Options For Scam Victims In Debt

Bankruptcy Is Often The Only Choice For A Scam Victim

Many scam victims send large amounts of money to their scammer before realizing it is a scam.

Younger scam victims also tend to neglect their work or school for the scammer, risking jobs, client bases, or academic scholarships. Older scam victims often take our second mortgages, loans, or max out their credit cards.

It is also common for scam victims to spend money on other expenses in preparation for meeting or living with their scammer, such as home, travel, or other things in preparation for the life they think they will soon lead.

This may mean that finances need to be completely overhauled and a brand new personal budget might need to be made.

Keep in mind that this is just a basic outline. We fully understand that things are not always so simple following a scam, and that often, people lose their entire savings accounts or retirement funds, sometimes even their homes. We always recommend getting the advice of a professional financial advisor or an attorney before making plans.

The following is intended only as the beginning of a process of reclaiming your control over your money and starting to rebuild your financial stability.


You’re in deep with credit cards, student loan payments, and car loans. Minimum monthly payments aren’t doing the trick to help control your debt, and you’re scared. Something has to change, and you’re considering debt consolidation because of the allure of one easy payment and the promise of lower interest rates.

The truth is debt consolidation loans and debt settlement companies might be worse.

It is important to understand what they really are. They are FOR-PROFIT businesses that are loaning you money, and they are going to make a profit on that.

They don’t always help you end mammoth amounts of debt. In fact, you end up paying more and staying in debt longer because of so-called consolidation. Get the facts before you consolidate your debt or work with a settlement company.

Here are the top things you need to know before you consolidate your debt:

  • Debt consolidation is a refinanced loan with extended repayment terms
  • Extended repayment terms mean you’ll be in debt longer
  • A lower interest rate isn’t always a guarantee when you consolidate
  • Debt consolidation doesn’t mean debt elimination
  • Debt consolidation is different from debt settlement. Both can scam you out of thousands of dollars

Debt consolidation is the combination of several unsecured debts—payday loans, credit cards, medical bills—into one monthly bill with what may be a lower interest rate, lower monthly payment, and simplified debt-relief plan.

Debt- relief may work for you since it resets your current obligations and can give you some breathing room, but be careful.

Debt consolidation promises one thing but sometimes delivers another. That’s why dishonest companies that promote too-good-to-be-true debt relief programs continue to rank as the top consumer complaint received by the Federal Trade Commission. Always research such offers thoroughly.


Bankruptcy is a process that helps consumers liquidate debts. In most cases, the court takes control of the financial assets to pay off their debts when they can no longer manage them on their own.

The process is outlined in Article 1, Section 8 of the U.S. Constitution. The Bankruptcy Code, which was enacted by Congress in 1978, is the uniform federal law that governs all bankruptcy cases in the U.S.

Bankruptcy is also available in other countries. Check your local law for what is available.

We recommend always speaking with an attorney before considering if bankruptcy is an option for you.

Besides consumer bankruptcy, bankruptcy laws also protect businesses that are struggling financially. The types of bankruptcy available to consumers, Chapter 7 and Chapter 13, help debtors resolve delinquent debts and shore up their finances, although they work in different ways.

While bankruptcy can result in the loss of personal property and assets through liquidation, it is often the best choice for scam victims:

  • After a Chapter 7 bankruptcy, scam victims are often able to enjoy a fresh start that is free from unsecured debts that previously plagued their finances.
  • After a Chapter 13 bankruptcy, scam victims are typically able to begin repaying a percentage of what they owe and get back on track financially.

Always consult a Bankruptcy Attorney before exploring your options in this.

Learn More: www.magnifymoney.com/blog/pay-down-my-debt/bankruptcy/ »


Debt is a way of life for many scam victims.

It can be so overwhelming that bankruptcy seems to be the only way out because bankruptcy can have such a devastating effect on their financial reputations and credit score.

If possible it is usually better to seek other alternatives before filing for bankruptcy.

One of these alternatives may save you from bankruptcy and save your credit score or reputation. It is better to take it an alternative to bankruptcy even if it will take a little longer or cost a little more to get rid of your debt.

If you ultimately have to file bankruptcy, you can have the peace of mind knowing you explored the alternatives.

Once the process is complete, you can work toward rebuilding your financial life and credit.


Work Through Them If You Can

1) Selling Some of Your Assets

Take an inventory of what you have. Sell whatever you can spare and use the money to pay off your debts.

You can sell items locally, on Craig’s List, or eBay.

Take action immediately when you notice you can’t afford to make payments. If you wait until you’re behind on payments, it may be too late to get caught up and avoid further action from your creditors.

You can sell your furniture, jewelry, and electronics on eBay, Craigslist, even in your front yard.

Is this a radical way to avoid bankruptcy? Perhaps. Many people can’t get past the inconvenience of living without their things, but you can adjust and it’s only temporary. It will help you avoid bankruptcy and spare your credit.

2) Pay Your Way Out of Debt

Can you afford to pay off your debts over a period of time?

