One of the most common myths regarding bankruptcy is that everyone will know you filed for bankruptcy. Unfortunately, there is still a significant stigma surrounding bankruptcy, even though over 700,000 American individuals and businesses typically file for bankruptcy yearly. Many people are understandably concerned that they will be embarrassed personally and professionally if people find out that they have filed for bankruptcy. Filing for bankruptcy is part of the public record, but people will not see it unless they specifically search the court records for you. For most individuals, filing for bankruptcy remains a relatively private process.
Bankruptcy Records are Public Information
Every few weeks, we see headlines about celebrities filing for bankruptcy. These people did not announce their bankruptcy to the press or post their finances on the internet for others to see, so you may wonder how this information became public knowledge. Bankruptcy records are open to the public. Technically speaking, anyone could discover your bankruptcy case. However, they would need to be looking for your specific filing or be one of your creditors. Absent these circumstances. It is unlikely anyone will find out about your bankruptcy unless you tell them about it.
In the case of celebrities, some paparazzi groups constantly check bankruptcy records to find celebrity bankruptcy filings, get the scoop, and publicize the story. For most of us, nobody actively looks to see whether we have filed for bankruptcy by searching court records.
It is Not Easy to Obtain Another Person’s Bankruptcy Information
If someone wants to find your bankruptcy record, he or she would need to jump through some administrative hurdles that are not insignificant. First, they would have to go through the federal court system and acquire a special username and password to search for a party to a bankruptcy proceeding. Most people would never bother to go to this length unless they were your creditor or you were a celebrity or well-known public figure. Bankruptcy filings do have significant amounts of financial information that can be sensitive, however. As a result, many potential claimants are concerned about their financial information getting out to the public or an individual they do not trust.
What Type of Information Will be Included in My Bankruptcy Records?
Bankruptcy filings include multiple types of financial records. Specifically, they will include a detailed list of your assets, income, and debts. The filings will also contain a list of your creditors and the amount you owe each creditor. However, certain personal information will be redacted from the public record. In other words, a person or company searching for your bankruptcy record will not be able to see all of your personal information. For example, your filings will only show the last four digits of your Social Security number, birth date, financial account numbers, and taxpayer ID. Additionally, the record will only show the last four characters of the names of any of your miners involved in the bankruptcy proceedings.
These requirements protect claimants from identity theft. It is also important to remember that this information is not easy to obtain. A person could not simply do a Google search to find the information. Although the records are legally considered public, the odds that anyone would go to the trouble to find them are low. Unless you are a public figure, you probably will not need to worry about a person or company finding out about your bankruptcy filing against your will. As for your creditors, they are already aware of the financial difficulties you are having. They will receive notice from the court that you filed for bankruptcy but do not publish the names of debtors.
What if I Owe My Friend Money?
Your creditors may not be the only ones who receive notice that you filed for bankruptcy from the court. Bankruptcy courts are legally obligated to send notice to all creditors, even if they are your friends or family members. If you owe money to a family member or friend, you are legally required to disclose that amount as well as your family member or friend’s name and contact information. Applicants must file every debt they owe, even if it is a personal debt. As a result, that party will receive a letter from the bankruptcy court that you have filed for bankruptcy. This scenario is the most likely way your family members or friends would find out that you filed for bankruptcy.
Do Not Forget Your Credit Report
As long as nobody digs through court records to find your bankruptcy case, there should be only one other way for a person to find out you filed for bankruptcy if you did not tell them. Don’t forget about your credit report. Your bankruptcy filing will show on your credit report for seven to 10 years after your debt has been discharged. If you apply for a loan, a credit card, or try to rent an apartment, the creditor will be able to see that you have filed for bankruptcy when they look up your credit report.
Many employers require applicants to allow them to do a credit check. Your current employer may decide to do a credit check on you before promoting you. Employees working for private companies can be fired or rejected as applicants for positions based on filing for bankruptcy, but some public firms cannot. However, information on your credit report is not as revealing and personal as the information found in your bankruptcy filings. There will be no details about your assets and debts on the credit report. Instead, the report will state that you have filed for bankruptcy and the date on which the court discharged your debt.
Should I be Concerned About Everyone Knowing About My Bankruptcy?
The thought of having people find out about your bankruptcy can be stressful. None of us would like people to know the details of our financial struggles. When deciding whether to file for bankruptcy, it is important to weigh your hesitation about people potentially finding out about the bankruptcy with the benefits that bankruptcy can bring. For many individuals, filing for bankruptcy is worth the risk that someone might find out about it.
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