Creditors Beware: Please Follow The Laws When Filing Bankruptcy Proof of Claims. PART 1 of 2

This last week, Bankruptcy Judge Taylor in the Southern District of California Bankruptcy Court, sanctioned First Future Credit Union and Keypoint Credit Union for failing to redact personal and confidential information belonging to debtors, in the proof of claims they filed in a Chapter 13 Bankruptcy Case. While such information may have been unintentionally placed, it nevertheless cost them nearly $3000.00. So what did they do wrong and as a Debtor, how does this affect you?

Your Bankruptcy Case and the documents filed therein are public information. That means anyone can view your petition either online or at the Court House. Anyone can see what assets you own, what debts you owe, what your monthly income and expenses are, and what financial transactions occurred in the months and years leading up to your bankruptcy.

But don’t be too alarmed. Generally, only your creditors are interested in this information and most the time its not published in newspapers, or other media. Its also tough to search out in that unless you know what you are looking for, there are literally millions and millions of petitions to search with online. Nevertheless, everyone needs to be careful that certain identity information does not hit these public documents. Otherwise, it may just fall into the hands of criminals and could take many years to fix!

While your bankruptcy petition and schedules redact most your personal information such as social security numbers and account numbers, the claims creditors file in response to the bankruptcy are not always as diligent. Frequently, they contain confidential records which in turn contain identity information such as social security numbers, birth dates, phone numbers, minor children, and other personal info.

Many laws presently forbid the publication of this information. By publishing such information, a creditor will be breaking state laws, federal laws, local court orders, and common law torts such as invasion of privacy. The publication of such information then opens the doors to identity theft.

Unfortunately, criminals actively seek identity information. It’s one of the fastest growing crimes in America, with a stolen identity taking place ever 3 seconds. Criminals then sell social security numbers and other confidential information. The buyers of this information use this in a number of ways, the most common of which are: obtaining new credit(and yes, bankruptcy social security numbers get new credit very easily), immigration purposes, and for new “clean non-criminal records.” The victims, in turn, find that they now owe debt not theirs, now have illegal aliens using identity, and now have bench warrants and other criminal records.

To read what happened to First Future Credit Union and Keypoint last week, click here!

Written by Michael G. Doan