• Who Will Know If I File for Bankruptcy?

    Who Will Know If I File for Bankruptcy featured imageRecord numbers of new bankruptcy cases across the state are on the rise. And filing for bankruptcy can come with lots of questions and concerns. One of those chief concerns is who will know if you file for bankruptcy?

    Bankruptcy Defined

    Bankruptcy is a legal process consisting of federal rules and laws, offering a solution to financial problems for businesses and individuals. For example, when someone owes more debt than they can pay, bankruptcy assists them by liquidating their assets to clear the debts or establishing a payment plan. It allows individuals and businesses to get back on track with healthy finances and create a fresh start.

    The majority of cases are filed under Chapter 7, Chapter 11, and Chapter 13 of the Bankruptcy Code. We’re going to focus on Chapter 7 and Chapter 13.

    Chapter 7 Bankruptcy vs. Chapter 13 Bankruptcy

    Chapter 7, known as “straight bankruptcy,” aims to eliminate most, if not all, of your debt in exchange for your property; however, most Chapter 7 debtors keep all of their property. On the other hand, Chapter 13, known as the “wage earners” plan, is a way to reorganize your debt and catch up past due mortgage and car payments. As a result, you’re able to keep your valuable property, your house, cars, and pay off what you can over time. Both of these bankruptcy filings are designed to give debtors a fresh start.

    For more insight into the differences between Chapter 7 Bankruptcy and Chapter 13 Bankruptcy, click here.

    Who Will Know if I File for Bankruptcy?

    The filing of bankruptcy will create a public record. The Petition, Schedules, Statements, and other required documents will be maintained at the US Bankruptcy Court for your jurisdiction. Others will also be notified as required by Federal law.

    Creditors

    The clerk of court notifies that a bankruptcy petition has been filed to any creditor (an organization or individual that you owe money to) that you list when you file. This notice is not a bad thing; rather, it lets creditors know they are not allowed to call you or attempt to collect the debt without permission of the US Bankruptcy Court.

    Loan Co-Signers

    Any individual that you’ve co-signed a loan with will be informed that you’ve filed for bankruptcy. This places the co-signer on notice that you may not be responsible for the debt anymore.

    Bankruptcy Trustee

    The US Bankruptcy Court will automatically assign a Trustee to review your case. In Chapter 7, the Trustee reviews your Petition, Schedule, Statements, and documents provided to them to confirm that a) you are not committing fraud and b) that you have no assets to liquidate for the benefit of the creditors. An experience bankruptcy attorney will know whether you need to be concerned by either of these issues. A Chapter 13 Trustee also reviews your documents to determine the appropriate amount to repay your creditors.

    Credit Bureaus

    Federal law requires the US Bankruptcy Court to notify the three agencies of your bankruptcy. This information remains on your credit report for 10 years, which matches the average length of time non-payment of debt remains on your credit report. At Mummert Law, we can answer your question how this information will impact you obtaining new credit.

    Your Employer or Potential Employer

    Employers are not officially informed when you file for bankruptcy unless:

    • The bankruptcy filing stops a wage garnishment
    • Your employer is listed as a creditor, and you owe them money
    • You are filing Chapter 13, requiring a payroll deduction order for plan payments

    In addition, your current or prospective employer would need to know where to look for your information on a public record.

    Note – your employer or prospective employer is prohibited by law from discriminating against you due to your bankruptcy on record. If you lose your job or are denied employment because of discrimination, contact a bankruptcy attorney immediately.

    If you have questions about bankruptcy or are considering filing, Mummert Law can help! We are available for a consultation, at which time we’ll sit down together, evaluate your position, and determine the best way to proceed. So don’t go it alone when it comes to bankruptcy. Make your appointment with Mummert Law today!