File Segregation Scams
You just exited bankruptcy and your feeling excited about your newfound freedom from debt. You know it’s going to take time and effort to rebuild your credit and finances but you feel it’s worth it. A few weeks after the glow starts to wear off you receive an “invitation” in the mail to repair your credit “fast” and “easy.” When you see those two words together a loud alarm should go off in your head because it’s usually the first sign that you’re looking at a scam.
One of the most common credit scams targeting bankruptcy debtors is the file segregation scam. The scammers claim that they can remove a bankruptcy and negative credit information on a debtor’s credit report by giving them a clean slate. But wait…didn’t bankruptcy already give the debtor a clean slate? Yes, it did; but what credit report scammers want you to believe is that they have some type of magical ability to make all of your past credit history poof, literally giving you a “blank” slate on which you can write your new pristine credit history. Sounds too good to be true? That’s because not only is it not true, it’s illegal.
These credit report scammers create a new credit file for the bankruptcy debtor usually using an EIN number (but sometimes a fake SSI number) not the debtor’s social security number and that’s how they get the new credit file sans all the credit history. The problem is that by creating a new credit report with an EIN number or fake SSI number, the debtor is engaging in fraud. Furthermore, it is not even necessary. It only takes a bankruptcy debtor a few years to rebuild their credit. Within 2 or 3 years of filing bankruptcy they can buy a new car or even a new house and that’s with the bankruptcy filing on their record for all to see. Creditors understand that sometimes it’s necessary to file bankruptcy, as long as you have shown a few years of consistently good credit behavior they are willing to work with you.