Earlier in 2012, reports of a new kind of bankruptcy fraud, called “bankruptcy hijacking,” came to light, particularly in the Central District of California. Having your bankruptcy hijacked is a nasty situation that shows why hiring an experienced Las Vegas bankruptcy attorney is so important to your case’s success. Here is how bankruptcy hijacking works:
- Two sets of information are readily available: (1) all bankruptcy petitions are matters of public record that are available on PACER (Public Access to Court Electronic Records), and (2) land title records are also available online, especially to the real estate industry.
- Someone who is facing foreclosure contacts a scammer who has access to both these databases.
- The scammer then waits for a third party to file bankruptcy. He or she then takes the title documents for the property of the person who’s facing foreclosure and alters them by placing the petitioner’s name on all the documents. Now it appears that the bankruptcy petitioner owns someone else’s house.
- The scammer then forges a “Proof of Claim” in the petitioners bankruptcy fraudulently showing that the property belongs to the petitioner. Now the actual non-filing homeowner benefits from the automatic stay without filing bankruptcy.
- Neither the mortgagee bank nor the foreclosure trustee bothers to compare the fraudulent title documents with the actual ones available on the real estate database.
- The foreclosing bank then files a “motion for relief from stay” (even if the debtor warned it that he or she doesn’t own the property) in the petitioner’s bankruptcy regarding the property to allow it to resume the foreclosure.
- The debtor is required to clear the matter in bankruptcy court despite not causing the problem and the mortgagee bank not performing its own due diligence.
The good news is that a bankruptcy hijacking will probably not interfere with your bankruptcy filing in the long run. You will still receive your discharge or have your Chapter 13 plan confirmed. You will, however, need an experienced Las Vegas bankruptcy lawyer to determine that a forged deed was included in your bankruptcy and argue that against the mortgagee bank.
For more questions about bankruptcy in Las Vegas, please feel free to contact an experienced Haines & Krieger Las Vegas bankruptcy attorney for a free initial consultation. Call us at 1-702-880-5554 to set up your free consultation.