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Should I Choose A Type of Bankruptcy Based On Privacy Concerns?

March 13, 2018

People often ask me about their privacy when they are considering filing for bankruptcy. Naturally enough, they wonder if their family and friends, or their co-workers, will know about their private affairs. Sometimes people wonder if one type of bankruptcy is more private than another.

The first thing to keep in mind is that bankruptcy is a matter of public record. It goes onto your credit report and it can stay on your credit report for up to 10 years.

Now, the good news — it’s highly unlikely that your family or friends will check your credit report. Which means unless you have a reason to tell someone, they probably won’t know.

The flip side of that is that almost all creditors check credit reports. So your future creditors will know. One effect may be that borrowing money in the future may cost you more if you have a bankruptcy on your credit report. In addition, employers sometimes check credit reports, so if you change jobs your new employer may know. Other than that, employers cannot really discriminate against you on the grounds that you have filed for bankruptcy. It can be a factor, but it cannot be the sole factor in determining your suitability for employment.

If you get a job in security or need a security clearance for a job, then the situation gets a little more complicated. If that applies to you, give me a call and we can discuss the particulars of your case.

Also, if you’re planning on renting a property and you have a bankruptcy on your record, that can negatively affect you. But again, landlords cannot discriminate against you and not rent to you solely on the basis that you have a bankruptcy on your record.

All of these issues, however, apply to all matters of public record. So if you’re trying to determine which form of bankruptcy is right for you, the issue of privacy should not sway you one way or another.

Basically, when I first meet with a client, I make sure they know the difference between Chapter 7 and 13. I then do a thorough analysis of their income and we come to an agreement on the type of bankruptcy that’s right for them — and I assure them that their privacy is important to all of us.