The Right To Privacy When Filing Bankruptcy

Bankruptcy and Your Privacy

One of the biggest fears that a debtor has when considering bankruptcy is that their privacy will be violated.  Many debtors envision a bankruptcy where the trustee searches through their home looking for valuables that they can auction off for the benefit of creditors. But is this fear really warranted?

Let’s take a look at the facts:

  1. Yes, a bankruptcy trustee does have the right to search a debtor’s home especially if they believe that the debtor is hiding assets.  But in practice this is a rare event.  Even bankruptcy debtors who are very wealthy and are at a higher risk of hiding assets usually are not subjected to home searches unless they have a history of trying to hide assets.
  2. Since most debtors filing for bankruptcy are not wealthy and are probably not in possession of very valuable assets such as gold, silver, precious stones and other easy to conceal valuables, they don’t have to worry about a bankruptcy trustee searching their home.
  3. Even if a bankruptcy trustee decides that they want to search a debtor’s home for assets they believe are being hidden, they need to get permission to do so. However, the bankruptcy debtor will not be informed before the search takes place. The debtor will not be informed of any pending home search because the bankruptcy trustee does not want to take the chance that they will remove the assets.
  4. The best way to avoid a home search during bankruptcy is by making sure that assets are reported honestly on the bankruptcy petition. If there was an error or you discover assets you failed to report initially, contact you bankruptcy attorney so they can inform the court.