Partner/Owner at Debt Advisors Law Offices
Practice Areas: Chapter 7 Bankruptcy, Chapter 13 Bankruptcy, Stop Foreclosure
Identity theft isn’t just an inconvenience, it can leave you buried in debts you never agreed to. Credit card bills, loans, and even medical charges may suddenly appear in your name, damaging your credit and causing endless stress. Many victims wonder if bankruptcy could be a way out.
If you’re dealing with fraudulent debts in Wisconsin, working with a Wisconsin bankruptcy attorney may help you understand whether bankruptcy is the right option or if other remedies are better suited for your case. The answer isn’t the same for everyone, but knowing how identity theft and bankruptcy connect can help you make an informed decision.
In the sections below, we’ll cover the real impact of identity theft, the immediate steps to take, and how bankruptcy might fit into the recovery process.
Identity theft happens when someone uses your personal information such as your Social Security number to open accounts, make purchases, or even file tax returns in your name. Victims often discover the crime only after creditors start calling or their credit score drops unexpectedly.
Some of the most common types of identity theft include credit card fraud, wage or tax refund fraud, and medical identity theft. Children and military members are often targeted because their Social Security numbers are easier to obtain and less likely to be monitored.
“According to the Federal Trade Commission (FTC), identity theft was the second most reported consumer complaint in 2024.” Source: FTC Consumer Sentinel Network
In Wisconsin, residents are especially vulnerable to credit card fraud and tax-related identity theft. These debts can quickly spiral into financial problems that victims never created.
If you suspect identity theft, act quickly to limit the damage:
“Wisconsin law allows parents to request a credit freeze for minors, a proactive step to protect children from identity theft.”
Bankruptcy cannot undo the theft itself, but it may help address the debt left behind. In many identity theft cases, fraudulent accounts result in unsecured debts such as credit card bills or personal loans. Chapter 7 bankruptcy may discharge these obligations, giving victims a chance to rebuild financially.
Another benefit is the automatic stay, which halts creditor collection efforts once bankruptcy is filed. For victims already overwhelmed by calls and letters, this protection provides immediate relief.
It is important to understand that bankruptcy does not cover every type of debt. For example, student loans, tax debts, and certain secured loans are generally not dischargeable. A Milwaukee bankruptcy attorney can help evaluate whether bankruptcy is a practical solution in your case.
“Bankruptcy cannot stop identity theft itself but may provide relief from the debts that result from it.”
Before turning to bankruptcy, victims should explore other remedies. Disputing fraudulent charges directly with creditors is often the first step. Lenders may remove debts once proof of identity theft is provided.
You can also request credit bureaus to correct errors under the Fair Credit Reporting Act. In some cases, specialized credit repair services or nonprofit counseling agencies may be able to help you recover without filing bankruptcy.
The FTC also offers free identity theft recovery programs that guide victims step-by-step. These resources may be enough to resolve fraudulent debts in less severe cases.
Even when other remedies are available, victims often find the process confusing. A Wisconsin bankruptcy lawyer provides more than legal representation—they act as a guide through both the identity theft recovery process and the bankruptcy system.
An attorney can help uncover fraudulent debts that victims might not know exist, challenge improper creditor claims, and ensure that bankruptcy filings include only valid debts. They also advise on exemptions and how Wisconsin’s bankruptcy laws apply to your case.
Legal guidance does not guarantee outcomes, but it does provide reassurance and structure during a difficult time.
The table below shows how bankruptcy may or may not help with different kinds of identity theft.
| Type of Identity Theft |
Typical Debts Incurred |
Can Bankruptcy Address It? |
Notes |
| Credit Card Fraud | Unsecured credit card charges | Yes (Chapter 7 discharge possible) | Must verify debts were fraud-related |
| Tax Identity Theft | IRS debts / fraudulent returns | No | Work with IRS resolution channels |
| Medical Identity Theft | Medical bills in victim’s name | Sometimes | Depends on debt classification |
| Loan/Utility Fraud | Unsecured personal loans, utilities | Yes | Included in dischargeable debts |
| Child Identity Theft | Accounts opened with minor SSN | Not directly | Fraud alert + credit freeze needed |
Wisconsin offers several protections for identity theft victims. In addition to credit freezes for minors, residents can take advantage of consumer protection laws enforced by the Wisconsin Department of Agriculture, Trade, and Consumer Protection. These agencies assist with credit disputes and fraud complaints.
Bankruptcy law is federal, but how exemptions apply to property in Wisconsin makes working with a local lawyer essential. Each case must be carefully reviewed to determine whether bankruptcy or another solution is the right step forward.
Bankruptcy may discharge unsecured debts tied to identity theft, but it does not undo the crime itself. Other steps must still be taken to stop fraud.
No. Victims should first file reports, place fraud alerts, and dispute charges. Bankruptcy is considered when fraudulent debts become unmanageable.
Bankruptcy impacts credit in the short term, but it can provide a clear path to rebuild after fraudulent debts have overwhelmed your financial record.
Yes, children can be victims. Bankruptcy does not solve child identity theft, but parents can request credit freezes to protect minors’ Social Security numbers.
Wisconsin allows credit freezes for minors and enforces consumer protection rules that help residents dispute fraudulent charges and recover financially.
A lawyer helps identify fraudulent debts, explain discharge options, and guide you through bankruptcy if it is the right option for your case.
Identity theft can cause devastating financial problems, but bankruptcy may offer relief when fraudulent debts become too large to manage. It is not the first solution, but it can be an important tool for severe cases. Victims should act quickly, report fraud, and explore every available remedy.
If you are facing debts caused by identity theft, our attorneys can guide you through your options and provide the support you need. Schedule a free consultation today to learn how we can help you move toward a financial fresh start.
Learn about bankruptcy protections, types of bankruptcy, how to get started, what to expect, and who to trust. Filing bankruptcy is the ONLY way to completely eliminate debt. If bankruptcy is right for you, it offers powerful protections that cannot be achieved through alternative solutions such as hardship relief, loans, or debt settlement.
