People file for bankruptcy in Las Vegas for many reasons: too much credit card debt, high medical bills, bad investments, gambling addiction, and others. But one reason for bankruptcy that doesn’t always get as much attention is identity theft, a crime in which a person steals another’s personal information for financial gain.
According to the Federal Trade Commission, the nation’s consumer-protection agency, identity theft was the number two cause of consumer complaints in 2017. And Nevadans fall victim to it more frequently than residents of most other states, coming in at number five for victims of identity theft per capita.
Unfortunately, identity theft can have devastating consequences for a person’s finances, especially if the problem isn’t discovered for several months or years. As a result, many victims of identity theft turn to bankruptcy as a potential solution to the damage done to their credit after their identities are stolen.
And it’s true: The “fresh start” offered by bankruptcy can help resolve the financial problems caused by identity theft. But there are other options available, both before and after a person becomes an identity thief’s victim. This post explores how identity theft happens, how Nevadans can protect themselves against it, and provides links to resources that can help victims of identity theft repair their finances without filing bankruptcy.
How Identity Theft Happens
Identity thieves target sensitive personal or financial information of all kinds, and then use that information for various types of financial gain. Here are six examples of how identity theft happens in Nevada:
1. Theft of banking information. If a thief steals your credit or debit card or checking account information, he or she can go on a spending spree in your name. This information can be stolen by physically taking your card or checks or by copying the information when you try to pay for a product or service.
2. Theft of Social Security information. The government, banks, credit card companies, and other organizations often use your Social Security number (SSN) to verify your identity. As convenient as it may be to have a universal identifying number like that, it also means that an identity thief that learns your SSN can too easily impersonate you, filing taxes or opening credit accounts in your name.
3. Theft due to creditors’ mismanagement of records. This can be deeply frustrating because it’s caused by the creditor’s incompetence, over which debtors have no control. If a creditor’s security practices are weak, identity thieves can learn valuable information about a person’s identity, credit account, and finances.
4. Theft of medical records. Medical offices often don’t check patient’s identities, making it easy for thieves to fraudulently claim they are someone else to obtain medical treatment without taking responsibility for the bill.
5. Fraudulent bankruptcy. Sometimes people will file bankruptcy in another person’s name to get the advantages of easy credit or the automatic stay without the negative hit to their own credit score.
6. Fraudulent tax filings. Identity thieves may file a tax return in the name of another person, hoping to receive a refund before the IRS has a chance to review it or the other person can file his or her taxes.
Identity Theft Tip: 4 Things Not to Carry in Your Purse or Wallet
Given these examples, how can you protect yourself against identity theft before it happens? Because identity theft so often involves access to a physical item (like a credit card, checkbook, or Social Security card), one way is to be careful what you carry in your wallet or purse.
1. Your Social Security card. Remember the old American Express commercials from the 1980s that warned, “Don’t leave home without it”? In general, the opposite is true of your Social Security card. Unless you have a specific reason to carry it (e.g., you’re going to the bank to open an account or your employer needs it), do leave home without it.
2. Unlocked smartphones. Because smartphones are such convenient hand-held computers, it’s tempting to place enormously important private information on them, including applications that access your bank accounts. Worse, with syncing software, your phone might download information that you don’t intend to be on it. If your phone isn’t password-protected, anyone who gains access to it could easily steal all that information.
3. Unnecessary checks. Checks seem to be on their way out these days, and that may be for the best. Do you see those long strings of digits at the bottom of your checks? Those are the routing number for your bank and your bank account number. Those details, plus your name and address in the upper left corner of a check, can give an identity thief access to your money.
4. Unneeded credit cards. An alternative is to open a specific credit line for major household expenditures, like your phone bill or power bill, as well as for online purchases. This credit card stays at home, and if you want, you can even store the information in an encrypted file on your computer and then cut the card up. This way, if a thief maxes your personal card, your regular bills won’t be affected.
Bonus Tip: Be Smart Online. More and more identity thieves these days are moving online. To protect yourself, take the following steps:
Ignore emails in your spam folder unless you know for a fact that they’re not really spam. If you get an unsolicited email that your email service provider classifies as spam, it probably isn’t even worth opening.
Only shop at reputable online retailers. If you’re not sure, research the retailer on Google.
Don’t sign in to your email, bank account, or social media on unsecured WiFi. Fast-food joints, coffee shops, hotels, and airports sometimes offer free WiFi service. But that WiFi is frequently unsecured, and that means it’s easy for others on the network to snoop on your online activities. If you can access a WiFi network without providing a password, be wary of what sites you visit.
Recovering After Identity Theft
Fortunately, there are steps you can take short of bankruptcy to help fix your finances after an identity thief throws them into disarray. The FTC’s IdentityTheft.gov website provides a list of steps Americans can take to begin the recovery process. But be warned—that process is a process, and it can take weeks or months of hard work on your part to fully undo the damage.
Whether you’ve fallen victim to identity theft or not, if you are interested in learning how bankruptcy can help you get a fresh start financially, call the Las Vegas bankruptcy attorneys of Freedom Law Firm today for a free initial consultation.