Finding yourself in financial trouble can be a bitter pill to swallow. There’s a lot of personal shame involved, and then there’s the perception that you’re not able to manage your money properly. After all, you don’t want your personal affairs made public, with people you barely know asking you about your financial status.
So, who will know if you file for bankruptcy?
Generally speaking the only people who know about your bankruptcy filing will be:
- You
- Your creditors
- The court clerks
- Your court-appointed trustee
Will Your Employer Be Informed?
This is one of the most frequently asked questions and it’s asked simply because people filing for bankruptcy are concerned that their livelihood will be impacted by their decision. The good news is that no employer is permitted to fire you on the basis that you’ve filed for Chapter 7 or Chapter 13 bankruptcy.
Your employer’s HR department would be informed of any wage garnishment as part of a Chapter 7 or Chapter 13 filing, but it’s their responsibility to never disclose or discuss that information with anyone but you.
If you are currently unemployed and seeking work, it is possible that a private employer can deny your job application based on the fact that you are currently going through bankruptcy. Public and government employers are not permitted to prevent you from applying for or getting a job with them.
Family And Friends?
Although your bankruptcy filing will be a matter of public record, remaining on your credit report for 10 years, nobody in your family or social circle will know about it unless you tell them.
The only exception to this will be if a family or friend has co-signed a loan or finance agreement as guarantor for you. They are legally liable for the repayment of this loan because they’ve co-signed for it, so will become a de facto debtor in the bankruptcy filing. This is not an ideal outcome, but it’s how the law works in these matters.
The Courts
Remember that most courts handle hundreds of bankruptcy petitions every single month, so yours will disappear into the noise. In fact, almost 1 million people file for bankruptcy each year in the United States, so you’re just one of a huge number of people going through this process right now.
Court clerks have no interest in the names on the documents in front of them, and bankruptcy trustees are equally impartial. In short, you have nothing to worry about in that regard.
The only bankruptcies you see reported in the news are those of celebrities, politicians or somebody who is well known in the local community. Even at that it’s a tiny risk, and will probably only feature in the court proceedings section of your local newspaper, buried beneath all the other news.
In Summary
The only people outside of the courts who will ever know about your bankruptcy filing are either those you tell directly, or potentially the HR department of your employer. Besides that nobody will know.