When Filing Bankruptcy Who Is Notified?

Bankruptcy is a common method for escaping a mountain of debt, but for many people, it's an embarrassment they'd rather not publicize. Bankruptcy is a court proceeding and part of the public record, but the courts don't notify anyone but creditors and anyone involved in trying to collect money from you.

Types

If you want to file for personal bankruptcy, you'll probably need to file either Chapter 7 or Chapter 13. In Chapter 7, the U.S. Courts website states, the court can sell off some of your property to pay your creditors, after which your remaining debts are wiped out; in Chapter 13, you devote your disposable income for three to five years to paying off your debts before the remainder are erased. Some debts, such as child support, student loans and recent back taxes, can't be wiped out and must be paid in full.

Identification

When you file for bankruptcy, you'll have to submit a complete list of your creditors, the size of your debt and what kind of debt -- student loan or credit-card account, for instance -- that you owe. The bankruptcy court trustee will then notify all the creditors you listed, according to the Bankruptcy Law Firms website, so they can file any objections they might have to the bankruptcy. Once the trustee notifies creditors, it triggers an automatic stay, meaning they can't make any attempts to collect on your debt until the court case is finished.

Effects

If the creditors have already called in a collection agency or started foreclosure proceedings against you, the automatic stay will stop those debt-collection efforts, according to the Bankruptcy Form Processing website. For that to happen, the creditors will have to notify any attorneys or debt collectors involved in your case; if your employer is garnishing your wages, she'll have to be told to stop too.

Time Frame

Once you file for bankruptcy, according to Consumer Credit Counseling Services, credit bureaus such as Experian or Equifax will record the information on your credit report. Anyone who pays to get a credit report about you will learn about your bankruptcy, and the information will remain on the report for 10 years.

Warning

When you're filing your papers with the court, list every creditor, the Nolo legal website states; if you dispute your debt with a creditor, tell the court the claim is in dispute, but you still need to list it. If the court thinks you're trying to avoid paying one of your debts, that's grounds for throwing out your filing; if the court doesn't catch the omission and never notifies your creditor, the debt can't be wiped out.

References

• Bankruptcy Form Processing: When Filing Bankruptcy, WhoiIs Notified?
• U.S. Courts: Bankruptcy Basics
• Bankruptcy Law Firms: What Happens When Creditors are Notified of Your Bankruptcy?
• Nolo: Filing Bankruptcy? Disclose Everything, Hide Nothing
• Consumer Credit Counseling Services: Bankruptcy's Impact on Your Credit Report

Resources

• Nolo: Bankruptcy Center