How Does The Bankruptcy System Protect Your Privacy?

Filing for bankruptcy protection is a necessary tool at times, but many Americans hesitate to make use of it for a variety of reasons. One of the biggest is the fear of their personal and financial details becoming public knowledge. 

If you worry about this, though, know that the bankruptcy process protects your privacy in several important ways. Here's what you need to know about three of them.

1. Redaction of Details

First of all, your personal identification data is not part of the public court record. As with many types of court cases, information such as your address, birthday, Social Security number, phone number, account numbers, and other identity markers are redacted from public records. 

Redaction is done as a matter of form in most cases. However, if you find something isn't redacted but you have reason to believe it should be, you and your legal representative can petition the court for changes. 

2. Control Over Telling Others

Yes, bankruptcy cases are a matter of public record. However, that doesn't mean that everyone around you is informed that a record exists. Notices are sent only to parties that are relevant to the financial proceedings, including creditors and lenders. But your boss, neighbors, family, or co-workers will not automatically know you filed a claim. 

How much you tell those around you is largely up to you, unless any of these needs to make a claim, shares an asset or debt with you, or otherwise has a financial stake. And a past case is only likely to show up in background checks if directly searched for or the check includes your credit history. 

3. Limited Access to Records

Finally, perhaps your concern is that someone will find out and can then go look at your financial details in court records. This is technically possible. But it's not as easy as it sounds. 

A person who wants a copy of bankruptcy records must generally go to the bankruptcy court in which you filed and request access from the clerk. To obtain electronic records, access usually requires a subscription to a platform such as the Public Access to Court Electronic Records (PACER) and a fee. Few people will go to this trouble. 

Where Can You Learn More?

Do you want to know more about how your privacy will be protected during bankruptcy? Do you have specific concerns unique to your situation? Meet with a bankruptcy lawyer to learn more.