My Identity was Stolen, Will Bankruptcy Help?

TRI Writer • December 23, 2020

If you’re wondering if bankruptcy fixed identify theft problems, you’re probably in a pretty rough spot. Getting your identity stolen can cause financial (and emotional) ripples in your life for years after the incident. With the popularity of online shopping, the common-nature of data breaches, and the sheer accessibility of new loans through online lenders, identity theft, while still a major concern, has also  become a common one. If you’ve had your identity stolen, you know how difficult it is to get companies to stop seeking payment on fraudulent accounts. In many cases, collection companies and collectors require proof the debt is a result of identity theft. Sometimes, after receiving this proof, the collector will still send the unpaid debt to a collection agency. You may even end up attempting to prove the debt is not yours in court, which can be challenging (and expensive), and damaging to your credit rating in the meantime.  

What About Filing Bankruptcy to Avoid the Problems Associated with Identity Theft? 

Can you file bankruptcy on debts associated with identity theft? Yes, you can. Bankruptcy protection applies to debts resulting from identity theft, and can be useful even if you don’t have a clear idea who the creditors are and what they are owed. Debts associated with identity theft are almost always dischargeable, and creditors almost never try to fight them once they’re included in a bankruptcy filing. 

How Does Filing Bankruptcy After Identity Theft Help Me: 

  • Filing bankruptcy means the companies saying you owe them money will stop contacting you. 
  • Bankruptcy offers the chance to discharge almost any debt out there, even if you aren’t aware it exists (there are very few debts that are not dischargeable through bankruptcy, and they are very rarely involved with an identity theft case). 
  • Filing bankruptcy limits the access for additional fraudulent accounts on your credit. 
  • If you file bankruptcy, you don’t have to file a police report against the perpetrator of the identity theft (this is sometimes important in cases where the person who stole the identity is a friend or family member).

Bankruptcy Can Help Rebuild Your Credit After Identity Theft: 

When your identity is stolen and fraudulent accounts are opened in your name, they almost never get paid. Each month these bills go unpaid, they report negatively on your credit report as a “late” payment or “collections” account. The credit rating that creditors access to determine loan eligibility is at its roots a measurement of how long it has been since something bad happened to a financial account in your name. When you file bankruptcy, all current debts are marked with “discharged in bankruptcy” or “included in bankruptcy” at one time. Many bankruptcy petitioners see their credit rating start to improve the month after they file. When the bankruptcy is initially filed, the credit rating may go down (depending on where it was at that point in time), but after filing, the improvement begins. 

If you need to file bankruptcy due to identity theft , discuss your options with an experienced bankruptcy attorney. Don’t hesitate to call Kenneth C. Rannick P.C., Tennessee, and Georgia bankruptcy attorney. We help good people through bad times. 

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