Beware of These Bankruptcy and Debt Collections Scams
The stress of mounting debts can be overwhelming. For someone already considering bankruptcy, the situation may be even more dire. They are likely much behind on payments, fielding relentless calls from creditors and seeking the best option for debt relief. Unfortunately, scammers prey on such people, often impersonating lawyers and government officials, although sometimes it can also be legitimate creditors tricking their debtors. From fake debt relief services to fraudulent collection attempts, these scams are not only overwhelming but can also worsen one’s financial situation. Let’s look at common bankruptcy and debt collection scams and how to protect yourself.
Fake Debt Collection Scams
One of the most common scams involves fraudsters attempting to collect debts that don’t exist or those that have already been paid off. The scammers may claim to represent law enforcement, government agencies, or even attorneys threatening lawsuits, wage garnishment, or even jail time to appear legitimate. You can protect yourself in the following ways:
- Never pay someone who contacts you out of the blue, especially if they demand immediate action or unusual forms of payment like cash, gift cards, or other online/mobile payments systems such as Venmo, Zell, Cashapp, bitcoin, etc.
- Always insist on written verification of the debt. If they refuse, it’s a red flag
- Avoid sharing personal or financial information, such as your Social Security number or banking details
- Verify the legitimacy of the debt by contacting your original creditor directly, or better yet, consult an attorney to guide you.
Debt Relief Service Scams
Debt relief scams often target people with significant credit card debt, promising to negotiate with creditors or settle debts for a percentage of what’s owed. Many charge hefty upfront fees but fail to deliver on their promises or disappear altogether. To protect yourself:
- Be cautious of anyone guaranteeing quick fixes or claiming to have “secret” methods to eliminate your debt. Remember that if an offer seems too good to be true, it probably is
- Avoid companies demanding upfront fees before providing services
- Consult a reputable attorney or financial advisor before signing any agreement or paying for debt-related services.
Post-Bankruptcy Scams
Scammers also tend to target individuals after their bankruptcy is discharged, claiming that certain debts were not included and require immediate payment. These scammers may claim to be from the court, attorneys, or bankruptcy trustees. Keep in mind the following to protect yourself:
- Your attorney will never ask for post-bankruptcy payments without prior discussion
- Always verify the person claiming to represent the court or your attorney
- Contact your attorney if you receive suspicious demands for payment related to your bankruptcy.
Credit Repair Scams
Another common bankruptcy scam is a credit repair scam. Unfortunately, people seeking to improve their credit scores quickly fall for these scams. Here’s how you can protect yourself:
- Understand that credit repair takes time; there are no overnight fixes
- Consult your attorney for guidance on how to improve your credit legally and effectively.
How to Spot a Debt Collection Scam
Some common red flags of a bankruptcy and debt collection scam involve debt collectors who:
- Refuse to provide their name, company, mailing address or phone number
- Can’t verify the debt they claim you owe
- Use threats of arrest or legal action to intimidate you
- Ask for sensitive personal or financial information.
Contact a Lehighton & Carbon County Bankruptcy Attorney
If you’re facing debt challenges and want trusted guidance, contact our Lehighton & Carbon County bankruptcy attorney at The Law Office of Adam R. Weaver. Esq., today to schedule a consultation.
Source:
uscourts.gov/court-programs/bankruptcy/bankruptcy-basics/discharge-bankruptcy-bankruptcy-basics
