Love Scams & Bankruptcy

Arizona Bankruptcy Attorneys Take a Look At Filing Bankruptcy After Having Been Love Scammed

Some of the top reasons that people file bankruptcy in the United States are medical emergencies, divorce, credit card debt, and poor money management skills. But our lawyers have been noticing an increasing new, albeit less common, reason clients come to us for bankruptcy. Scammers have been around since the beginning of time, and the rise of the Internet has provided scammers many more opportunities to find victims. Sadly, some people see online dating as an opportunity to make a buck. In fact, the Federal Trade Commission reports that more than $201 million was lost in online romance scams in 2019. Perhaps in part due to the pandemic, this number increased to a whopping $304 million in 2020. Read on to learn more about the financial risks of love scams, and how bankruptcy may be able to help. 

Love Scams & Bankruptcy In Arizona

What Is a Love Scam?

Love scams occur when a scammer finds someone on the internet looking for love and creates a fake persona to develop a relationship with that person and have them send money. This may be through dating sites like Match and Plenty of Fish, but also through general social media sites like Facebook and Instagram. Targeted victims are usually in a vulnerable situation. For example, recent divorcees, the elderly, and people who have recently lost spouses are frequent targets of romance scams. The scammer will typically claim to be out of the country or unable for some reason or another- they may claim to be working in the military, on an oil rig, or on an international mission. Or they may claim to be unable to meet due to a medical or family emergency. Either way, they will continue to talk on the phone, send loving messages, and do everything possible to make the target feel like they are in a loving relationship.
 

There Are a Few Telltale Signs That Someone Is Involved In a Romance Scam. These Include:

  • Professing love early in the relationship

  • Needing money for a way to see the victim, like a plane ticket, customs fees, or a visa

  • Immediately wanting to move off of the site where they met, so they can message privately

  • Reverse Image search pulls up several profiles.

  • Requests to wire money, open a new bank account, or send gift cards for Visa, Amazon, etc. 

If you believe you or someone you know is being targeted for a romance scam, don’t let the scammer rush the situation towards “love” and sending money. Asking for money in an online relationship is a huge red flag. You should contact your bank and any stores or services you used to send money or gift cards to see if you can get anything you already sent back. You should also report your experience to the site where you met, and file a complaint with the Federal Trade Commission. 

Can Bankruptcy Help If You Are Victim Of a Love Scam?

The FTC reports that the median amount of money lost to romance scams is about $2,500. This might be enough to bankrupt some individuals, and some individuals lose far more to their romance scams. Romance scam victims who are 70 and older report a median loss of $9,475. Bankruptcy might be able to help victims of love scams in numerous ways. 

For those who qualify, Chapter 7 bankruptcy clears away several types of unsecured debts. For someone who has spent significant sums for a love scam on their credit cards, this can be useful. One caveat is that you must fall within a certain income level to qualify for Chapter 7 bankruptcy. Your income must either fall below the state median for your household size, or you must pass the Means Test. You should also make sure that your assets will be protected if you file Chapter 7 bankruptcy. 

When a debtor files either Chapter 7 or Chapter 13 bankruptcy, a legal protection called the “automatic stay” goes into place. The automatic stay freezes your assets, so they are protected from your creditors. This will prevent collection efforts like vehicle repossessions, wage garnishments, bank levies, home foreclosures, evictions at certain phases, utility shutoffs, lawsuits, and more. With few exceptions, the stay lasts until your case is dismissed or discharged. A Chapter 7 bankruptcy typically lasts 3 to 5 months, and a Chapter 13 bankruptcy lasts 3 or 5 years. This protection can be vital to someone who has recently lost several thousand dollars in an online love scam. 

Rebuilding Credit After Bankruptcy

One of your main concerns after a romance scam may be fixing your credit. How bankruptcy affects your credit will depend on its current status. If you have a decent credit score, you will probably see a sharp drop once your case is filed. But if your score is on the lower end, you may see very little effect, or even a slight improvement in your score. The effect can be more drastic in a Chapter 7 bankruptcy than a Chapter 13 bankruptcy. 

You can begin rebuilding your credit history even before your case has been discharged. Some dealerships work with lenders who specialize in bankruptcy clients, and you can finance a vehicle shortly after your petition is filed. You should start receiving new credit card offers in the mail once your case has been discharged. You can also open a secured credit card with your current banking institution. A friend or loved one may be willing to add you as an authorized user on one of their accounts to help increase your available revolving balance, and in turn increase your score. You will need to wait two years before you will qualify for a home loan. 

Have You Been Love Scammed In Arizona?

Have you or someone you love been the victim of an online romance scam? It may seem unfair to be left without a real partner and mountains of debt. But bankruptcy could provide a way for you to move on from this horrendous exploitation. Our experienced AZ bankruptcy lawyers will help you discharge your debt at discount rates with payment plan options you can afford. You may even qualify to be filed for zero dollars down. To learn more, call or use our online form to request your free consultation today.

 

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