Filing for Bankruptcy: Who Will Know, and Who Might Find Out?

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filing for bankruptcyDespite the fact that bankruptcy is a legal protection and not a moral judgement, most people who contemplate a bankruptcy filing are understandably anxious about “who’s going to know.”

The first thing to note, is that a bankruptcy is not (remotely) on the same level as a criminal conviction — especially for a felony or other serious crime — which can have significant negative consequences financially, vocationally and even socially or domestically.

What’s more, bankruptcy filings are hardly rare occurrences. Each year, about 800,000 individuals and businesses file for bankruptcy. And while the matter is obviously processed through the court system, the difference between bankruptcy proceedings and criminal proceedings (or even civil proceedings) is categorical.

Yet with this being said, it’s true that some people aside from debtors and their respective bankruptcy attorneys will and/or may know about the bankruptcy filing: 

Those Who Will Know About a Bankruptcy Filing

  • Each creditor listed as part of the filing. Note that this is not a bad thing, since upon learning about the filing each creditor must immediately cease all further contact with debtors, as well as any collection action such as wage garnishment.
  • The three main credit bureaus (Equifax, TransUnion and Experian).
  • Anyone who is jointly liable for debts per the filing.
  • Plaintiffs in any current or future civil lawsuit (i.e. the lawsuit could be about any matter, such as a dog bite, slip and fall, neighbor dispute, etc.).

Those Who Might Know About a Bankruptcy Filing

  • Defendants in a civil lawsuit (while they may find out, unlike plaintiffs they will not automatically be informed about the bankruptcy filing).
  • Current employers, if wage garnishment activity had commenced and ceases per the filing (employers will get a letter from the court with instructions.
  • Prospective employers, if job candidates choose to answer questions about a past bankruptcy and/or authorize prospective employers to access their credit record (which will show the bankruptcy for 10 or 7 years, depending on whether the filing is Chapter 7 or Chapter 13).
  • Prospective landlords (the same reason as prospective employers).
  • Other prospective lenders, such as banks, car finance companies, and so on (the same reasons as prospective employers).
  • The media, if the debtor has a high profile. Note that since bankruptcy is so common, it is not really considered “newsworthy” these days compared to other court-related incidents like brushes with the law, acrimonious divorces where millions in assets are being contested, and so on).

Learn More

Filing for bankruptcy is a serious decision that should never be made without carefully analyzing all of the available options, and understanding both the advantages and limitations. To learn more, contact the Law Office of Charles H. Huber today. We have been helping individuals file consumer bankruptcy cases for more than 30 years, and understand every detail of the process from beginning to end. Our experience is your advantage.