Bankruptcy Records

Bankruptcy is declared when the income of an individual or company is insufficient to cover any obligations relating to debt repayment it may have and there are no other options for it to return to a financial status from which it could fulfil such obligations. The person or organization essentially opens their books to the courts and gives up: release from most debt follows. A fresh start is allowed then by the bankruptcy system which is intended to instil increased caution with relation to obtaining credit and spending.

Bankruptcy is intended to contain an element of shame, thus the person or company who declares bankruptcy is marked by it and will be thought of warily in the business community. Thereby the person or company declaring bankruptcy will find future business partners and creditors warned off and unwilling to engage in dealings, associations, or contracts.

The filing of a bankruptcy case is legislated according to section 107 of the bankruptcy code as a matter of public record. Society has a right to knowledge of such cases in order to prevent underhanded and toxic business practices. This explains the proliferation of bankruptcy records online, with many website now offering their services to find and disclose such information from around the world. While bankruptcy records are a matter of public record, they can still require considerable research skills to obtain, thereby explaining the cost of such services. This is especially true in a global business environment where an individual or company seeking information may have to deal with the agencies of numerous states, not to mention more general language and knowledge impediments.

Fraudsters and Identity thieves are making use of the widespread availability of property records, and are using this information in their identity fraud based crimes. Thus criminals use the identities of such individuals to obtain credit. This is predicated on the fact that many bankrupted individuals are considered to be good credit risks by lending agencies as they technically cannot go bankrupt again for a minimum period of several years. It is also generally understood that business people who file bankruptcy will learn important lessons preventing them from making bad choices in their future enterprises.

The above should explain why bankruptcy records must be treated with extreme caution by all concerned. The threats of identity theft and identity fraud are a constant feature of the planning and discussions surrounding the storage and recording of such bankruptcy records.  This brings us to the curious relationship between privacy issues and bankruptcy. Those who have declared bankruptcy essentially give up their rights to privacy in its traditional understanding. Therefore the prevention of fraud is hampered by the very ideas underpinning the role of bankruptcy in society and the dissemination of bankruptcy records. The embarrassing and stigmatizing nature of bankruptcy along with the loss of privacy is an intentional functional component of declaring bankruptcy. This idea is fundamental to understanding the disclosure issues surrounding bankruptcy records and why they are one of the most easily manipulated types of records by fraudsters and criminals.