Daily Archives: July 12, 2011

Who Will Know If I File Bankruptcy?

Many clients ask me who will find out if I file bankruptcy?  Does my boss have to know? I don’t want my relatives and friends to find out.

All court proceedings are matters of public record, unless the Judge orders the records sealed at the request of a party, and it must be for special reasons.

I have never heard of bankruptcy records being sealed.

On the other hand, besides four fingers and a thumb, who cares?

Who is going to search through court records for over 40,000 bankruptcy cases filed in Detroit last year, to see if your name is in there?

No one.

In any bankruptcy case, the IRS and some other government agencies are notified, and all of your creditors.

No one else gets a notice mailed by the court.

Now, in Chapter 13, you will have your payment deducted from your pay, so your employer will know.

The local rules in the Detroit bankruptcy court require this.

The experience of bankruptcy courts across the country is that many more Chapter 13 cases succeed when the payment is sent by the employer to the Chapter 13 trustee, and you never see it, just like taxes that are witheld.

This requirement can be excused by the Judge, if you file a motion and have a good reason.  Not wanting your employer to know is generally not viewed as a good reason.

Hey, if you are already famous, like Ted Nugent, then the media will pick it that you filed bankruptcy.

And  websites will be happy to point out your downfall.

I do not get many clients like this.

Everything celebrities do is news.  Well, not really, but, it is covered by the media.

Like what clothes the prince and new princess are wearing in Canada.

Gag me with a spoon.

Plenty of professional athletes have filed for bankruptcy protection, including our own Derrick Coleman.

CNBC has a slideshow of 15 famous athletes who filed bankruptcy.

Some filed during their careers, and may have saved enough from their later years in action to still be well off.

Some have substance abuse problems, like many of us ordinary folks.

Many made bad business decisions, like many of my clients.

OK, me too, I have made my share.

Bottom line:  anyone COULD find out that you filed bankruptcy, it is not a secret, but it is also not normally reported anywhere.

4 Responses to Who Will Know If I File Bankruptcy?

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