{"id":36840,"date":"2008-03-26T16:35:41","date_gmt":"2008-03-26T21:35:41","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/uncategorized\/file-segregation-new-id-is-a-bad-idea.html"},"modified":"2008-03-26T16:35:41","modified_gmt":"2008-03-26T21:35:41","slug":"file-segregation-new-id-is-a-bad-idea","status":"publish","type":"corporate","link":"https:\/\/corporate.findlaw.com\/litigation-disputes\/file-segregation-new-id-is-a-bad-idea.html","title":{"rendered":"File Segregation: New ID Is a Bad Idea"},"content":{"rendered":"<section class=\"fl-gutenberg-byline\">\n    <div class=\"fl-gutenberg-byline-content\">\n                    <p><em>This article was edited and reviewed by <a href=\"https:\/\/www.findlaw.com\/company\/our-team.html\" rel=\"noopener\">FindLaw Attorney Writers<\/a><\/em><\/p>\n\n                | Last reviewed\n        <time>\n                            May 05, 2026\n                    <\/time>\n    <\/div>\n\n    \n    <div class=\"fl-gutenberg-byline-toggle fl-gutenberg-byline-legally-reviewed\">\n        <h2>\n            <button tabindex=\"0\" aria-expanded=\"false\">\n                <i class=\"fl-gutenberg-byline-icon\"><\/i>\n                Legally Reviewed\n            <\/button>\n        <\/h2>\n\n        <div class=\"fl-gutenberg-byline-toggle-content\">\n            <p><em>This article has been written and reviewed for legal accuracy, clarity, and style by <a href=\"https:\/\/www.findlaw.com\/company\/our-team.html\" rel=\"noopener\">FindLaw\u2019s team of legal writers and attorneys<\/a> and in accordance with <a href=\"https:\/\/www.findlaw.com\/company\/company-history\/editorial-policy.html\" rel=\"noopener\">our editorial standards<\/a>.<\/em><\/p>\n\n        <\/div>\n    <\/div>\n\n    <div class=\"fl-gutenberg-byline-toggle fl-gutenberg-byline-fast-checked\">\n        <h2>\n            <button tabindex=\"0\" aria-expanded=\"false\">\n                <i class=\"fl-gutenberg-byline-icon\"><\/i>\n                Fact-Checked\n            <\/button>\n        <\/h2>\n\n        <div class=\"fl-gutenberg-byline-toggle-content\">\n            <p><em>The last updated date refers to the last time this article was reviewed by FindLaw or one of our <a href=\"https:\/\/www.findlaw.com\/company\/our-team\/contributing-authors.html\" rel=\"noopener\">contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please <a href=\"https:\/\/lawyers.findlaw.com\/?fli=bylinelink\" rel=\"noopener\">contact an attorney in your area<\/a>.<\/em><\/p>\n\n        <\/div>\n    <\/div>\n<\/section>\n\n\n\n<div class=\"rxbodyfield\" xmlns:o=\"urn:www.microsoft.com\/office\" xmlns:st1=\"urn:www.microsoft.com\/smarttags\" xmlns:w=\"urn:www.microsoft.com\/word\" xmlns:x=\"urn:www.microsoft.com\/excel\"><table border=\"0\" width=\"580\"><tr><td><div align=\"center\"><center><table bgcolor=\"#800080\" border=\"0\" bordercolor=\"#800080\" bordercolordark=\"#0000FF\" bordercolorlight=\"#0000FF\" width=\"100%\"><tr><td align=\"center\" width=\"100%\"><font color=\"#FFFF00\" face=\"Arial\" size=\"6\"><strong>&#39;File Segregation&#39;:<\/strong><\/font><\/td><\/tr><\/table><\/center><\/div><p align=\"center\"><font color=\"#800080\" face=\"Arial\" size=\"5\"><strong>New ID Is a Bad IDea<\/strong><\/font><\/p><p align=\"center\"><font size=\"3\">January 1999<\/font><\/p><p><font size=\"5\">I<\/font>f you have filed for bankruptcy, you may be the target of a credit repair scheme called &quot;file segregation.&quot; In this scheme, you are promised a chance to hide unfavorable credit information by establishing a new credit identity. That may sound perfect, especially if you&#39;re afraid that you won&#39;t get any credit as long as bankruptcy appears on your credit record.<\/p><p>The problem: &quot;File segregation&quot; is illegal. If you use it, you could face fines or even a prison sentence.<\/p><p><font color=\"#800080\" face=\"Arial\" size=\"4\"><b>The Pitch: A New Credit Identity<\/b><\/font><\/p><p>If you have filed for bankruptcy, you may receive a letter from a credit repair company that warns you about your inability to get credit cards, personal loans, or any other types of credit for 10 years. For a fee, the company promises to help you hide your bankruptcy and establish a new credit identity to use when you apply for credit. These companies also make pitches in classified ads, on radio and TV, and even over the Internet.<\/p><p>If you pay the fee and sign up for the service, you may be directed to apply for an Employer Identification Number (EIN) from the Internal Revenue Service (IRS). Typically, EINs &#194;&#8212; which resemble Social Security numbers &#194;&#8212; are used by businesses to report financial information to the IRS and the Social Security Administration.<\/p><p>After you receive your EIN, the credit repair service will tell you to use it in place of your Social Security number when you apply for credit. They&#39;ll also tell you to use a new mailing address and some credit references.<\/p><p><font color=\"#800080\" face=\"Arial\" size=\"4\"><b>The Catch: False Claims<\/b><\/font><\/p><p>To convince you to establish a new credit identity, the credit repair service is likely to make a variety of false claims. Listen carefully; these false claims, along with the pitch for getting a new credit identity, should alert you to the possibility of fraud. You&#39;ll probably hear:<\/p><p><i><strong>Claim 1: You will not be able to get credit for 10 years (the period of time bankruptcy information may stay on your credit record).