One concern that keeps people from filing bankruptcy is the fear that everyone will find out about it. Bankruptcies do become part of the public record, which does mean that anyone who is curious enough can do some digging and find out if you’ve filed or not. But, unless someone is really nosey or has a particular interest in finding out more about your financial history, the odds of a person checking to see if you’ve filed are pretty low. That said, there are certain groups of people who will find out if you’ve filed for bankruptcy.
Your creditors are the companies or individuals to whom you owe money. It’s only natural that they’d be informed when a person files for bankruptcy. An automatic stay goes into effect immediately after a person files, meaning that your creditors are told they can no longer pursue collection of your debts.
Your Employer (In Some Cases)
For the most part, your current employer won’t find out if you’ve filed. But, if you file Chapter 13 bankruptcy and wage garnishment is part of your repayment plan, the court may send an income deduction order to your employer, which will require a portion of your wages be deducted from your paychecks and sent to the court to repay your debts. In that case, your employer will learn about your filing. Although you might feel embarrassed about that, you can rest assured that it’s illegal for your employer to fire you or otherwise punish you for filing.
Anyone Who Checks Your Credit
Potential employers who run a credit check can also find out about any bankruptcies potential employees filed. Before a potential employer can run the credit check, you have to give consent. If you are concerned about the filing or about how other details on your credit report will hurt you, you can refuse to give an employer permission. Private employers do have the option of using the information on your credit report when making a hiring decision or of using the fact that you refused to give permission for a credit check as grounds for not hiring you. A government agency, whether it’s a federal, state or local agency, can’t use the information on your credit report when making a hiring decision.
If a friend or relative cosigned a loan with you, that person will find out about your bankruptcy. Whether that person is responsible for the debt or not depends on what you file. Cosigners have less protection under Chapter 7 bankruptcies than they do under Chapter 13, according to Nolo. Under Chapter 7, the creditor can try to collect the debt from your cosigner, unless you reaffirm the debt, or keep it from being discharged. If you reaffirm the debt, you remain responsible for it. Under Chapter 13, your cosigner can be off the hook if you repay the debt as part of your payment plan.
Anyone You Choose to Tell
Bankruptcies don’t have to be top secret. They are part of the public record. While you might not need to tell your first cousin once removed or your great-aunt about your filing, you might decide to tell the people closest to you, so that they understand what you are going through and can provide support.
One other group of people will find out about your bankruptcy, and that’s the organization you turn to for your required counseling and debtor’s education before and after you file. If you are considering filing for bankruptcy, you can get a free consultation with a local bankruptcy attorney in your area
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Consumer Education Services, Inc. (CESI) is a non-profit service provider of comprehensive personal financial education and solutions for all life stages and for all of life’s milestones. Our goal is enhanced economic security for everyone we serve.
CESI is NOT A LOAN COMPANY