If you file Chapter 13 bankruptcy either to save an asset or because you failed the means test for Chapter 7, you will be doing this anyway.

If you take a closer look at your budget, you may be able to cut out those nice-to-haves like cable or satellite television, landline and cell phones. These are examples of some expenses you can cut without too much pain.

We understand that being scammed leaves you broken emotionally and financially, we do not want to minimize this. We are simply saying that financial recovery is relative and what works for one may not work for others.

If you’re already living on a barebones budget, how about increasing your income by working overtime or part-time? There are many jobs that can be done from home, but be careful of “work from home” scams. Consider www.Fiverr.com as a way to do small jobs for extra money.

Hobbies and skills can also help you get some extra money to avoid bankruptcy. Here are dozens of ideas for getting extra money to pay off your debt. Think about making crafts or art items that you can sell on Etsy.com

3) Ask Creditors to Help You Avoid Bankruptcy

Many creditors will restructure or reschedule your debt rather than have you default.

Your creditors would rather get some money from you than no money at all.

Let your creditors know you are having financial difficulty and want to avoid bankruptcy. Express your willingness to pay the debt and ask if they can help ease the burden by lowering your monthly payment or decreasing your interest rate (or both) or deferring some payments to the end of the loan. Many credit card companies and banks have hardship programs intended for this type of situation.

Before you enter a hardship program make sure your monthly payment and interest rate actually go down. Otherwise, you could be stuck with an even higher minimum payment.

4) Seek Consumer Credit Counseling

If you don’t have success working with your creditors on your own, enlist the help of a professional. Find a consumer credit counselor who has experience working with creditors to get your payment and interest rate reduced.

A Credit Counselor is different than a Debt Relief agency! Credit Counselors are usually nonprofit entities.

The new bankruptcy law requires credit counseling prior to bankruptcy filings anyway so it’s worth it to strongly consider credit counseling as a bankruptcy alternative.

A consumer credit counselor can work with you and your creditors to put together a debt management plan to repay your debts over three to five years. The debt management plan payments may seem out of reach, but if you look, you may find holes in your budget that allow you to make the payments.

The Federal Trade Commission has a guide for how to choose a Credit Counselor here: www.consumer.ftc.gov/articles/0153-choosing-credit-counselor »

5) Get Help From Family and Friends

Here is the tricky part. You spent considerable time in your scam. During that time you either told your family and friends nothing about the fake relationship, or you ignored their advice that it was a scam.

Now you are facing the consequences of those actions, and you not only need to face the reality of your financial situation but also how you treated your family and friends during the scam.

Before you can ask anything of them, you will have to accept how you responded to them or kept them in the dark. You will need to admit to them what you did under the manipulation of the scammer. We have a guide that can help them understand, but it is going to be you that has to accept their blame and misunderstanding in the short run. Later they will come to better understand, but you may not have the time for that, so you may just have to accept the reality of their perspective to move forward.

Regardless, you have to tell them what happened and that you need help.

Normally, borrowing money from family and friends is a bad idea. It’s been known to create hardships and even end relationships. But there’s an exception to every rule, and bankruptcy or complete financial collapse is one of them.

Start by taking the time to calculate how much money you need to avoid bankruptcy. You will get one shot at asking for the help you need, and your numbers need to be right.

Carefully consider how much you’re able to contribute to your debt, then ask friends and family to help you make up the difference.

Before you approach them with your handout, come up with a plan for how you will repay them once your financial situation has turned around. Don’t expect a gift, expect a long-term loan.

6) Settle With Creditors and Debt Collectors

Debt settlement is another of those things that should be avoided under normal circumstances. However, the brink of bankruptcy isn’t normal. If you have to choose between settling a few debts or filing bankruptcy, settle the debts, but do it right.

  • First, don’t use a debt settlement company. Too much time and extra money go to these companies.
  • Second, don’t settle any debt on which your payments are current. Continue making the minimum payments on any current debts to keep them in good standing. Instead, focus on debts that have already been charged off or sent to collection.
  • Third, be ready to pay the lump sum settlement amount as soon as an agreement has been made.

7) Use Everything in This Guide

Rather than read through this SCARS Guide and decide that none of these things will work for you, consider the entire list as an set of tools you can use to avoid bankruptcy.

For example, you may be able to avoid bankruptcy if you sell some assets, cut back on your budget, make a deal with your creditors, and borrow money from family and friends. Use everything that makes sense for you!

Gaining Control

Follow these basic steps to gain control over what your situation is. It may not be pretty, but better to know the cold hard truth than not. After all, that is what got you to this point, right?

Step 1: Write Down The Amount Of Money You Can Count On Coming In Each Month

This can be heartening or it can be depressing, but it is important to focus in on this amount. No matter what it is, write it down. Even if it’s only fifty dollars from the two photos you sell to a web page each month, write that down.

