Identity Related Bankruptcy Fraud

Identity Related Bankruptcy Fraud

Identity criminals frequently use the bankruptcy system. They may file bankruptcy using a name and Social Security number of a victim if they have been barred from filing additional claims. Or they may want the protection offered by an automatic stay of a bankruptcy without having the bankruptcy procedure associated with their own name. 

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Parents have sometimes used the names and Social Security number of minor children in bankruptcy protections, mistakenly believing this will not harm the child’s credit history. Sometimes, people file bankruptcies in the names of ex-employers, ex-business partners or ex-spouses for revenge.

Identity thieves often utilize the bankruptcy system to commit or further their criminal activity. Over ten percent of all bankruptcy cases in the United States involve fraud, according to the Justice Department. Many bankruptcies have an identity theft element. Generally, identity-related bankruptcy fraud is committed using a false name/Social Security number in order to avoid foreclosure or eviction.

The forms of identity-related bankruptcy fraud include:

  1. Filing for bankruptcy in the name of another person known to the filer
  2. Taking on debt under a false name and/or Social Security number and subsequently filing for bankruptcy
  3. Transferring property to another individual and then filing for bankruptcy using that person’s name/Social Security number to discharge the debt and putting the bankruptcy on that person’s record
  4. Filing for bankruptcy under a false name/Social Security number, using the information of someone not known to the filer
  5. Transferring a share of property into the name of a person who has a pending bankruptcy, using this to stop foreclosure proceedings once the pending filer is listed as partial owner
  6. Using a false Social Security number for purposes of identification when acting as a bankruptcy petition preparer

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