Identity Theft during Bankruptcy and How to Avoid It


No event in your life will uncover all your personal financial information the way bankruptcy does. By its very nature, bankruptcy entails you disclosing every asset and liability you have. Only then can the bankruptcy court administer your bankruptcy effectively. However, due to the high level of disclosure of such sensitive information, identity theft can very easily take place during and even after bankruptcy is filed. But the good news is that you can take some practical steps to avoid becoming a victim of identity theft because of bankruptcy.

Firstly, you should always have a copy of your credit score with you to see if any debts have been opened under your name without your knowledge or consent. Your credit score will show the debts under your name. Granted, if you file for Chapter 7 bankruptcy, these debts might very well be forgiven but still, you should know what debts are under your name and whether they are accurate. After all, if someone has racked up debts using your name, it is your assets that will be liquidated to pay off those debts. Obviously, you should not pay for these debts if you did not incur them.

Secondly, be careful to whom you divulge your financial information. Once you file for bankruptcy, technically you do not have to communicate with anyone other than the bankruptcy court and your bankruptcy lawyer. If any other party such as debt collectors approaches you, you can rightfully inform them you have filed for bankruptcy and tell them to contact your lawyer. If they ask you any questions about your finances, you are not obliged to answer them. By doing so, you reduce the chances of your personal financial details being leaked out to unauthorized persons.
Thirdly, you might want to consider a credit monitoring service. Such services are normally available through your bank or credit card issuer and will monitor your credit standing.

And fourthly, after you exit bankruptcy, you might very well receive offers from credit card companies or other lenders. Be careful – some of these so-called credit providers may be scams out to obtain your identity through fraudulent means. You should only accept credit offers coming from reputable lenders who have worked with discharged bankrupts before.

Finally, take all common sense steps to avoid scams like email solicitations of your personal details. Phishing scams commonly use email to obtain your financial details. You should never divulge such information online.


Published In: Bankruptcy Updates, Consumer Protection Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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