<\/strong><br\/><\/i> Each creditor has its own criteria for granting credit. While one may reject your application because of a bankruptcy, another may grant you credit shortly after you filed for bankruptcy. And, given a new reliable payment record, your chances of getting credit will probably increase as time passes.<\/p><p><i><strong>Claim 2: The company or &quot;file segregation&quot; program is affiliated with the federal government.<\/strong><br\/><\/i> The federal government does not support or work with companies that offer such programs.<\/p><p><i><strong>Claim 3: The &quot;file segregation&quot; program is legal.<\/strong><br\/><\/i> It is a federal crime to make any false statements on a loan or credit application. The credit repair company may advise you to do just that. It is a federal crime to misrepresent your Social Security number. It also is a federal crime to obtain an EIN from the IRS under false pretenses. Further, you could be charged with mail or wire fraud if you use the mail or the telephone to apply for credit and provide false information. Worse yet, file segregation likely would constitute civil fraud under many state laws.<\/p><p><font color=\"#800080\" face=\"Arial\" size=\"4\"><b>Rights Under The Credit Repair Organizations Act<\/b><\/font><\/p><p>This law prohibits false claims about credit repair and makes it illegal for these operations to charge you until they have performed their services. It requires these companies to tell you about your legal rights. Credit repair companies must provide this in a written contract that also spells out just what services are to be performed, how long it will take to achieve results, the total cost, and any guarantees that are offered. Under the law, these contracts also must explain that consumers have three days to cancel at no charge.<\/p><p>Under the law, you also have the right to sue in federal court. The law allows you to seek either your actual losses or the amount you paid the company &#194;&#8212; whichever is more. You also can seek &quot;punitive&quot; damages: sums of money to punish the company for violating the law. The law also allows class actions in federal court: cases where groups of consumers join together in one lawsuit. If you win, the other side has to pay your attorney&#39;s fees.<\/p><p>Many states have laws regulating credit repair companies, and may be helpful if you&#39;ve lost money to credit repair scams.<\/p><p>If you&#39;ve had a problem with a credit repair company, report the company. Contact your local consumer affairs office or your state attorney general (AG). Many AGs have toll-free consumer hotlines. Check with your local directory assistance.<\/p><p>You also may wish to contact the FTC. Although the Commission cannot resolve individual credit problems for consumers, it can act against a company if it sees a pattern of possible law violations. If you believe a company has engaged in credit fraud, you can file a <a href=\"http:\/\/www.ftc.gov\/ftc\/complaint.htm\" rel=\"noopener\">complaint online<\/a>, or send your complaint to: Consumer Response Center, Federal Trade Commission, Washington, D.C. 20580.<\/p><p><font color=\"#800080\" face=\"Arial\" size=\"4\"><b>For More Information<\/b><\/font><\/p><div align=\"center\"><center><table border=\"0\" cellpadding=\"0\" cellspacing=\"0\" width=\"580\"><tr><td><font face=\"Times New Roman\">You can file a complaint with the FTC by contacting the Consumer Response Center by phone: 202-FTC-HELP (382-4357); TDD: 202-326-2502; by mail: Consumer Response Center, Federal Trade Commission, Washington, DC 20580; or through the Internet, using the <a href=\"http:\/\/www.ftc.gov\/ftc\/complaint.htm\" rel=\"noopener\">online complaint form<\/a>.<\/font> Although the Commission cannot resolve individual problems for consumers, it can act against a company if it sees a pattern of possible law violations. <p>The FTC publishes free brochures on many consumer issues. For a <a href=\"http:\/\/www.ftc.gov\/ftc\/consumer.htm\" rel=\"noopener\">complete list of publications<\/a>, write for <b>Best Sellers<\/b><font size=\"3\">,<\/font> Consumer Response Center, <font size=\"3\"><a href=\"http:\/\/www.ftc.gov\/index.html\" rel=\"noopener\">Federal Trade Commission<\/a>,<\/font> Washington, D.C. 20580; or call (202) FTC-HELP (382-4357), TDD (202) 326-2502.<\/p><\/td><\/tr><\/table><\/center><\/div><\/td><\/tr><\/table><\/div>","protected":false},"excerpt":{"rendered":"<p> January 1999 If you have filed for bankruptcy, you may be the target of a credit repair scheme called &#8220;file segregation.&#8221; In this scheme, you are promised a chance to hide unfavorable credit information by establishing a new credit identity. That &#8230;<\/p>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_categories":[6520,6532],"class_list":["post-36840","corporate","type-corporate","status-publish","hentry","corporate_categories-litigation-disputes","corporate_categories-litigation-disputes__other-litigation-disputes"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate\/36840","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=36840"}],"wp:term":[{"taxonomy":"corporate_categories","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_categories?post=36840"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}