Bankruptcy Scam Operators Can Lock You Out of Your Home

1/24/2003

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Are you having trouble making your mortgage payments? Are you facing foreclosure on your home? Get all the facts before you pay someone to help you work out your mortgage problems. According to the U.S. Department of Justice (DOJ), "bankruptcy foreclosure scams" are targeting consumers whose home mortgages are in trouble. Scam operators advertise over the Internet and in local publications, distribute flyers, or contact consumers whose homes are listed in the foreclosure notices. The scam artist's appeal is sometimes directed to specific religious or ethnic groups.

The fraudulent operators may promise to take care of your problem with your mortgage lender or to obtain refinancing for you. Sometimes they also ask you make mortgage payments directly to them. They have even been known to ask the homeowner to hand over their property deed, claiming that if the homeowner then makes the mortgage payments to them, they will be able to in stay in their home. Instead of contacting your lender or refinancing your loan, the con artist pockets all the money you paid, and then files a bankruptcy case in your name - sometimes without your knowledge.

A bankruptcy filing often stops a home foreclosure, but only temporarily. If a bankruptcy is filed in your name but you do not participate in the case, the judge will dismiss the case and the foreclosure proceedings will continue. If this happens, you will lose the money you paid to the scam operator - and you could lose your house. You will also have a bankruptcy listed on your credit record for at least 10 years.

The Better Business Bureau, along with the DOJ, suggest you proceed with care if an individual or company:

  • Calls itself a "mortgage consultant," "foreclosure service" or similar name.
  • Contacts or advertises to consumers whose homes are listed for foreclosure.
  • Collects a fee before it provides services to you.
  • Tells you to make your home mortgage payments directly to the individual or company.
  • Tells you to transfer your property deed or title to the individual or company.

If you are having trouble paying your mortgage, contact you lender or an attorney for assistance.

If you think an individual or company is running a mortgage foreclosure scam, contact the Better Business Bureau and the Department of Justice.

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