Embarrassment is one of the most common reasons that people avoid filing for bankruptcy. They fear that others might learn about their challenging circumstances and judge them.
However, many bankruptcy cases are the result of uncontrollable circumstances, such as medical challenges or unexpected job loss caused by economic downturns rather than job performance. People who might benefit from personal bankruptcy may find themselves worrying about whether their employers or people they know are likely to learn about their bankruptcy case.
Technically, bankruptcies are public record
Federal statutes clearly make bankruptcy proceedings public record in most cases. Additionally, local courts tend to report bankruptcy filings and other legal proceedings to local newspapers for publication in the legal notice section.
However, fewer people diligently read newspapers now than in decades past. The decline in subscription rates triggered by the move to digital media has reduced the likelihood of nosy neighbors spotting a known name as they scan the legal notice section of the local paper. While the court records of a bankruptcy are technically public, people must be aware of the bankruptcy case to file a request to access those records.
Employers do sometimes learn about prior bankruptcy cases when they pull credit reports during onboarding or when considering a worker for a promotion. However, credit report records of bankruptcy are temporary and fall off an individual’s report either seven or 10 years after the completion of the bankruptcy, depending on the type of bankruptcy filed.
Most people can keep their bankruptcy cases private by choosing not to share details with others. Discussing personal concerns regarding a potential bankruptcy filing with a skilled legal team can help people with overwhelming debt make informed choices. The public nature of bankruptcy records should not deter most people from pursuing financial relief.
