When it comes to student loan debt, it’s distressing to discover that someone took out loans in your name without your knowledge. Even worse is when you learn a family member or friend committed the crime, often known as familiar fraud.
You may not think this could happen to you. But, unfortunately, identity theft by someone you know is all too common.
The ” 2015 Identity Fraud: Protecting Vulnerable Populations” report by Javelin Strategy & Research found 12.7 million U.S. consumers reported cases of identity theft in 2014 , worth a total of $16 billion. Of those cases, 550,000 were committed by individuals the victims knew, according to data pulled for CNBC.com.
Students need to pay extra attention. Based on that study, they are four times more likely to suffer familiar fraud than all other consumers.
[Know how to resolve student loan disputes.]
Everyone knows the importance of keeping passwords a secret. What people tend to forget is that their identifying information is even more precious. Social Security numbers combined with date of birth or bank account information can be a recipe for financial disaster if others access these details.
Parents and spouses are generally trustworthy, but there have been cases of these individuals fraudulently borrowing student loans in their loved ones’ names. If you can’t trust these individuals, whom can you trust?
These loved ones often have unfettered access to your information or have it memorized. This gives them the ability to borrow loans in your name, open bank accounts or drain your accounts without your knowledge.
If you discover that a family member has borrowed student loans in your name, here are four steps you can take to begin the process of undoing the damage.
[Learn how to dispute a student loan.]
Step 1: Review your student account statements. Being a victim of identity theft may allow you to discharge any fraudulent loans borrowed in your name, but to be eligible, you must not have benefited from the loan funds in any way.
There are instances where a student’s parent borrows a loan in the student’s name, which results in a credit balance. The parent applies for the refund and never involves the student or instructs the student to give the parent the refund. In this case, it would be nearly impossible to prove you did not benefit from the funds deposited into your student account.
For this type of situation, your best option is to work with the person who borrowed the loans and reach a repayment agreement. You may also find a mediator beneficial.
Step 2: Submit a fraud alert. Contact one of the three major credit reporting agencies — Experian, Equifax or TransUnion — to report the fraudulent loans and place a 90-day fraud alert on your credit file. You may want to do this with all three agencies, since information could be reported differently to each of them.
You’ll still be able to apply for credit during this time, but lenders will need more robust identifying information before approving.
You should also review your credit report to identify any other forms of fraudulent debt in your name. You can do this for free each year at AnnualCreditReport.com. You can then initiate a dispute directly with each lender.
[Make sure to understand the consequences of student loan default.]
Step 3: File a report. Next, file an identity theft report with your local police department. This step is critical if you don’t want to be responsible for this loan.
The catch here is that you must be willing to take legal action against the perpetrator, pursue a conviction and testify. If you don’t wish to go this far with a family member, you will either need to repay the loans yourself or work with this person as suggested in the first step.
The Department of Education’s Office of Inspector General investigates fraud cases in the federal student loan program. You can report cases of identity theft and fraud directly to the office.
Step 4: Apply for a discharge. Federal student loans can be discharged due to identity theft. Although there is no formal application for this discharge, some loan holders have created forms to assist with the process. Other loan holders don’t accept t hese forms .
To apply for a discharge, you must certify that you did not authorize or benefit from the fraudulent loans. With this, you’ll need to submit six samples documenting your signature with several of them being from the time period the loan in question was signed.
Finally, you’ll need to provide a judgment stating you were the identity theft victim and that the perpetrator borrowed the loans in your name. A simple police report will not suffice, nor will a judgment of identity theft without the statement that the loans were borrowed fraudulently in your name.
You will work with your loan holder throughout this discharge application process. If you are unsure who that is, you can determine that through the National Student Loan Data System.
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4 Steps to Handle Student Loan Fraud by Family Members originally appeared on usnews.com
