Cleaning Up My Financial Disaster

Posted on: 24 March 2018

While the stigma of bankruptcy may stain your credit report for a few years, what might make you feel even worse is if everyone who knows you finds out about your financial predicament, especially if you live in a small town. As you face your financial hardship, keep in mind the following ways in which you might be able to keep your personal woes from becoming public knowledge.

1. Notify Your Bankruptcy Lawyer That You're Trying To Keep The Ordeal Under Wraps

Lawyers know all about keeping information confidential and yours will advise you about everything you can do to avoid any unnecessary public humiliation. Also, your bankruptcy attorney may be able to request that some of your documents are "sealed", which means unavailable in the public records system:

• If you're involved in any business covered by trade secrets, parts of your bankruptcy could be sealed, to keep that information private.
• Should any part of your filing involve scandalous information that could potentially harm your reputation or defame you personally, you might be able to have that sealed, too.
• If you can prove that having your information available to the public could cause you physical harm, such as in a domestic violence situation, your lawyer can file a motion to seal the documents.

2. Don't Discuss Your Finances Publicly

Although your bankruptcy filing will be a matter of (searchable) public record, if you don't offer anyone clues as to what you're doing, they're not likely to look you up on their own. Keep your paperwork away from prying eyes and consider meeting with your attorneys far enough away from your places of work and residence, so that no potentially gossip-spreading person observes you together. Going through this financial crisis may make you feel like having a heart-to-heart with someone, but doing so comes with the risk of everyone finding out about it.

3. If You Want A New Job, Find One Before Filing

The court will not inform your current employer about your filing; however, any future employer you apply with may make inquiries and you'll be forced to reveal the bankruptcy. If, looking ahead, you see yourself as wanting or needing a change of employment, ask your lawyer about doing that sooner, rather than later. Unless your wages are going to be garnished, there are ways of keeping your finances private from employers, if you plan ahead.

4. Keeping Your Landlord Out Of The Loop

Whether your rent is discharged as unsecured debt  (Chapter 7) or part of a restructured payment plan (Chapter 13), there's no way around a landlord you're now renting with discovering your bankruptcy if you're behind on your rent. If you're not in arrears and your landlord doesn't perform annual background and credit checks to re-certify you, your financial secret would be safe, likewise if you applied to rent a new apartment without the extensive background investigation, but that's not very likely, unless you seek out specific arrangements, such as:

• No credit-check listings, which may mean higher rent and/or deposits.
• Apartments around a college or university, where credit standards may be lower.
• Entering into a lease with a qualified co-signer.

6. Plan On Paying In Cash After You File

Lenders would discover your bankruptcy if and when they run a credit check on you, but if you pay cash, that won't be necessary. You should also weigh the benefits of credit-building loans, which will help you repair your credit, against keeping your information private.

7. File Without Your Souse, If Possible

If you're married, but your spouse doesn't carry a significant amount of debt in their name, you can file without them. This carries the benefits of limiting the scope of what neighbors can find out about you, along with leaving you more options in renting or financing anything in the future, if it's done under your spouse's name only.

It can be very difficult to keep the details of your bankruptcy out of the realm of gossiping and judgmental neighbors in a small town, so if they find out, don't take it too hard. Hundreds of thousands of people just like you go through this every year and it doesn't make you a bad or lesser person; rather, it means you're in the process of learning lessons and trying to improve yourself. To learn more about filing for bankruptcy, contact a legal team like Haven Law Group, P.C.