How Chapter 13 Bankruptcy Protects Your Privacy At Work
Posted on: 23 May 2022
For many people who are hesitant to file bankruptcy, the worry that others will find out about their debt problems is very real. In particular, you may worry that your employer, coworkers, or even clients will find out you filed for bankruptcy.
But did you know that claiming bankruptcy protection can actually have the reverse effect and actively work to protect your privacy? Here are a few things you need to know.
Your Employer Isn't Actively Notified
The first thing to know about bankruptcy filings and employment is that no one goes out and tells your employer you filed. Unless your employer is a type of creditor, they do not receive any notices from the court or creditors. Chapter 7 filers often gain at least a few months to resolve their issues quietly on their own, while Chapter 13 claimants typically get several years.
Finding Public Records Takes Work
It is true that bankruptcy is a matter of public record since it goes through the court system. However, this doesn't mean it's particularly easy for everyone to access.
To access court records, someone usually has to go to the record storage location in person or send a mail request for information. Records are often filed online nowadays, but the person likely also needs to go to the extra step of registering for an account. All these added requirements mean that only the most dedicated outsider is likely to search for your court records.
Collectors Cannot Bother You at Work
If you're falling behind on payments, creditors may already be calling you, sending notices, or even visiting you in person. While state laws may ban them from coming to your workplace, collectors may still try to engage in this underhanded activity.
Bankruptcy filing includes an automatic stay that prevents any further collections activities, including calls, emails, or visiting your employer or co-workers. During Chapter 13 cases, this stay usually continues throughout the duration of the payment plan.
Bankruptcy Prevents Employee Garnishments
One of the most common ways an employee's debt problems reaches the workplace is through garnishments. A debtor who goes through the required collection steps and finally sues for payment can obtain a court order for the debtor's employer to withhold part of their paycheck and send it to the creditor.
This is called an employee garnishment, and it's sent directly to your employer. Once your employer receives a garnishment, they must follow its legal instructions. How do you prevent an employee garnishment from reaching your employer? Get the protection of the automatic stay against collections, and keep it for a while.
Where to Learn More
Bankruptcy may sound stressful for employees and business people, but it also provides proactive privacy protection. Learn more about how this works in your case by meeting with a bankruptcy lawyer in your state today. To learn more, contact a Chapter 13 bankruptcy lawyer near you.
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