If you have been the victim of a financial scam, you may be entitled to file for bankruptcy in a California court. The type of protection that you seek will largely depend on your income, if you own property or if you have the ability to repay your debts over a period of three or five years.
Bankruptcy entitles you to an automatic stay
One of the primary benefits of filing for bankruptcy is that you get an automatic stay of creditor collection activities. Putting such a stay in place can be ideal if you believe that someone acquired a debt in your name without your permission. This will prevent a creditor from taking your home, car or other assets while you work to prove that you were a victim of fraud. Of course, it can also be ideal if you were victimized by a shady credit counseling service that you worked with in an effort to repay legitimate creditors.
Filing for bankruptcy may actually help your credit score
It’s fairly common for debt relief companies to tell clients to stop making payments to creditors. However, this can be a mistake as it will result in several late or missed payments on your credit report. Filing for protection from creditors may enable you to get rid of these payments, which will likely result in a positive change to your credit score.
Tips for avoiding debt relief scams
It may be easier to avoid debt relief scams by doing a background check on any outside entity that you want to work with. It’s also a good idea to get testimonials from others who have used a specific service or who may have had help obtaining debt relief.
As long as you haven’t willfully engaged in fraudulent behavior, bankruptcy should be an option if you have been a victim of a scam. In some cases, it may be possible to have some or all of your debts discharged without losing property or losing the equity that you have accrued in an asset.