legal Troubles, All Some Debt Repair Agencies Hand You Is a Faux Fix


The commercial dangled an array of elixirs for the credit-impaired. Get a Visa card in 30 days. Repair bad credit. Declare bankruptcy, and--making this unique among the bankruptcy attorneys and credit repair agencies who clutter the airwaves--incorporate yourself in Nevada. I caught these ads in the wee hours of the night, when most skeptical and productive people are fast asleep, on programs such as "Strange Universe" and "Could It Be a Miracle?" They're the kinds of ads that almost everybody ignores. But who are the people who don't?

To find out more, you are invited to attend a free seminar. It was a door that opened into the twilight zone of credit repair, a shadowy world whose siren calls, dubious as they may sound, lure countless desperate souls.

The seminar takes place in a bland meeting room at a downtown hotel. There are about 100 chairs set up, which quickly fill as the starting time approaches. The crowd is pure melting pot. Projected onto a screen in front is a slide with the words "The American Dream," accompanied by an illustration of a smiling couple surrounded by a sailboat, a convertible and a big house.

Then, Ray Reynolds, general manager of Service Maintenance Awareness Systems and the man who would make all this possible, leaps to the platform. A bit heavy with a trimmed, reddish-blond beard and swept-back hair, he is hyped up in the way most minor-league motivational speakers are. His sharply dressed minions stand in the back of the room while one burly associate hovers nearby.

Just by being here, he says, you will be able to soak up "$4,000 worth of free information." As proof of his credibility, he rattles off feats of credit dexterity, which, he claims, were recorded by the L.A. Times, "That's Incredible," TV reporter David Horowitz and others. These feats run the gamut from the amazing to the absurd. For instance, he is certain that we all remember that news story about a guy who got a credit file and Visa card for his cat. "That was my cat," he boasts. "Sam Reynolds."

The room is filled with the financially distressed. Many, by a show of hands, are contemplating bankruptcy. "You're not bad people, you're just going through bad times," Reynolds assures them. Standing before the hopelessly debt-sick, he prescribes the medicine they would find easiest to swallow: more credit. Anybody, by careful application of simple techniques he will teach in his free workshops, can fatten their wallets with at least five unsecured credit cards in the next 30 days. Then, when they need money, well, he wants everyone to repeat the mantra, "Cash Advance." Bad credit can be erased in four months or less. How about a new, clean credit file?

He lingers on what appears to be the soul of the Ray Reynolds system--Nevada incorporation. It has dual appeal: end your credit problems and live like a millionaire. No income tax. No shared information with the IRS. Also, you can contemplate $100,000 in potential corporate credit. You get a new tax ID number, the ability to buy products at wholesale prices, yadda, yadda, yadda. There is talk of having your corporation take over your personal debts by lending you money at favorable terms.

And there are the perks. "I don't own that Mercedes out front," he says, dangling a chain full of keys. "But my Nevada corporation does. And do they let me drive it? You bet they do." Best of all, if your corporate credit persona goes the way of your personal one, nobody knocks on your door. "You drive the car you want. You live where you want. And if anyone sues you, they get diddly," goes Reynolds' version of the American dream.

After an hour of mouth-watering fiscal scenarios, Reynolds shifts gears. To attend these free workshops and be personally guided through his system ("You don't want to do these things yourself," he warns. "You'll just screw up"), you have to purchase one or more of his company's books or services. For $199, you get "How to Erase Bad Credit" and an audiotape. A hundred dollars more gets you two other books, "A New Credit File" and "How to Get Credit in 30 Days." At the high end, you can go for a Reynolds bankruptcy job--$599 for Chapter 7, $699 for Chapter 13.

The reluctant are urged to consider: "If you've already messed up your credit, what's one more bad mark?" And finally, the "dream of Nevada incorporation" can be had for the nominal fee of $399. He is "donating his time" because he's confident that the happily incorporated will keep him plied with referrals.

But unfortunately, this is to be the last opportunity to be mentored by the master himself. Tomorrow, the price will hyper-inflate and the workshops be taken over by underlings. And better move it because even this low rate is available only to the first 45 people. Cash customers receive their materials right away. Those paying by check will get them a few days later at the workshop. Finally this: the Wizard of Plastic does not accept credit cards.


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