For those facing severe problems with debt, bankruptcy can be a powerful step toward lasting relief. Depending on your circumstances, bankruptcy can be a way to discharge certain debts and restructure others, in order to make them less of a month-to-month burden. It’s an effective solution that has helped countless people – including business owners, retirees, and married couples – to get out from under burdensome debt, and achieve a fresh start on life.
With that said, there are many myths and misconceptions out there about bankruptcy, which have created a negative feeling on the part of many debtors. One such misconception is that bankruptcy, by nature of being a public process, will mean that all of your personal information will inevitably be exposed to friends, family, and coworkers.
So, what’s the real deal? Who has to receive notice about your bankruptcy, and who does not? What details of your bankruptcy can you keep close to the vest? Here are a few key things about bankruptcy notices, communication, and disclosures to keep in mind:
Personal bankruptcy is a matter of public record.
The reality is that bankruptcy is technically public – but in practice, this does not necessarily mean that just anyone and everyone will be able to easily access the information about your bankruptcy, whenever they’d like.
Beyond small public notices online or in a local newspaper, the public details of your bankruptcy will typically only be available in very limited ways. Broadly speaking, someone would likely have to visit the clerk of the bankruptcy court in person, or try to locate your bankruptcy information via Pacer, a digital system used by the federal courts to store and access documents and records. Pacer requires a password to use, and is generally used primarily by bankruptcy attorneys and recordkeepers.
All of your creditors and co-debtors will be notified.
Broadly speaking, direct notice of your bankruptcy petition must be sent to all relevant creditors and co-debtors. If friends, family, or members of the general public fall into this group, they will be notified of your bankruptcy, and may be able to spread the information. However, individuals in this group will typically be motivated to work with you in order to achieve a resolution, and are often already going to be aware that you are experiencing difficulty with making payments or keeping up with debts.
A bankruptcy will remain on your credit report for up to ten years.
As a rule of thumb, it’s important to keep in mind that a bankruptcy will remain on your credit report for up to ten years. Though certain accounts and debts included in your bankruptcy could fall off your report sooner, a Chapter 7 bankruptcy will remain for ten years, and a Chapter 13 for seven. As a result, any third party who accesses your credit report with your permission will know that you have a bankruptcy on your record. In many cases, a person or group who runs a check on your credit may ask for disclosures upfront, including information about prior bankruptcies.
Will your employer or colleagues need to be notified?
Broadly speaking, your coworkers do not need to be notified of your bankruptcy, unless they are co-debtors or creditors of yours. Similarly, your employer does not need to be notified automatically, though there are some cases in which a bankruptcy trustee may reach out requesting garnishment of wages (for instance, if you fall behind on the terms of a Chapter 13 repayment plan). In some states, employers may also run credit or background checks on prospective employees during the hiring process (in line with the Fair Credit Reporting Act, or FCRA), or ask for disclosure of past bankruptcies on an application form.
Want to discuss your unique circumstances?
If you’re curious about any detail or variable of the bankruptcy process in your area, one of the most important steps you can take may be to consult with an experienced, local bankruptcy attorney. A legal professional can be a powerful resource, helping you find specific answers tailored to your unique situation.
Have any more questions about the bankruptcy process in Chicago? Don’t hesitate to reach out to the attorneys and staff of the Gunderson Law Firm to keep the conversation going.
At Gunderson Law Firm, we strive to protect our clients’ assets to the full extent allowed by today’s laws throughout the complex bankruptcy process, helping them get the debt relief they not only need, but genuinely deserve.
Moving through the bankruptcy process, we can also counsel you on alternative strategies, along with realistic ways to avoid serious debt issues in the future. Our hope is that we can address your specific situation with strategic plans to help put severe indebtedness behind you, so you can enjoy life again.
Interested in learning more about any aspect of bankruptcy law in Illinois? Want to talk over your questions or concerns? Curious about finding the solutions that may work for you? Don’t hesitate to get in touch to continue the discussion.