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Beware Of Bankruptcy Mills Posing As Free Bill Help Companies

People fall behind on their bills for an assortment of reasons, including job loss and unexpected emergencies. If you fall so far behind you risk losing your home or other assets, you may be tempted to take advantage of the free bill help advertized by a local company. However, it's essential that you thoroughly check out this type of company, because some of them are actually bankruptcy mills. Here's more information about this scam and what you can do to avoid falling for it.

Bankruptcy Fraud

A bankruptcy mill is a person or company that—under the guise of helping customers stop bill collection activity—file bankruptcy petitions without the client's' knowledge or approval. These fraudsters typically pose as financial advisors, credit counselors, or even paralegals and claim to keep creditors from taking assets or implementing collection activities. They typically charge a fee for their services and disappear when people begin realizing they've been scammed.

How this scam works is the mill will ask clients to provide personal information (e.g. social security number) and to list the bills they need help with. They will then trick customers into signing bankruptcy petitions, or forge their signatures, and file the paperwork with the local bankruptcy court. The victims may not think anything is amiss, especially when the bill collectors stop calling, until they receive notices in the mail from the bankruptcy court. Even then, they may not realize the full extent of the scam until they arrive at court and the trustee or judge starts discussing their case with them.

Unfortunately, by this time, the damage caused by these bankruptcy mills is done and will affect the victims for a long time. Even if the case is dismissed, the record of the bankruptcy filing will remain on the victims' credit reports for up to 10 years, damaging their credit in the process.

Avoiding This Scam

It can be challenging avoiding this scam, especially since there are legitimate debt counseling and consolidation companies out there that do help people get a handle on their finances. However, you may be dealing with a scammer if the company

  • Charges large upfront fees for their services
  • Guarantees it can make debts disappear or end any and all collection activity but doesn't clearly explain how it accomplishes this feat
  • Refuses to provide any information about the service unless and until you provide your financial information
  • Has a dodgy, generic name such as Credit Helper ABC that seems more appropriate as a Twitter handle
  • Subjects you to high pressure sales techniques
  • Does everything possible to prevent you from actually reading the papers you sign or doesn't have you sign anything at all

If you are scammed by one of these outfits, it may be possible to sue for damages their actions caused to your finances. At the very least, you should consult an attorney as soon as you find out you've been taken advantage of. The lawyer can advise you on the best way to proceed to avoid making a bad situation worse. Click here for more information.