‘I’m drowning in debt’: I was scammed by a ‘friend’ who asked me to take out a loan, and I fell victim to identity theft. Can you help me? | #datingscams | #lovescams

By Quentin Fottrell

‘I am not an idiot. I’m an educated, employed person.’

Dear Quentin,

During the pandemic, I was scammed. I tried to help someone I thought I knew. I took out a secured loan with high interest, and I also fell victim to identity theft. (I do not know if the two were related, but there is a good chance.) Now I am in a ridiculous amount of debt. My vehicle is tied to the secured loan and is currently on its last leg. (I will know by the end of the week if that last leg has given out.)

My credit-card debt was zilch before this. Now I’ve settled, with a debt-relief company’s help, for credit-card debt somewhere around $10,000, plus the secured loan of $15,000. The secured-loan company has referred me to a credit counselor, and I’m about to begin working with them to try to lower my $500-plus monthly payment. I live on a single income and I have one child.

The reality is: I am drowning in debt. I briefly looked at bankruptcy, but I was told I’d lose my condo. I have a low- to medium-paying job that I stay at because it has fabulous insurance and because I am part of an employee share ownership trust (ESOT) program. If I stay with this company, I should be able to retire in 10 years at 55 years old. If I left my job and took a partial distribution of my ESOT, it would definitely solve my immediate problem but would have a negative effect on my long-term goals.

Do you have any suggestions? The simple solutions are off the table. Overtime is out. A second job is out unless it’s remote and at my own pace. I’ve had no luck with the lottery thus far. I’m getting desperate! The scammer had me max out my mobile-phone account by purchasing phones. At the time it made sense. I swear it did. He said he was going to pay me for them.

I am not an idiot. I’m an educated, employed person.

Feeling Hopeless

Dear Feeling Hopeless,

You can’t get out of this today, but you can get out of it with the help of a long-term plan.

How you are feeling and how you’re actually doing are often very different things. You might feel like a 5 on a scale of 1 to 5 (with 5 being the worst), but the chances are you are closer to a 2 or a 3. It’s like that message you see when you look in your car’s rearview mirror: “Objects in the mirror are closer than they appear.” The same is likely true for your feelings of financial doom and gloom. You made a mistake. You got scammed. But you are putting a plan together to pay off this debt of over a period of years.

Melinda Opperman, chief external affairs officer, at Credit.org, a nonprofit financial counseling agency, says your No. 1 priority is to stop borrowing money. “Is your credit counselor certified and from an accredited nonprofit organization? If so, then take advantage of every resource they offer. Don’t just look at them as a way to lower your monthly payments; a reputable nonprofit credit counselor should be able to help you with a full budget, taking into account all of your expenses and obligations.”

Obviously, find ways to reduce your outgoings. Whatever it takes. “Giving up on your ESOT for a quick bail-out today seems like the worst possible response,” Opperman adds. “This is your retirement plan, and it’s the very thing you’ve been working toward, so you shouldn’t give up on it when you’re only 10 years from the finish line. But that may mean other sacrifices in the near term; what are the consequences of surrendering your vehicle? Will that satisfy the secured debt? Would you have any way to get to work in that event?”

Before you go any further, I recommend you seek a second opinion from a trusted and experienced bankruptcy lawyer regarding filing for bankruptcy and the security of your home. “Chapter 7 bankruptcy is a method to retain most or all of your exempt assets, and all non-exempt assets may be used to pay off debts to creditors,” according to Farmer & Morris Law. “Because this bankruptcy chapter does not include a repayment plan, this filing may be more suitable for people who are up to date with their mortgage payments and can continue paying their mortgage payments after filing.”

As for bankruptcy, Opperman implores you to look into alternative counsel. “A HUD-certified counselor might have options to help you remain in your home while you take more extreme measures to reduce your debt. Make sure you’re taking advantage of any programs available to you — it’s hard to say what options there are because every locality is different, but a housing counselor will know if there are any relief options in your area.”

The National Foundation for Credit Counseling is a nonprofit financial-counseling organization that can help you put together a budget and a realistic plan to pay off your debt. Another nonprofit organization, American Consumer Credit Counseling, is also there to help people who are in your position. And there are support groups, including Debtors Anonymous, that can give you you a safe space to talk about your background and your emotional life, what happened to you, and how you can tackle your debts, and to hear from others who have had similar experiences.

If you have been the victim of identity theft, you should attempt to recover the money that was stolen from you. Please report this to your local police so they can provide you with a police report. “The report will help you obtain receipts and transaction records from stores, credit-card companies and other businesses used by the identity thief,” the New York Department of State advises. “The police report may improve your chances of obtaining compensation or restitution if the case is prosecuted.”

Notify your creditors (your bank, credit-card company, phone company, etc.) that you were compromised. And file a complaint with the Federal Trade Commission. You can do that via its online complaint form; by calling the FTC’s Identity Theft Hotline at 1-877-ID-THEFT (438-4338) or TTY at 1-866-653-4261; or by writing to the Identity Theft Clearinghouse, Federal Trade Commission, 600 Pennsylvania Ave. NW, Washington DC 20580. You may need to close accounts and open new ones, change your passwords, put a fraud alert on your credit report and freeze your credit.

You have been the victim of a crime, and you are likely traumatized and still in shock. But there is so much you can do to get back on your feet. It may not happen overnight, but you have options. You took out a loan in good faith and you were scammed, and you won’t make that mistake again, but identity theft is a crime and there is a lot you can do to make yourself whole again. Don’t give up hope. Fight for your future. Seek out expert help from the nonprofit debt-management community, from an experienced bankruptcy lawyer and from support groups.

You have already started on that road to financial recovery. Some 2.4 million people were scammed last year, according to the FTC, and while that was down from 2.9 million in 2021, it still resulted a record $8.8 billion lost to scams and fraud, up 30% from the previous year. People are targeted in many ways — by phone, on dating sites, by email and, yes, even in person. You were preyed upon by a fraudster who you thought was your friend. Take it day by day, and know that you’re not alone.

You can email The Moneyist with any financial and ethical questions at qfottrell@marketwatch.com, and follow Quentin Fottrell on Twitter

Check out the Moneyist private Facebook group, where we look for answers to life’s thorniest money issues. Readers write in to me with all sorts of dilemmas.

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The Moneyist regrets he cannot reply to questions individually.

More from Quentin Fottrell:

‘We grew up poor and financially ignorant’: My children are 14 and 16. Is it too late to save for their college education?

My brother-in-law has menial jobs, borrows money and lives with his parents. Will I be his ‘keeper’ after his parents are gone?

The cable guy introduced my 90-year-old stepmother to a new ‘friend,’ and she’s gotten fleeced. Am I legally responsible if she ends up destitute?

-Quentin Fottrell

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04-28-23 1347ET

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