Should you keep your bankruptcy secret?
Image Source: Flickr User Stuart Richards
One of the concerns we often address with our bankruptcy clients is who will know that they filed bankruptcy. For the most part, only people you tell will know. It is true that bankruptcy petitions, both business and personal, are a matter of public record, but it is rare that the “public” becomes aware of bankruptcy filings. If you have an attorney friend or family members that regularly scours local bankruptcy filings on the Federal website, they may come across your name, but this seems unlikely. The question is, should you tell your family that you filed for bankruptcy?
The argument for yes
If you opted for Chapter 13, it might be harder to keep it from your family because you will be involved in the process for three to five years. This means you’ll be living on a tight budget for years to come, and you may want to be able to explain why you can’t take costly family vacations or eat out with them more often. If you opted for Chapter 7, it might come up if your family notices you don’t have any credit cards and always pay cash or debit. If you owe your family money, letting them know you filed bankruptcy to clear up your debts may give them hope that you will be able to pay them back.
The argument for no
Filing bankruptcy is a legal and legitimate way to extricate yourself from unmanageable debt, but not everyone views it in a positive light. You should not feel bad about opting for bankruptcy to get debt-free. But if you know that any of your friends or family will make you feel guilty about bankruptcy or sabotage your fresh start. If there are some family members you feel will be accepting and some that will not, you may want to consider keeping news of your bankruptcy to yourself rather than telling some, but not others.
Special considerations for your spouse
You can choose to file bankruptcy without your spouse, but it’s a bad idea to try and keep the fact that you’re filing from your partner. You will be getting mail from the court and will have to see your lawyer occasionally, and it’s hard to hide this activity – and not fair to your spouse. You wouldn’t want your husband or wife to hide something this significant from you. It’s probably not a good idea to try and keep bankruptcy a secret – particularly a Chapter 13 which can last up to five years. But, everyone’s situation is different, so ultimately, it’s up to you whether you share the filing with your spouse.
Special considerations for co-signers of debt
If you have friends or family – or your spouse – that carries co-signed or joint debt with you, your filing bankruptcy will affect them significantly. Not only should you tell them that you filed, you likely should tell them before you file and discuss the impact on them and make a plan for the future. With co-signed debt, like an auto loan or joint credit card, your bankruptcy only removes your obligation for the debt. The co-signer is still responsible for the debt and will be held accountable by your creditors. All collections efforts towards you stop once you file bankruptcy, and then the creditor focuses on your co-signer.
In some ways, it may be less stressful to tell those closest to you that you filed bankruptcy and why you chose to do so. But, in some cases, you may not want to deal with the pressure of judgment from family or friends. The aftermath of bankruptcy should be about making the most of your fresh financial start, rebuilding your credit, and moving forward with your life. If keeping your bankruptcy private helps meet those goals, it’s something to consider – and will vary from person to person.
To find out more about the fresh start offered by bankruptcy, contact the Law Offices of John T. Orcutt. Call +1-919-646-2654 for a free North Carolina bankruptcy consultation at one of our locations in Raleigh, Durham, Fayetteville, Wilson, Greensboro, Garner or Wilmington.