Filing for bankruptcy is a personal decision, and usually not your first choice. You may feel ashamed that you have fallen behind on your debts. You may also be concerned that filing a bankruptcy petition now will affect your future. You may even worry about the general public getting details about your assets and debts. Find out whether U.S. bankruptcy court documents are public, and what information may be available if you decide to file.
It is true that, as a court document, your petition for bankruptcy will be part of the public record. Federal and state court records are generally required to be available to the public. However, the federal Public Access to Court Electronic Records (PACER) system isn’t free. PACER charges the individuals and companies who use it for every search they run, and every page they view. Because of this, most of the people who use PACER are attorneys, credit companies, or lenders. Unless you are a celebrity, reporters and the general public won’t care enough to pay the fee to access your personal bankruptcy records.
What about identity thieves? You may worry that a bankruptcy petition and its attachments could include a lot of personal details. An industrious identity thief could make enough money to justify the costs of skimming these details from the U.S. Bankruptcy Court records. This is why it is now federal court policy that any document filed in the U.S. Bankruptcy Court must be “redacted.” Attorneys and petitioners must remove personal identifying information, including:
The process of redacting documents can be tedious, but it makes sure you don’t have to worry about protecting your personal identifying information just because you file a petition in the U.S. Bankruptcy Court.
Your Chapter 7 or Chapter 13 bankruptcy petition will include a list of all your creditors, from the mortgage company or student loan lender to your aunt who loaned you $1,000 to cover rent. Soon after the bankruptcy petition is filed, the U.S. Bankruptcy Court clerk will mail each creditor a “Notice of Chapter 7/11/13 Bankruptcy Case, Meeting of Creditors, Deadlines.” This notice:
This notice also works in your favor. Remember that filing a bankruptcy petition triggers an automatic stay of collections for debts included in the bankruptcy. Once a creditor is on notice that you have filed for bankruptcy, it must stop calling, sending letters, or trying to sue you to collect on the debt.
Most of the time, companies will learn about your bankruptcy after it is over. Lenders, creditors, and leasing companies review your credit report to decide whether to lend you money or rent you an apartment. You may also consent to a credit history search while looking for a job or as part of a background check. When that search is done, your bankruptcy will be included in the report.
A bankruptcy appears on your credit report for years after the discharge has been entered. A Chapter 7 bankruptcy will appear for 10 years. A Chapter 13 bankruptcy itself stays on your credit report for 7 years, but because those debts are paid off over time, they may continue to appear a few years later. While the bankruptcy is included in your credit report, it could cause creditors to decline loans or charge higher interest rates than they would to someone with a similar credit history that avoided filing for bankruptcy.
It is true that a bankruptcy will negatively affect your credit score. However, in most cases, by the time you decide bankruptcy is right for you, your credit score may already be quite low. The work you do to cancel delinquencies and pay off or discharge past-due balances may mean that your total credit score will be higher at the end than it was when you started the bankruptcy process.
In most cases, the emotional resistance to filing for bankruptcy doesn’t come from creditors knowing about your money trouble, but from family and friends. A bankruptcy is often the most financially prudent option for individuals and families facing excessive debt or an unexpected loss of income. But some people have a false perception that filing for bankruptcy means you have somehow failed.
The good news is that, unless you owe them money, your friends and family don’t need to know about your bankruptcy. Relatives and close friends may receive notices to creditors if you owe them money at the time you file the petition. However, if you don’t want someone to know about your money trouble, you probably have not borrowed money from them, so they will not receive notice. Since most people are not paying to search PACER to discover family secrets, you should rest assured that your closest relatives won’t be informed of your bankruptcy, even though it is technically a public record.
At John A. Steinberger & Associates, P.C., we are a full-service bankruptcy law firm in Southeast MI. We help debtors and families in Southfield, throughout Metro Detroit, and in the surrounding communities see their Chapter 7 or Chapter 13 bankruptcy through from start to finish. If you think a bankruptcy might be the best financial decision for you, call us toll-free at (866) 690-2140 or contact us online to schedule a free initial consultation.