In this day and age of online shopping, data breaches and automated loan approvals without even meeting a banker, identity theft is becoming more common than ever.
Anyone who has had their identity stolen knows that it can be extremely difficult or even impossible to get companies to stop pursuing you for a debt that is the result of identity theft.
They require proof that the debt is a result of identity theft, and often will still send the debt to collections after getting the proof.
- You may then have to prove to the collections agency that the debt isn’t yours
- You may even have to prove it in court
This is expensive and difficult, and it will be harming your credit rating the entire time.
So, does bankruptcy fix identity theft?
BENEFITS OF BANKRUPTCY AFTER IDENTITY THEFT
From time to time people call my offices in Minneapolis, St. Paul, Blaine and Brooklyn Park, to ask if you can file bankruptcy on debts that are the result of identity theft.
These people are usually at the end of their rope because they have tried everything else.
So, can bankruptcy fix identity theft?
- Bankruptcy works on debts from identity theft
- Bankruptcy is also useful when you don’t have a clear idea of who the creditors are
These debts are almost always dischargeable, and the creditors do not try to fight them in the bankruptcy.
- If you file for bankruptcy, then the companies saying that you owe them money will stop
At least in Minnesota, we can add new creditors to the bankruptcy even after the discharge order has been entered.
HOW DOES BANKRUPTCY FIX IDENTITY THEFT?
The debt must have arisen before filing the bankruptcy, and if it did, then we can add it indefinitely.
This is useful to victims of identity theft because sometimes you don’t know about all of the debts.
- Bankruptcy gives you some certainty that you can discharge whatever is out there, even if you don’t know about it
You can stop future identity theft by putting a fraud alert on your credit profile.
You won’t have to file a police report against anyone to discharge identity thefts in bankruptcy, which can be useful if it is a friend or family member who stole your identity.
Any sort of non-bankruptcy dispute over identity theft usually requires a police report, and many people understandably do not want to file police reports against their family; especially if the family member stole the identity out of desperation.
- I can also guarantee you that filing for bankruptcy will be cheaper than hiring a lawyer to dispute the debts one by one, or fighting them in court
- Filing Chapter 7 Bankruptcy usually costs less than $2,000 and can be completed in just 3 months.
WHY DOES BANKRUPTCY HELP REBUILD CREDIT AFTER IDENTITY THEFT?
Credit rating essentially measures how long it has been since something bad happened to a financial account with your name on it.
When your identity is stolen, there are lots of accounts with your name on them that are not getting paid.
Every month these accounts put a “late” or a “collections” on your credit report.
When you file bankruptcy:
- These debts are marked as “included in bankruptcy” or “discharged in bankruptcy”
This only happens once, so your credit rating will start to go up the month after the bankruptcy is filed
It is true that your credit rating will go down when the bankruptcy is filed, but this will only be temporary.
After filing for bankruptcy:
- You can get credit again
- You can get a mortgage 2 years after filing for bankruptcy
- Many clients tell us they have been offered other sorts of credit, sometimes even before their bankruptcy has been discharged
WHAT TO DO NEXT
If you’ve been the victim of identity theft, then why not not speak to us now at 612.824.4357 and see whether filing for Chapter 7 Bankruptcy is right for you?
We’ll give you all the help and advice you need.
Alternatively, fill out our free Bankruptcy Evaluation Form to see if filing for Chapter 7 Bankruptcy or Chapter 13 Bankruptcy in Minnesota is right for you.
We’re looking forward to helping you fix identity theft and become debt free.