Someone Filed Bankruptcy in My Name: Identity Theft and Fraudulent Bankruptcy

It’s the sort of surprise that’s never welcome: you open the mail and receive notice of a bankruptcy filing that you didn’t make. Why would anyone file a bankruptcy in someone else’s name? After the shock wears off, you may find that this is just the end of a long trail of identity theft. Someone has used your identity to rack up a huge debt and is now using bankruptcy to erase it.

This is not a common scenario, but it does happen. Because of the reporting requirements and creditor meetings needed under the Federal Rules of Bankruptcy Procedure, it’s more likely that you’d learn of identity theft before someone has the chance to complete a bankruptcy. If it does happen, you’ll have two issues to deal with: the criminal identity theft and repairing your ruined credit.

As frustrating as it may be, this is a situation that can be fixed. Unless you have a strong understanding of the laws involved, it’s a good idea to speak with a skilled bankruptcy lawyer for help.

Identity Theft, Credit Fraud, and Bankruptcy

In identity theft, a thief or thieves acquire your personal information (Social Security number, birthdate, etc.) and use it to obtain credit cards and other lines of credit. In some cases, they may even purchase cars, boats, and other items using your information with fraudulent names.

Identity theft can result from any number of sources. It can involve family members or close friends who use your information without your knowledge, or someone you gave permission to begin with before things got out of hand. Another common example is a person using a spouse’s credit card and, after maxing it out, opening new cards in the spouse’s name.

Although rare, some bankruptcy filings are honest mistakes from a transposed number or mistaken identity. Credit reporting agencies may mislabel your file, especially when accounts are repackaged and sold to new creditors. Regardless of how it comes about, you’re the one who ends up facing a bankruptcy you did not file, with your credit report is at risk.

Protecting Your Identity in a Fraudulent Bankruptcy

If you receive a bankruptcy notice or learn that someone may have filed for bankruptcy with your information, you must take immediate steps. While credit damage is awful, you need to show that you didn’t commit fraud by obtaining all this debt and then filing bankruptcy to avoid payment.

A good first step is contacting a bankruptcy attorney for legal advice. Given the complexity of the laws involved, it’s smart to seek legal assistance for anything related to bankruptcy law. Until you can speak with an attorney, take these immediate steps:

• Place a fraud alert on your credit reports: You only need to contact one credit bureau, as they share information. If you use a credit report tracking app, it may have a fraud alert form. The initial alert lasts for one year and makes it harder for any identity thief to open another account.
• Request free credit reports from all credit bureaus: You can receive one free report per year. Review all your accounts and public records for any fraudulent items.
• You may want to consider a credit freeze: This prevents anyone from accessing your report or making any credit applications. A credit freeze is often stronger protection than a fraud alert.
• File an FTC Identity Theft report: IdentityTheft.gov offers an online affidavit to declare that you are a victim of identity theft. This also serves as an official federal record. Fill out the form and print several copies, which you’ll need for future action and to send to the bankruptcy court.
• Contact your local police department and file a police report: You will need the FTC Identity Theft report, copies of your credit reports, and other evidence showing someone has stolen your identity. Law enforcement may seem reluctant in some cases, but identity theft is a crime in all 50 states. Get the report.
• Contact the bankruptcy court: The filing will be on your credit report. Request case documents and the case number. Let the clerk know that this is a fraudulent filing, and ask how the court needs a report filed.
• Contact the United States Trustee Program: This is part of the U.S. Department of Justice. You’ll need their help to have the case dismissed.
• Document everything: Keep all your documents in a single file, or, if on your computer, in a separate flash drive. Make copies of all documents. Keep a timeline of everything you find and everyone you talk to, with phone numbers and titles. Archive all emails and texts.

Don’t ignore any notices from the court. Respond immediately by phone and in writing that the filing is fraudulent. Make sure your bankruptcy attorney gets a copy of everything you receive.

Legal Issues With Identity Theft/Bankruptcy

If someone stole your identity and then filed for bankruptcy, you’re facing two similar but separate issues: the bankruptcy and your credit report. You must take care of the first before you can repair the second. If you mishandle the credit report, the identity theft can look criminal.

Bankruptcy Court

When a bankruptcy is filed, the court does not realize the filing is fraudulent. You must prove that the person who filed is not you and get the case dismissed or vacated. This is a job for a bankruptcy attorney. Even under the best conditions, the bankruptcy process is complicated. Both local and federal court rules make skilled legal assistance necessary to have a fraudulent bankruptcy vacated.

Make sure you give your attorney all the documentation you collected showing that you were the victim of identity theft and that you did not file the bankruptcy. The attorney may need additional evidence to show the court that:

• You did not acquire this debt yourself
• You did not give the real debtor permission to use your personal information
• You are not otherwise committing fraud

The attorney will submit the evidence you provided and file a Motion to Vacate. The judge will review the evidence, and if necessary, schedule a hearing. If the judge agrees and no creditors object, the judge issues an order vacating the bankruptcy. Get copies of the order.

The court removes your bankruptcy filing from PACER, the federal court filing system. This can take a few weeks, but once it clears, the filing is no longer part of the public record. The entire court process may take two to six months.

Fixing Your Credit Report

A fraudulent bankruptcy can cause serious damage to your credit report, which can make it difficult to get approval for auto and home loans. You may see debts “discharged in bankruptcy” on your report. If the bankruptcy is ongoing, you may see other “negative comments” on your report.

Once you receive the order vacating the bankruptcy, you should do the following:

• Send a certified letter with a copy of the court order, the FTC report, and the police report to each credit reporting agency, and a clear legal demand to remove the fraudulent bankruptcy from your reports. Your attorney can write the letter with proper statutory references.
• Dispute any individual accounts reported as “discharged in bankruptcy” by sending the same certified letter with attachments to the creditors. If the accounts were yours and you actually incurred them, ask that they be restored to their pre-bankruptcy status. If they are fraudulent accounts you never opened, demand that they be removed entirely from your credit report.
• Follow up in 30 days, which is the time credit agencies have to respond to and address your credit report. Most should do so when they see the court order. If they do not, you can sue under the Fair Credit Reporting Act. Ask for an updated credit report.

Asking to have a debt restored may sound odd, but it’s the smart (and legal) thing to do. A debt discharged in bankruptcy has a negative effect on your credit score, the opposite of what happens when you pay it off instead. You also need to demonstrate that you didn’t file this bankruptcy case to rid yourself of excess debt.

Get Legal Help From a Local Bankruptcy Attorney

Federal laws govern bankruptcy courts, but state law determines how individual bankruptcy cases are handled. When facing a scam bankruptcy, your best option is to work with an expert in state and local bankruptcy filing rules. Contact a bankruptcy attorney immediately to start the process of vacating the fraudulent filing and clearing your name.