When someone is facing foreclosure, anything that promises to help them save their home can seem like a good option. Unfortunately, that is exactly what some criminals want debtors to think.
One Canadian criminal was recently indicted in a foreclosure scam that affected nearly 800 people in Southern California. The man convinced victims that his plan would postpone their homes’ foreclosure sales as long as they could pay him a $700 fee.
Once he received the fee from his clients, the man looked up a bankruptcy debtor’s name on a public bankruptcy database and received a copy of his or her bankruptcy petition. He then asked his clients to give that debtor 1/100th fractional interest in their homes. This was done through a grant deed. Once accomplished, he sent a copy of the bankruptcy petition and the grant deed to the lender, demanding that the lender stop foreclosure on the home.
Because lenders must stop foreclosure during bankruptcy proceedings, lender could not foreclose on the properties without direct permission from the bankruptcy courts. Therefore, the clients got what they wanted: delayed foreclosure. By delaying foreclosure for 824 homeowners, the man collected more than $1 million from his clients and made a significant amount of property unavailable to lenders.
Unfortunately for the clients, they ended up paying a significant amount of money for nothing. Their homes could still be foreclosed upon after their lenders received permission from the bankruptcy court to do so.
The most important thing to take from this story is that people such as this man exist. Foreclosure fraud is prevalent in the U.S. If you face significant debt or foreclosure of your home, be aware that there are scams – schemes that promise to help you may in fact hurt you financially. The last thing you need right now is to have your money further depleted by a criminal.
So what should you do? One point the criminal got correct is that bankruptcy stops foreclosure. It can also help you keep your home for years to come. Depending on your financial situation, filing for Chapter 7 or Chapter 13 bankruptcy may be the ideal solution for you.
Source: LoanSafe.org, “Canada Man Indicted in Outrageous Nationwide Foreclosure Rescue Scam,” Evan Bedard, Aug. 20, 2012.
Learn more about bankruptcy and foreclosure by visiting our page on home foreclosure.