Jacqueline here, with AllClear ID. Discovering that you’ve been a victim of identity theft can feel like being hit in the chest by a load of bricks. You feel violated, overwhelmed and frustrated. Your finances are in shambles. Your credit report is littered with debts you didn’t accrue and the debt collectors might be starting to call. What do you do?
In situations like this it can be tempting to file for bankruptcy to stop collection calls and wipe the debts that aren’t yours off of your credit report, but this could be a mistake. Filing for bankruptcy might seem like the easiest solution to identity theft, but it carries many long term consequences that can be avoided.
Here are five reasons you shouldn’t file for bankruptcy after ID theft:
- You Are Legally Entitled to Have the Debts Removed– As an identity theft victim, you are entitled to certain legal protections. The Fair Credit Reporting Act requires that debts resulting from id theft must be removed from your credit report within 4 days of receipt of an identity theft report and other needed documents. Debt collectors may contact you about these debts, but if you inform them that you are a victim of id theft and that these accounts are fraudulent, then the debt collector must inform the original creditor and give you access to information about the accounts like applications and statements. Here is more information about dealing with debt collectors after ID theft from the Privacy Rights Clearinghouse.
- Bankruptcy Will Ruin Your Credit– After ID theft, you may think that bankruptcy is a good solution since it will quickly wipe away many if not all of the fraudulent debts, but bankruptcy has a downside; it will absolutely decimate your credit. Bankruptcy reports can appear on your credit report for as long as 10 years after you file. Additionally, bad credit can interfere with getting some jobs and qualifying for new loans like credit cards or mortgages. It will take time, but by working with the credit reporting agencies you can often restore your credit to the level it was before you became an ID theft victim.
- Bankruptcy is Expensive- Filing a complaint in bankruptcy court costs several hundred dollars in filing fees and other charges. Hiring a bankruptcy lawyer to help you with the process can easily push the dollar cost of filing for bankruptcy into the thousands. Restoring your identity after id theft can be expensive, but filing for bankruptcy is too.
- Reporting Your Crime Helps Law Enforcement and Others- Identity theft is notoriously hard to investigate and prosecute. Thieves use the internet and other techniques to disguise themselves and may be perpetrating their crimes miles away from their victims. Fighting your ID theft and reporting your crime to agencies like the FTC and the IC3 will help law enforcements find and stop identity thieves. This may also help others avoid id theft.
- AllClear ID Can Help– If you are the victim of id theft you might feel alone, but you’re not. There are many agencies and services ready to help you fight and restore your identity.
Members of our Free and Pro plans have an immediate connection to an AllClear Investigator. In addition, our Pro plan members have $1 million in id theft insurance and Complete Identity Repair.You don’t have to file bankruptcy; we can help. Other agencies ready to help you restore your identity after id theft include: ITRC (Identity Theft Resource Center), the FTC (Federal Trade Commission) and many others. Avoid id theft when possible, but if you are a victim, you do have options.
If you are a victim of id theft, bankruptcy might seem like the only choice – but it isn’t. With a little hard work and the right resources, you can restore your identity and get the debt collectors to stop calling.