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Who will find out if I file bankruptcy?

By Nicholas Ortiz, Boston Bankruptcy Attorney

This is a question we hear a lot: who will find out if I file bankruptcy?

It’s a good question with a pretty simple answer, but like a lot of things about bankruptcy, people tend to worry about it. First of all, bankruptcy is a court proceeding. The fact that you filed bankruptcy will be available to anyone at the bankruptcy court or anyone who accesses bankruptcy information online. However–and this is important–this information is not free. You must belong to the PACER service center to obtain bankruptcy information. And you must pay for it. Attorneys (like us) tend to be the ones who have access to this system in order to check on our cases and get other information. Other people rarely pay for access to this system.

Bankruptcies also appear on credit reports. They do so for 10 years after a Chapter 7 and for seven years after a Chapter 13. So, every time you apply for credit during these time periods, the lender will find out about your bankruptcy. This is not as bad as you think because many, many people have filed for bankruptcy, but it something you should know before you file.

Notice of a bankruptcy case also goes out to every entity you owe money to. However, it will not go out to your employer just because you have a 401(k) loan. This is something that worries people–unjustifiably. A 401(k) “loan” is not really a loan: it’s a withdrawal from your own tax-deferred account that must comply with certain tax-related regulations.

Information about consumer bankruptcies is also not published in the newspaper. Here in Massachusetts, Banker and Tradesman publishes information about corporate bankruptcy filings, but no paper anywhere that we’ve ever heard of publishes information about individual consumer bankruptcies.

The bottom line: past and future creditors, along with court personnel, are usually the only people who will learn of a bankruptcy.
If you are nervous about this, feel free to call one of the attorneys in your area listed on this page. If you are in Eastern Massachusetts, you can set up a bankruptcy consultation with us here.

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Full post as published by Bankruptcy Law Network on September 23, 2010 (boomark / email).