Because bankruptcy can stop creditors’ collection efforts, at least temporarily and sometimes permanently, and because bankruptcy laws are complex, fraudsters often target people in bankruptcy or those who bankruptcy might help.
Mortgage Rescue Scam. In this scam, the fraudster finds out who is having difficulty paying their mortgage. This is easily accomplished because a mortgage company starting foreclosure files a Notice of Default with the county recorder. The Notice of Default gives the borrower’s name and the property address. The scammer contacts the borrower and offers to help negotiate with the mortgage company. Sometimes a fee is involved; sometimes the borrower is told to send the mortgage payment to the scammer instead of the mortgage company. But nothing happens. The scammer keeps the payments and does nothing for the borrower.
Bankruptcy to Stop Foreclosure. In order to string out the monthly payments, thereby getting more money, the scammer might even file bankruptcy in the borrower’s name, without telling the borrower. This stalls a foreclosure for a few more months, but eventually the bankruptcy will be dismissed because the borrower isn’t aware of the filing and doesn’t participate in it. Not only does the borrower end up losing the house, she now has a bankruptcy on her record.
Contacting People in Bankruptcy. If you’ve legitimately filed bankruptcy, a scammer might still contact you, telling you they are from the court or the trustee’s office and that you need to make an immediate payment or your case will be dismissed. Usually these calls come after business hours so that contacting your attorney or the court directly is impossible.
Warning Signs. If any of the following happen to you, BEWARE. They might be legitimate but they probably aren’t.
- Someone offers to resolve your debts for a fee, payable upfront.
- They tell you to make payments of any debt directly to them.
- They contact you immediately after foreclosure begins or you’ve been sued by a creditor.
- They call themselves a “mortgage rescue service,” “debt resolution service,” “mortgage consultant” or something similar.
- They tell you to transfer your property out of your name and into a name they provide.
- They contact you after-hours.
If you have any questions regarding the bankruptcy or debt collection process, contact us.