We have had a lot of clients coming in worried about the stigma of a bankruptcy. What happens to their credit? What will their family think? Will they be shunned in their community? You can rest easy, not many people will know about your bankruptcy unless you tell them. Here are the people that will know, followed by a few misconceptions.
Creditors
Creditors are obviously the largest group of people that will be notified of any bankruptcy. They have to know that you have filed so that they can make sure the debt is discharged in their system. Even if the debt is non-dischargeable, you are federally required to list all debts—including your home and car even if you are keeping them. Listing your home and car may seem scary to some, but it offers protection to debtors in case they can no longer afford the payments in the future. Just remember to pay and pay on time if you wish to retain your property!
Co-Debtors
Do you have a debt that was co-signed by a family member or friend? Since they will now be on the hook for the debt, then they will need to be notified of your case. This can be upsetting to some debtors, but imagine that you are being left with the full amount of a debt—that can be just as upsetting! Even if you are only on as a co-signer, they will still be required to receive notice of the filing. If you have co-debtors, it would be a good idea to speak to them beforehand to let them know that they will be receiving notice so they are not caught off guard.
Leases and Contracts
This is the final major group of those who will be notified of your bankruptcy filing. If you have an open contract or lease with a rental company, cellphone company, or another creditor, you will need to list them. This does not get rid of your lease or contract automatically—you must let your attorney know if you wish to retain or reject your lease/contract. This is good for debtors that are trying to get out of a contract and can’t due to cancellation fees.
Common Misconceptions
- They are going to print my name in the paper. Even if this used to be a common thing, you won’t find that happening much today. Unless you are a large or popular company, odds are it will not be printed. Although it IS public record, you have to have access to PACER and you also have to pay for that access.
- They will tell my family. Unless they are in one of the three categories, they will not be notified. If you are worried your creditors or co-debtors will spill the beans, it might be a good idea to talk to them when you file to stop that embarrassment.Â
- My rental company will spread it through the neighborhood. If you have a contract that you are keeping, then there is no reason for them to even entertain the idea. If you are rejecting your lease, talk with your rental company and explain your situation when you file.Â
The big thing to remember is that we all fall on hard times and the people around you are more understanding than you think. Even if they turn a blind eye to your situation, they cannot harass you about the debt.
Still worried about filing bankruptcy? Come speak with our experienced bankruptcy attorney, Huong Lam, and let her put your mind at ease about the process. Lam Law Firm is here to help! Call us at 843-839-9995 or fill out our contact form online to set up your initial bankruptcy consultation.
