17 Feb Can Bankruptcy Result in Identity Theft? Part II of II
In the first article, Identity theft was discussed when arising from the public disclosure in Bankruptcy Court Documents of confidential information. In this article, further discussion takes place on its ramnifications.
One may wonder what is the harm with disclosing such information on a person who just filed for bankruptcy protection. Afterall, their credit is shot and if they are in a pending bankruptcy, who can get credit anyways?
Well, there is lots of harm. To start, identity theft is one of the fastest growing crimes. The FTC estimates that as many as 9 million Americans have their identities stolen each year. In a typical bankruptcy, all the private financial information of an individual is public information except the social security number. Add the social security number to the mix and you have the perfect recipe for an identity theft. They can verify prior addresses, employment, debts, balances on debts, assets, prior income, etc. Without a social security number, all this information is meaningless. Add the social security number, and its like giving a thief the key to a bank vault.
And since in most cases Bankruptcy actually improves one’s credit, increases their credit score, and starts a floodgate of credit offers, the indentity thief couldn’t ask for a better set of circumstances. They dont need to sift thru trash, steal credit cards, photograph atm users, etc. Instead, a few internet clicks and they now have their new identity!
The crime takes many forms. They may create a quick picture ID to present if needed, and start obtaining new credit. Identity thieves may rent an apartment, obtain a credit card, or establish a telephone account in your name. They might book a vacation, buy a timeshare, gamble, obtain cash advances, purchase a car or boat. The list is endless, with maybe the only obstacle being limited credit availability due to bankruptcy. But again, Bankruptcy will not stop the credit cards from comming, buying a car, or purchasing a home. Bankruptcy usually makes this easier than before and may only result in a slightly higher interest rate.
In the case referenced in the last article, we will be requesting that the Bankruptcy Court order that the offending creditors pay for a credit monitoring service such as “Life Lock” for 10 years. Supposedly they guarantee against identity theft with a $1,000,000 guarantee. We will also request the court for additional damages for the client(s) to go through this mess, as well as attorney fees and costs.
So what does all this mean? You and your attorney need to examine every document filed with the Bankruptcy Court, especially proof of claims. Many of the proof of claims, especially those from credit unions, typically have confidential information that should not have been published. Generally, most courts allow for an immediate restriction of such information with the filing of a motion. Its also not your fault if this information is published. Always bring this to the Court’s attention to make sure this does not happen in the future and also so the Court can award the creditor to pay your attorney fees and not you.
Identity Theft should not be taken lightly. Just because a credit haphazzardly publishes confidential information about you to the world does not mean you need to sit idle and take it without recourse.
Written by Michael G. Doan
Bankruptcy Law Network (BLN)
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