Except in a handful of situations, it is unlikely others will find out about your bankruptcy proceeding, unless you choose to tell them. It is always possible that you will run into someone you know at a hearing in bankruptcy court, but the chances of that happening are slim. Experience has shown that in the event others do find out, they are generally accepting and understanding and can even serve as a source of support during this difficult time.
While bankruptcy proceedings are not published in newspapers like foreclosure notices, they are a matter of public record. Bankruptcy proceedings are conducted in Federal Court and a record is kept of all bankruptcy proceedings. Court records are made available to the public as a matter of law.
There is good news for debtors seeking to keep their bankruptcy proceedings confidential. The process for accessing court records varies from court to court and can be a cumbersome process. In order to access the court records, an individual conducting a search will typically need to know what court handled the bankruptcy proceeding, will have to furnish a complete name, approximate date, and perhaps even a social security number. Generally, only those individuals with a particular motive such as a new business associate, lender, or creditor, will go through the hassle of searching for a record of your bankruptcy proceeding.
There are certain categories of people that will be involved in the bankruptcy proceeding and will learn about your bankruptcy filing. It comes as no surprise that all creditors are notified of the bankruptcy petition. When you file for bankruptcy, the court notifies your creditors of your bankruptcy filing. Creditors must be given the opportunity to protect their rights regarding possible distributions from the bankruptcy estate.
In addition to creditors, your spouse and others in your household, even if not included in your filing, will be made aware of the bankruptcy proceeding. You will be required to provide financial information concerning all members of your household, including your spouse. Therefore, even if your spouse is not included in the bankruptcy proceeding, he or she will have to provide information regarding his or her income and expenses.
In addition, if you owe money to any friends or family members, they will be notified as well. As noted above, all creditors in a bankruptcy proceeding have a right to protect their financial interests and thus will be notified by the court regarding your bankruptcy filing.
Employers may also become aware of your bankruptcy filing under certain specific circumstances. During the bankruptcy proceeding, you will be required to provide detailed information about your income, and if you are unable to prove the amount of your earnings, the bankruptcy trustee may contact your employer. For most people, this is not a concern because the year-to-date earnings information is provided on each pay stub.
In a Chapter 13 bankruptcy proceeding, your employer may also be made aware of your filing. Some Chapter 13 plans require payments to be made by payroll deductions, and your payroll department will receive notification of your filing. Generally, however, repayment plans involving payroll deductions are much more successful, and having the payroll department learn about your bankruptcy proceeding has insignificant consequences when compared to the increased likelihood of successfully completing your Chapter 13 plan.
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