DEBTORS WHO FILE a personal bankruptcy case in 19 federal judicial districts, including NH, must show proof of identification and Social Security number under a pilot program now in effect.

NH has been selected as a pilot district to participate in the Debtor Identification Pilot Program instituted by the Executive Office for US Trustees (EOUST). EOUST is the Washington, DC, office of the US Trustee Program, a component of the Justice Department that monitors the administration of bankruptcy cases nationwide and works to ensure the integrity of the bankruptcy system.

The program was launched Jan. 1 to detect and deter identity fraud in bankruptcy, which typically involves filing for bankruptcy using a false name or Social Security number, according to Martha Davis, acting director of EOUST. "Identity fraud can severely damage the credit record of an innocent victim whose name and Social Security number are falsely used in a bankruptcy filing," said Davis.

"Identity fraud also threatens the integrity of bankruptcy court records by placing inaccurate information in those records," she added.

The pilot program was announced in NH in early December and applies to bankruptcy cases filed after Feb. 1, 2001. Under the program, bankruptcy debtors who file under Chapter 7, 11 or 13 must provide proof of identity and Social Security number when they appear at the mandatory Section 341 meeting of creditors to discuss their financial obligations. That meeting is held 20 to 40 days after a case is filed.

Permissible forms of ID include a valid state driver’s license, government-issued picture identification card, US passport or legal resident alien card. Proof of Social Security number may be provided through documents such as a driver’s license, Social Security card, current W-2 form or payroll check stub. Other forms of ID and proof of SSN may be accepted as well. If the debtor does not produce the required identification, the Section 341 meeting will be continued to another date.

A common reason for filing a bankruptcy case under a false name or SSN is to obtain the protection of the "automatic stay" to delay foreclosure or eviction, without placing a bankruptcy on one’s own record, according to EOUST. The automatic stay takes effect as soon as a bankruptcy petition is filed. Until it is lifted by court order or otherwise expires, the stay prevents creditors from engaging in collection actions.

A false filer who seeks only the temporary protection of the stay often fails to appear at the Section 341 meeting, and the case is dismissed. However, the bankruptcy filing remains in the court record under the victim’s name, and remains on the victim’s credit record.

Another common reason to file bankruptcy under a false name or SSN is to evade payment of and to discharge debts incurred under the false name or SSN. The filer may have fraudulently obtained credit cards, telephone service, bank loans or other valuable goods or services.

In other cases, the use of an incorrect name or SSN on a bankruptcy petition results from careless error. An attorney, paralegal or bankruptcy petition preparer may accidentally transpose digits in the SSN while filling out the client’s papers. If the inaccurate SSN matches the true SSN of another person, the bankruptcy filing may appear on that person’s credit record.

When an incorrect Social Security number on a petition is identified, the trustee must report it to the EOUST for further action. The debtor’s counsel would be required to file an amendment to the petition to reflect the correct number and to report the error in the use of the Social Security number to major credit reporting agencies. In this way, innocent people whose Social Security numbers are misused, even unintentionally, will not suffer the consequences of having a bankruptcy on their record.

During the pilot program, the US Trustees will collect data on topics such as the use of questionable identity documents, inaccurate names, inaccurate SSNs resulting from mistakes such as typographical errors, and inaccurate SSNs resulting from apparent fraud.

The pilot program is modeled after a procedure tested since September 1999 by the US Trustee in Northern Illinois and Wisconsin in which bankruptcy filers were asked for proof of ID and SSN. The test uncovered cases of apparent criminal fraud, as well as typographical errors resulting in inaccurate SSNs on bankruptcy documents.

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