Interviewer: How public is the chapter 13 bankruptcy, like who’s going to find out about it?
James Logan: The only way really to find out about it is to pull the credit report, which obviously no one has any right to do unless you’re applying for a job or applying for a credit or if you go to what they call PACER, an electronic court system, and you can search for cases there but in the vast majority of cases, no one will ever know that you filed a bankruptcy. It’s not really a public record any more than any other things that somebody’s really diligent, searches the internet and they could probably figure it out but for the most part, no one’s ever going to know.
Most of the People that File Bankruptcy Actually Have Very Good Incomes
Interviewer: Do you have to be unemployed to apply for bankruptcy or to qualify?
James Logan: No. Actually, most people who file bankruptcy have good incomes, that’s one of the reasons you’re filing is you’re filing to protect what you have. If you’re unemployed and you have no money in the bank account, there’s really nothing your creditors can do to you and there’s really not much point in filing a bankruptcy because you’re probably going to incur more debts after you file if you’re still not working. So, the vast majority of people can file a bankruptcy are just decent hardworking people and can’t afford to pay their debts as they come due but for the most part, they’re working people and they have jobs, have incomes and they just try to hold on to what they have and reorganize and make a fresh start.
An Employer is Notified of the Wage Order in a Chapter 13 Bankruptcy
Interviewer: So, if I was employed, would my employer be notified about the bankruptcy?
James Logan: In a chapter 7, your employer would probably never find out that you filed a bankruptcy. In a chapter 13, there is a wage order that will go into place when you file a chapter 13 to make sure the payments get made and that’s one of the requirements in the court is they want to do it by wage order to make sure that the payments are being made. On the other hand, personal matters are supposed to be private and confidential, so if you work for a big corporation, your HR department may find out and obviously will know about it if there’s a wage order but they’re not supposed to be telling anybody about this, your coworkers. If you work in a big corporation, no one would know about it, if you work in a small company, obviously human beings are human beings and people will talk and it may not be confidential even though it’s supposed to but payroll matters should be confidential.
It is Imperative to List All Assets and Debts on a Bankruptcy Petition
Interviewer: Let’s say I only want to file a bankruptcy on certain creditors but not on others, is that going to be possible?
James Logan: When you file a bankruptcy, you must list all your assets and all your debts, everyone you owe money to. In chapter 13, you can’t discriminate between similar creditors, so you can’t say, “Well, I am going to pay this credit card and pay that credit card”, you can’t discriminate between different kinds of creditors. For example, student loans and regular credit cards, we do a lot of cases where people pay the student loans outside because they’re not going to be discharged in a bankruptcy and will pay off the credit cards through the bankruptcy. That’s a fairly common one.
The Payments of a Co-Signer on a Particular Debt Will be Continually Paid to Protect the Co- Signer
If you have a cosigner on a particular debt, you can continue to pay that debt to protect the cosigner, we do that quite a bit, their husband or coworker or something will cosign with them and they want to make sure that they’re not harmed, so they continue to pay that debt. In a chapter 7, you can payback anybody you want after filing a bankruptcy. The effect of a chapter 7 discharge doesn’t mean that debt is not owed; it may only means that their creditor can never make any attempt to try to collect that debt from you but you can voluntarily repay any debt you want to after filing a chapter 7.