How to Avoid Bankruptcy-Related Scams

A number of companies and individuals take advantage of people who are in debt and currently deciding whether to file for bankruptcy. Falling for such a scam may make it harder to convince a judge to grant you a bankruptcy petition, and it can cost money that you can't afford to pay. However, you can avoid bankruptcy-related scams fairly easily. Here are tips.

Instructions

Difficulty: Moderately Easy

1. Avoid credit repair or credit counseling services that are not associated with established nonprofit organizations. Credit counseling services that charge fees to improve your credit and prevent bankruptcy are scams.
2. Think twice before using a typing service or bankruptcy petition preparer. Such scams offer to prepare your bankruptcy paperwork, but are notorious for the number of errors they make. Such errors can cause a judge to dismiss a petition, making it difficult to appeal.
3. Check to see whether a service is provided free or for a minimal fee before purchasing it for a hefty sum. A number of bankruptcy-related scams charge individuals for services that would otherwise be free, such as obtaining credit reports or finding a bankruptcy attorney.
4. Ignore offers to obtain credit, housing or loans aimed at those individuals going through or just finishing the bankruptcy process. Most of these offers cost a lot of money, but give you very little help.
5. Consult a bankruptcy lawyer during your petition process. Bankruptcy law in the U.S. is extremely complex, and scams arise out of debtors' confusion with the process. A knowledgeable lawyer can direct you through filing your paperwork.

Tips & Warnings

• You can often consult with a bankruptcy lawyer for free. Either check for free legal aid in your area or with an attorney to see if she will offer you a free initial consultation. Even one meeting can be enough to simplify your bankruptcy proceedings.
• If you were unable to avoid a bankruptcy scam, contact the fraud unit of your local police department.
• Any offer that seems like a cheap and easy way to make financial problems go away is likely to be a scam.
• Many scams purposely target individuals facing foreclosure and prey on fears of losing your home. Avoid such scams and cooperate with your lawyer and your mortgage lender to work through the issue at hand.
• Unfortunately, due to the nature of many bankruptcy-related scams, it may be difficult to get your money back, and your credit may suffer even more.