Bankruptcy, Tax Returns and Identity Theft

Looking at the title to this post, I must say that those are not words I ever expected to be putting in one sentence — but then this morning happened.  Let me begin at the beginning.  Early this morning I got an email from a friend of mine with a link to this article:

http://krebsonsecurity.com/2014/03/experian-lapse-allowed-id-theft-service-to-access-200-million-consumer-records/

Evidently, some time ago Experian (one of the three major credit reporting services) bought a company called Court Ventures.  Now, from what I gleaned from Google, Court Ventures is a company that collects public record information on people.  I assume from the name that they tend to focus on court house type records.  Whether or not they are collecting Bankruptcy court records, I don’t know.  Regardless, many bankruptcy cases wind up being referenced in State Court files.  The most common reason for that is when a bankruptcy is filed and there is a pending state court case (a foreclosure, a collection case, anything like that), a Notice is filed in the state court case that the case has been stayed by the Bankruptcy filing.  This notice is sometimes called a Suggestion of Bankruptcy.  This notice includes the bankruptcy case name, case number, and the bankruptcy court in which the bankruptcy is filed.  So, if Court Ventures is collecting courthouse based public records, they are collecting bankruptcy filing notices — albeit indirectly.

Court Ventures then had a contract with another data collection company, US Info Search.  From them a Vietnamese man, who was in the ID theft business,  bought access to both US Info Search data and Court Ventures data — kind of the warehouse shopping model for Identity theft.  Ultimately, this Vietnamese man was able to sell to his customers access to names, Social Security numbers, dates of birth, addresses, former addresses, phone numbers and email addresses — among other things.

The article goes into considerably more detail, and it is quite interesting and well worth reading.  Still, you might be wondering what this has to do with tax returns and bankruptcy clients.  An increasingly common form of ID theft is to file a fraudulent tax return for the victim of the ID theft in an attempt to steal the victim’s tax refund.

Shortly after reading this article this morning I received an email from a Chapter 13 client of mine letting me know that she didn’t have her tax return ready quite yet.  You see, she was working with the IRS to unravel it, but evidently someone had filed a tax return for her in an attempt to abscond with her refund.

That got me thinking.  I wonder how many bankruptcy clients assume (rightly or wrongly) that their Trustee is entitled to their tax refunds, so when the refund doesn’t appear; they don’t go looking for it?  I have had a number of clients over the years receive correspondence from the IRS that they don’t understand (and that may or may not make sense to me), but they don’t follow up on it.  They don’t call the IRS and get them to explain something to them or ask what something means or why it happened.  They just assume.

So, don’t do that.  Nobody in Vietnam deserves your refund more than you do.

Elaine

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Categories: Bankruptcy, Credit Reports, Taxes | Tags: , , , , | Leave a comment

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