Bankruptcy and the Overseas Lover Scam:

Protecting Yourself Financially

It’s a story we hear all too often: you meet someone online, they seem charming and trustworthy, and before long they ask for financial help — travel expenses, medical bills, business opportunities, or “emergency” situations. By the time you realize it’s a scam, you may have sent thousands of dollars through wire transfers, gift cards, or even taken out loans or credit cards in your own name to help them.

If this sounds familiar, you are not alone — and bankruptcy may be a tool to help you recover financially.

🔎 How This Becomes a Bankruptcy Issue

• Debt Accumulation: Many victims take out credit cards or personal loans to send money to the scammer.

• Loss of Savings: Emergency funds, retirement savings, and home equity may be drained.

• Legal or Collection Pressure: Once you stop paying, creditors may sue, garnish wages, or repossess property.

🏛 Bankruptcy Options

• Chapter 7 Bankruptcy: Wipes out most unsecured debts like credit cards, personal loans, and payday loans. A good option if you cannot realistically repay the money you borrowed.

• Chapter 13 Bankruptcy: Lets you catch up on secured debts (like a car loan or mortgage) while paying a portion of your unsecured debts through a 3–5 year repayment plan.

⚖ Special Legal Considerations

• Good Faith Requirement: Courts generally don’t penalize you for being scammed — as long as your borrowing wasn’t fraudulent or intentionally misleading to lenders.

• Possible Restitution: If law enforcement catches the scammer (rare, but possible), you may be able to claim restitution or cooperate in a case against them.

• Asset Protection: Bankruptcy protects exempt property (home equity up to a certain limit, retirement accounts, basic personal property) so you can start fresh.

💡 Practical Tips for Clients

• Stop Sending Money Immediately: Even if they promise to pay you back “soon,” it almost never happens.

• Save All Communications: Texts, messages, and receipts can help show that you were defrauded.

• Consult an Attorney Early: The faster you act, the more options you have to protect income, property, and credit.

• Report the Scam: File a complaint with the FTC (reportfraud.ftc.gov) and your state attorney general’s office. This can help others avoid the same trap.

Should I File Bankruptcy After a Scam or Major Financial Loss?

Unfortunately, scams — especially online romance scams — leave many people with large amounts of debt. You may have borrowed money, taken out cash advances, or used credit cards to help someone who was never who they said they were. If you are facing collections, lawsuits, or wage garnishment, bankruptcy might be the solution — but it’s not the only option.

Here’s a simple guide to help you decide:

📝 Step 1: Take Stock of Your Situation

• List All Your Debts: Include credit cards, personal loans, payday loans, and any cash advances you used to send money.

• Calculate Monthly Income vs. Expenses: Are you falling behind on necessities like rent, utilities, or groceries?

• Check Your Assets: Do you own a house, car, or retirement account that you need to protect?

🔎 Step 2: Consider Your Options

⚖ How Bankruptcy Helps After a Scam

• Stops Collections Immediately: Lawsuits, wage garnishments, and creditor calls must stop once you file.

• Eliminates Most Unsecured Debts: Credit cards, payday loans, and personal loans can often be wiped out.

• Protects Property: Exemptions allow you to keep most personal property, retirement accounts, and sometimes your home.

• Lets You Rebuild Credit Faster: Many clients see their credit begin to recover within 12–18 months after discharge.

💡 Practical Checklist

✅ Stop sending money to the scammer — even if they promise repayment.
✅ Save all communication — it may help show you acted in good faith.
✅ Report the fraud to the FTC (reportfraud.ftc.gov) and your state attorney general.
✅ Consult with a bankruptcy attorney to understand your best option before your wages are garnished or your bank account is frozen.