If I file for bankruptcy, will everyone find out?

If I file for bankruptcy, who will know?

Every couple of weeks, you see a new headline about bankrupt celebrities. Chances are, those people didn’t announce their financial struggles to the paparazzi or publish their finances on the internet. How did that information become public? If you’re considering bankruptcy, you might be worried about the word getting out. You want to keep money matters private, regardless of your debt situation. Your finances probably won’t make the front page of the tabloids, but you still don’t want to advertise them. If you file for bankruptcy, who will know? See also: Chapter 7 Bankruptcy Information in NJ

The Short Answer

Bankruptcy records are public. Technically, anyone could find out about your bankruptcy, but they'd have to be looking for the filing, or be a creditor. Absent that, it's very unlikely anyone will find out about your bankruptcy.

The Long Answer

If someone wanted to find your record, though, he or she would have to jump through some administrative hurdles. For example, you have to go through the federal court system to get a special username and password in order to search for a party to a bankruptcy proceeding. Why would anyone bother unless they were a creditor (or you were a celebrity)? Bankruptcy filings are, of necessity, chock full of financial information. The filings will list your assets, liabilities, and income. They’ll also show a list of your creditors and how much you owe each one. For security purposes, certain information will be redacted from the public record. It will only show the last 4 digits of your Social Security number, taxpayer ID, birth date, financial account numbers, and the last four characters of the names of any minors involved in the proceedings. That protects you from identity theft, but not from the office snoop. That’s a lot of information, but it’s not easy to get to. You can’t just do a Google search to find it. While the records are technically public, the odds that anyone would go to the trouble of finding them are very low. You probably don’t have to worry about people finding out about your bankruptcy filing, unless they're a creditor. The Bankruptcy Court, here in New Jersey, is obligated to send notice, to all the creditors listed in your schedules, that you've filed bankruptcy. If you owe money to a friend, or family member, we'll need to disclose that, and that party would get a letter about your bankruptcy. That's the most likely way someone would find out.

Don’t Forget Your Credit Report

Assuming no one digs through the public records to find you (which is a safe assumption as long as you’re not a celebrity), there’s only one other way for people to find out about your bankruptcy without you telling them – your credit report. Bankruptcy filings show on your credit report for seven to ten years after you file. If you apply for a credit card or a loan or try to rent an apartment, your creditor is going to see that. If you’re applying for a job, your potential employer may do a credit check. In fact, your current employer may do a credit check before promoting you. Your credit report isn’t as revealing as the public records – no details will show up other than the fact that you filed.

Does it matter?

That’s the real question here. In all likelihood, no one is going to find out about your bankruptcy other than your creditors. There’s no real reason for anyone else to dig through the public records. Your employer cannot legally fire you, demote you, or take any responsibilities away from you because of your decision to file bankruptcy. Private prospective employers may decline to hire you on the basis of your bankruptcy, but public firms may not. They can’t consider your bankruptcy in any way for hiring decisions. All in all, if you’re struggling with debt, filing for bankruptcy is worth the risk that someone might find out. Besides, you shouldn’t be ashamed of asking for help. You might be surprised at how many of the people around have already done or are considering doing the same. So, if you think bankruptcy can help you, speak to an experienced attorney. She’ll be able to help you through the bankruptcy process so you can be debt-free, no matter what that nosy coworker says.