You open your mailbox and find what looks like a legitimate summons from your local bankruptcy court. Since you never filed for bankruptcy, you wonder if maybe the court has made a mistake. Unfortunately for the people who have experienced this, the summons from bankruptcy court was real.
Victims of this scam often show up to court perplexed. Many are facing years of financial troubles far beyond what they were already experiencing before they were scammed. Poor credit ratings will also haunt them for years to come.
How can filing bankruptcy for someone else be beneficial for a scammer?
How the Scam Works
Bankruptcy petition mills pop up everywhere and they have been taking advantage of people since the 1980s. These con artists often target non-English speaking or low-income folks who are experiencing financial hardship. They pose as paralegals, attorneys, consultants, renter service agencies, or credit advisors and offer a variety of fake services to people, including eviction assistance, overnight credit restoration, or other types of financial help. The scammers convince their victims that they will guide them toward a better financial situation.
The perpetrators collect information about their victims and charge steep fees, promising to help the victim get out of a difficult financial situation. Of course, they never come through with their promises. Instead, the swindlers take as much money from their victims as they can, delay any legal processes possible, and then disappear when the money dries up and their victim’s credit is completely ruined.
Often, individuals and couples unwittingly reach out to petition mills in desperation. The fake companies claim to help delay the eviction process or decrease or consolidate debts for their victims. The fraudsters advertise their services to people who need them using postcards or flyers as targeted mailings. A simple public records search can quickly and easily discover people who are in the process of being sued for financial reasons. Beware: these scammers also advertise in newspaper ads and even on websites that seem legitimate.
But, Why File Bankruptcy Fraudulently?
Many people wonder why these criminals would file bankruptcy for their victims. How does filing bankruptcy help them steal money or resources from their victims? Bankruptcy is a stalling technique for eviction. The automatic stay, which stops creditors from collecting from the debtor the moment a bankruptcy petition is filed, also delays eviction. If the scammer promised credit repair service to the victim, the victim believes they are working on their credit because the automatic stay of the fraudulently filed bankruptcy makes the creditors stop calling and sending threatening letters.
Of course, filing a bankruptcy petition without the individual’s or couple’s permission is illegal. It is bankruptcy fraud. But, these scammers are here today and gone the moment they think there might be trouble - or when the money runs out, whichever comes first.
Typically, the fraudster will attempt to muddle the bankruptcy petition with deceptive information and actions meant to drag out or delay the proceedings. Unfortunately, proving bankruptcy fraud takes up government resources and time. In the meantime, the victim is suffering more financial pressure, as the scammer most likely charged the victim hundreds, or worse yet thousands, of dollars in fees.
Tips to Detect Bankruptcy Petition Mills
People usually do not reach out for financial assistance until they are at their wit’s end and drowning in debt. Even the savviest of people can be conned by perpetrators who have worked hard to perfect their scams. The following signs will help you determine if you are working with a petition mill:
- No matter how many times you ask, you are not transferred to speak to a bankruptcy attorney on the phone - ever.
- You never meet with the representative in their office. They will insist on meeting you at your house or somewhere out in public.
- The representative tells you that their company files a ton of bankruptcy cases every month.
- You always talk to “office staff,” instead of a real attorney.
- The company advertises overnight or immediate bankruptcy filing. Preparing the schedules for bankruptcy accurately takes time.
- The representative promises that your credit will be restored immediately.
- The company leaves you to attend meetings and hearings for your bankruptcy alone.
If someone helps you fill out your bankruptcy paperwork, you should never tell the court that you prepared the paperwork on your own. This is yet another type of bankruptcy fraud. A scammer charges a victim a hefty fee to prepare the bankruptcy documentation and then instructs the victim to tell the court that they filed the petition on their own. Any discrepancies in the bankruptcy petition are then solely the responsibility of the victim, and the victim can be charged with bankruptcy fraud.
It is crucial to do your due diligence and only hire a reputable and established bankruptcy attorney if you are experiencing financial hardship. A petition mill could cause you further financial strain and land you in legal trouble, as well.
Are You Considering Filing For Bankruptcy?
If you feel bankruptcy is the best option for your financial situation you need to speak with an experienced bankruptcy lawyer as soon as possible. Please contact us online or call our office directly at 888.348.2616 to schedule your free consultation.