Many New York bankruptcy debtors wonder if their employers will find out about their bankruptcies. The short answer to the question is the same for just about anyone whom debtors might fear will learn of their bankruptcy filings: probably not. But as with many New York bankruptcy matters, there are caveats and exceptions. Here are the most important ones.
- Bankruptcy filings are a matter of public record. Bankruptcy proceedings are just like any other court case. They are filed into publicly available databases that anyone can search. In fact, you can click to read about how to find information about a bankruptcy case to learn of the variety of ways parties and non-parties to a bankruptcy case can obtain case information. As a result, if people want to find out about a bankruptcy, they will find out about it. However, they have to know to look in the first place, and most employers won’t have a reason to check.
- When employers are creditors, they will learn of employees’ bankruptcies. This would happen because the employer has been drawn into the bankruptcy case as a party, which could happen, for example, if a debtor-employee borrowed money from the employer, like an advanced paycheck. This would be a debt that the debtor would need to list on the petition. Debtors may want to repay these debts, and they are free to do so after bankruptcy, but the discharge will prevent the employer from trying to make them.
- Employers might learn about chapter 13 cases. If a debtor in a chapter 13 bankruptcy misses a plan payment, then the trustee may attempt to garnish the debtor’s wages to cover any losses. At this point the debtor’s employer will certainly learn of the bankruptcy case. Who in the organization that actually learns of the case will depend on its size. A large impersonal employer’s payroll or human-resources division may not bother telling a line supervisor about a subordinate’s bankruptcy case.
- Employers cannot retaliate against employees for filing bankruptcy. Section 525(b) of the Bankruptcy Code explicitly forbids employers from firing employees for filing bankruptcy. This ban even applies to hiring practices and bankruptcies in the distant past.
In all likelihood, an employer will not find out about an employee’s bankruptcy barring some kind of unusual situation (like owing money to or being married to your employer). Even if the employer does find out, there’s legally nothing it can do about it. Moreover, there are few occupations in which an employer would really care.
Rather than feel ashamed about who might find out about a bankruptcy, it’s better to focus on what the advantages might be. An experienced New York bankruptcy lawyer can provide guidance on what those might be.
For answers to more questions about bankruptcy, the automatic stay, effective strategies for dealing with foreclosure, and protecting your assets in bankruptcy please feel free to contact experienced Brooklyn bankruptcy attorney Bruce Weiner for a free initial consultation.