Step 2: Make A List Of All The Things That Absolutely Must Be Paid Out Of This Money

Sometimes this step is the hardest one of all. We often come to think of things we want and like a lot as things that must be paid for, but the basic expenses are:

  1. Rent, mortgage or other housing payment
  2. Electric bill (add a third for gas bill if necessary)
  3. Water bill
  4. Food / Groceries
  5. Transportation costs (bus pass or car upkeep)
  6. Medical expenses
  7. Internet (as your lifeline for your friends & family, and support)
  8. Phone (one phone, landline or cell..if only to keep for emergencies) – you may have to change your number to go with a cheaper carrier or plan (here is a guide to cheap cell phone plans: www.nerdwallet.com/blog/utilities/cheap-cell-phone-plans/
  9. Television (if free channels do not come in well in your area. This isn’t an absolute necessity, but it is an important window on the outside world for many) – However, you can watch much of this on the Internet
  10. Children or elderly parents’ additional expenses, if applicable (school supplies, medical supplies not covered by benefits or insurance, etc)
  11. Your other necessary expenses, such as existing credit card debt or loan payments.

Write this list out and note the maximum amount you must spend for each of these items on the sheet. If you have this area paid for outside of the income you can count on, note that next to the item. For example, if you get $300 a month, but you have moved in with your son or daughter and they only ask you to contribute $100 toward the groceries each month, write an x or the work “ok” next to the rest of the household expenses and then write $100 next to the groceries.

As you write this out, you will either notice things falling into place, with your income being more than your expenses, or you will notice gaps.

Write down ideas for filling in the gaps, note them with a mark on the paper, and then write them down on a separate list. For example, suppose you know that your food budget is a bit short. You might want to write down “government assistance available?” and then add “EBT Card or Assistance Application” to your list. If you have credit card bills you absolutely cannot pay, you may want to look into filing bankruptcy (look above).

Step #3: Make Your New Budget

Write your income on the top of the page, list your individual necessary expenses, noting areas where you may need to fill in gaps, then subtract the amounts. The money left over is your “extra” money or if negative it is your shortfall.

Step #4: Decide How To Manage Your Extra Money (If Any)

Many people use all or part of this money to begin the process of replenishing their savings account. Others use it to treat themselves. Make another list like the one above, only instead of those bills and expenses that must be paid, write out what you would like to do with your money.

Remember that you are going to be recovering from the scam, and you will need to focus on your emotional recovery as well. This may mean some expenses associated with that, such as counseling or therapy, or books to guide you.

It might look like this:

  1. Mental Health Services
  2. Books
  3. Music:
  4. Movies
  5. Rebuild savings account at Bank of America
  6. Save for a trip

Once this list is written out, allot portions of the extra money to each category.

For this step, it might be helpful to find ways to get certain things for free. If you need to read several books each month, you may want to write $0.00 in the slot, and make a rule that you will visit your local library and book exchanges for reading material. Many people also find points programs such as “swagbucks” a good way to get small items such as songs, movies, or a book or two for free. You can even make it a rule that you will ask for bookstore, music service, and/or movie rental gift cards for your holiday gifts from family and friends and use those for these purchases.

Mental Health services. Remember you are the victim of a crime, and reporting the crime to the police opens up many government services free of cost for you. Be sure to explore this with local victims advocates – those that work in domestic abuse know about these, as them.

Step # 5: Look Over Your Budget As A Whole

This might be heartening, as you realize you can pare down expenses and make it on a limited income. Or it might be terrifying as you realize you have several gaps and most of your “ok” sections are only “ok” because someone else is now paying for them. This does not mean you failed or that you are doomed to always have this as your budget or your life. It is just a portrait of where your finances are right now.

Writing it out in a simplified manner is a first step in making the needed changes. It is also a way to regain control.

No matter how bad it looks now, you are the one making the decisions about where your money goes once again.

We Sincerely Wish You The Best Of Luck

Know one thing! You are not alone. There are millions of other scam victims.

Most of them gave up too much money to their scammers and now have to fake the financial reality. But they can get through this and so can you.

It will be incredibly hard for some, and for others less. Part of it depends on the help you are willing to accept, part of it depends on the state of your income. But mostly it depends on how honest you are willing to be with yourself and others.

You have to accept one simple fact, that this was done to you and that you now need help!

The scammer and your anger does not matter right now. Denial does not matter. The only thing that matters is survival, and that means that your pride goes out the window.

Accept what happened! Accept that you can’t worry about stopping scammers on another continent.

Always Report All Scams – Anywhere In The World To:

Go to reporting.AgainstScams.org to learn how

U.S. FTC at https://reportfraud.ftc.gov/#/?orgcode=SCARS and SCARS at www.Anyscams.com
Visit reporting.AgainstScams.org to learn more!

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SCARS the Society of Citizens Against Relationship Scams Incorporated

By the SCARS™ Editorial Team
Society of Citizens Against Relationship Scams Inc.

A Worldwide Crime Victims Assistance & Crime Prevention Nonprofit Organization Headquartered In Miami Florida USA & Monterrey NL Mexico, with Partners In More Than 60 Countries
To Learn More, Volunteer, or Donate Visit: www.AgainstScams.org
Contact Us: Contact@AgainstScams.org

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