Bankruptcy fraud comes in many forms. One relatively unusual practice combines bankruptcy fraud with identity theft. In one case, a couple used the names and social security numbers of their infant grandchildren to run up debt, and then filed bankruptcy. In another case, a person used a stranger’s social security number to file a bankruptcy and delay her eviction. While these acts are federal crimes which can land the offender in jail, the victim of bankruptcy fraud faces an expensive and time-consuming road to rehabilitating his or her credit.
If you have been the victim of bankruptcy fraud, your first call should be to the U.S. Bankruptcy Trustee’s Office. The U.S. Trustee will refer the case to the F.B.I., and in many cases the U.S. Trustee’s Office will assist a victim of bankruptcy fraud. Unfortunately, the procedure for removing a fraudulent bankruptcy can take time. First, the bankruptcy case must be reopened. A bankruptcy case may be reopened “to administer assets, accord relief to the debtor, or for other cause.” Rule 5010 of the Federal Rules of Bankruptcy Procedure grants standing to the victim of identity theft to file a motion to reopen the bankruptcy case.
After the bankruptcy case is reopened, the victim must ask the bankruptcy court to expunge the fraudulent bankruptcy case. The victim must allege and prove harm done by the fraudulent bankruptcy filing. This will involve allegations of harm to the victim’s credit history, as well as the harm done to creditors and to the public by the false and misleading record.
Once the bankruptcy case has been expunged from the victim’s record, there is still the matter of repairing the credit file. The Fair Credit Reporting Act requires consumer credit reporting agencies to adopt reasonable procedures for verifying and maintaining accuracy of their records. Once a bankruptcy has been expunged, the FCRA requires the credit bureau to remove that record from the credit file.
Failing to take these steps to remove a fraudulent bankruptcy filing from your record can have lasting consequences. The bankruptcy is a public record that can be found by creditors and employers, and can only be expunged by the bankruptcy court. While the bankruptcy filing may be actually fraudulent, the credit bureau can report the false record for ten years, unless it is expunged.
If you have been the victim of bankruptcy fraud, report the fraud at once to the U.S. Bankruptcy Trustee’s Office. The bankruptcy trustee will investigate the fraud, and can assist you in the procedure to file the proper motions with the bankruptcy court.