Vail A. Kaufman, P.A.
Always Free Initial Consultations
301-850-2470 or 800-724-1621

Will My Employer Find Out I Filed Bankruptcy?

A common question asked by many individuals considering bankruptcy ask me in an initial consultation is "Does my employer have to know I filed bankruptcy?"

The answer is always "it depends."

In the event you are eligible to file a Chapter 7 bankruptcy and receive a discharge under Chapter 7 then the answer is likely "no."

In a Chapter 7, the individual filing bankruptcy is completing a "straight liquidiation," meaning that most of your debts prior to filing will be discharged by the bankruptcy.  In exchange for that discharge, you have to give up any assets -- if there are any available -- that are not exempt from the control of the Trustee.  You do not pay any of your individual creditors back directly resulting in the likelihood that your employer will not find out about your bankruptcy.

For example, if Debtor A is able to exempt all of her assets with the available exemptions other than a $1,000.00 watch that she just inherited, the Trustee will only be able to take and sell the watch and pay your creditors whatever he recovers.  Your boss or employer will not find out.

In the unlikely event you owe your employer money, then they will find out because you are required to list all your debts and all creditors receive notice of the bankruptcy filing.

In a Chapter 13, your employer may find out about your bankruptcy.  In a Chapter 13 you are creating a plan to pay back your creditors over time.  The most desirable way to make these payments is through an employer wage lien.  Your payments are split in half each month and taken in equal portions from your paycheck.

You can request a Waiver of Employer Wage Lien, but the Trustee has to agree to the Waiver.  Generally, a Trustee will agree to the Waiver, but if there are any missed payments the Trustee will seek to install a wage lien.  Also, that waiver needs to be requested, ideally, with the filing of your case.

A waiver of the wage lien in a Chapter 13 can prevent your employer from knowing of your bankruptcy filing.  That being said, the bankruptcy court filing system is a limited access system, but it is not a confidential system (your social security number always is confidential) and your filing could be subject to review by people who have access to the courts web site.

Also, if you are trying to obtain a security clearance from the Federal Government you might have to disclose the bankruptcy as part of that process.

Ultimately, no one can promise you that your employer will never find out about your bankruptcy.  Depending on the circumstances, it could be highly unlikely that they will find out.

In order to get a better idea of your personal situation, you should call and schedule a free, no-strings-attached, initial consultation. 

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Vail A. Kaufman, P.A.
8955 Edmonston Road
Suite A
Greenbelt, MD 20770

Toll Free: 800-724-1621
Phone: 301-850-2470
Fax: 301-513-0434
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