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Consumer Alert: Bankruptcy can attract scammers

By the time that an individual or family in Michigan has made the decision to file for bankruptcy, they have often undergone years of financial turmoil and attempts to gain control of a worsening financial situation. Many will attempt debt consolidation and other measures to reduce their outstanding bills, often to no avail. In addition, consumers who are struggling financially will encounter a multitude of businesses who claim to be able to obtain loan modifications, credit repair and other connected services. While some of these businesses offer legitimate services, others are scams geared to defraud consumers on the brink of bankruptcy.

The recent arrest of one couple exemplifies the lengths to which some unscrupulous individuals will go to scam consumers out of their hard-earned money. The two are alleged to have defrauded consumers out of at least $120,000. The couple purportedly targeted Hispanic consumers, and advertised their 'services' aggressively. Among their claims was the ability to stop foreclosure proceedings, audit mortgage loans and assist with bankruptcy filings.

They are said to have charged clients up-front fees for services that were never provided. The criminal charges against them are in relation to orchestrating a fraud that targeted homeowners in financial distress. One of the pair was also charged with conspiracy to commit bankruptcy fraud for filing paperwork connected to fraudulent bankruptcies.

For consumers who are considering filing for bankruptcy, advertisements for these types of financial services may be tempting. It is not unusual for individuals to try everything in their power as they struggle to overcome their financial distress. However, once one's financial situation has reached a certain point, filing for bankruptcy makes good financial sense. Michigan consumers must take a long, hard look at any and all claims that promise to end financial troubles in return for fees, and understand that scams abound that will only serve to cost consumers more money at a time when they can least afford it.

Source: Imperial Valley News, "Couple Arrested for Loan Modification and Foreclosure Rescue Scheme," Oct. 1, 2012

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