Bankruptcy Fix Up

Bankruptcy Records Online Opens The Door To Fraudulent Activities

November 1st, 2007 Subscribe To Our Feed

In today’s digital age, it is relatively easy to learn the financial habits of a person simply by searching bankruptcy records online. This method was originally set up for creditors or potential business investors so that they could get an accurate picture of a person’s financial history. However the open book created by bankruptcy records online also places a person at risk to identity theft and fraud.

Regardless of whether a person has filed for Chapter 7 or 13 personal bankruptcy of chapter 11 for a business, their financial details are recorded and can be viewed by the public. As has been said, this gives potential creditors information to help make a decision on whether to give an applicant a loan or other form of credit.

However there is a waiting period of a few years before a person can file again. During this time their information is open and potential identity thieves can use this information for their own purposes. This might include applying for credit and using this money to put the person into more financial trouble.

It is an open debate as to whether this is an unfair hindrance on the bankrupt or whether they have forfeited the right to financial privacy because of their irresponsible actions. As identity fraud becomes more prevalent this debate will no doubt shift in favor of the bankrupt.

Additionally, the person’s bankruptcy records will become part of their financial history, affecting their credit report for several years, influencing the interest rate they must pay on future loans considerably higher than loans for people without the stigma of a bankruptcy on their record.

For many, bankruptcy becomes their only avenue when financial obligations exceed their ability to cover them. They have no option but to start over again with a blank slate. A court can release a person from debt with the hope they will use it as a learning experience to get their financial house back in order. The court maintains bankruptcy records on every person or business, which will be open for any curious person to review.

Not only are the bankruptcy records online designed to be a warning for others against future dealings, they are meant to be a reminder to the debtor that they need to pay their bills on time and the anguish they have experienced as a result of bankruptcy. Although bankruptcy does not have the stigma attached to it that it once had, it can still be a source of embarrassment to the individual or business and a constant reminder that they have to be more prudent in their financial dealings.

It is this level of embarrassment (and difficulty in getting future finance) that many creditors see as punishment for failing to pay outstanding debts. And bankruptcy records online are a part of that embarrassment. Knowing they are open to friends, relatives and employers may act as a deterrent to people filing for bankruptcy.