Fact: Most people find bankruptcy to be a humiliating experience, and are afraid that anyone and everyone - from friends and family to neighbors and coworkers - will find out their secret.
First of all, I think the stigma is unnecessarily exaggerated. Many people find themselves in bankruptcy through no fault of their own - from disastrous medical events, being laid off in the bad economy, or a vehicle needing expensive repairs. Even those who find themselves in bankruptcy - at least partially on their own accord - shouldn't feel overly guilty. This country has never emphasized financial education in its schools, so very few of us know how to read a contract, or fully appreciate the effect of interest and loan terms on debt. People make mistakes, and those mistakes needn't destroy you for life. The trick is to learn from them so you don't repeat the same mistakes. Bankruptcy gives you that fresh start.
The fact of the matter is that a LOT of people file for bankruptcy. Undoubtedly (and statistically), you are acquainted with several people who have filed for bankruptcy. You might just not be aware that they filed for bankruptcy. In the state of Wisconsin, I would estimate that between 25 and 35,000 people file for bankruptcy each year.
So who will find out? For the most part - those who will find out will be (a) your creditors - the bankruptcy court has to send out notice to all of your creditors, and (b) anyone who pulls your credit report for the next 10 years. It is uncommon for anyone else to find out you filed for bankruptcy.
Yes, bankruptcy is a matter of public record. Wisconsin residents may be familiar with Wisconsin Circuit Court Access (CCAP), which is a free, publicly accessible, searchable database of all state court cases. The good news is that bankruptcy cannot be found on CCAP. Why? Because CCAP is a database of state court cases. Bankruptcy is a federal court case.
The federal courts have an analog to CCAP called PACER, but unlike CCAP, you must have a paid login to access it. For the most part, the only people with access to PACER are legal and financial professionals who need to access these sorts of records.
Newspapers and tabloids often feature news about bankruptcy for celebrities and airlines. However, they do not publish notices of bankruptcy for ordinary individuals. That's because (a) publication by newspaper is not valid form of notice in bankruptcy procedure and (b) there are simply too many bankruptcy cases to fit in an ordinary publication. I am aware that back in the day, bankruptcy cases used to be published in the newspaper, and I cannot categorically deny that there isn't some backward newspaper in some corner of the country that still does this. However, I am unaware of any newspaper in the state of Wisconsin that does this.
Your friends, family, and neighbors are very unlikely to discover your bankruptcy unless you tell them, or unless you owe them money. Remember, there's a very good chance several people you know filed for bankruptcy, but you don't know that they filed.
Employers are slightly more likely to find out you filed for bankruptcy. This is true of anyone who files Chapter 13 bankruptcy and has a payroll deduction order for the plan payments (most trustees are flexible and will allow you to make direct payments if this is a concern, so long as you remain current on your plan payment commitments). Employers would also find out if you are currently having your wages garnished, and your attorney needs to notify your payroll department of the bankruptcy to terminate the garnishment. Most people feel that the wage garnishment dulls the humiliation factor of bankruptcy.
Want to find out what bankruptcy could mean for you? Call (920) 490-6160 now to schedule a free consultation.
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