Regardless of the circumstances surrounding your bankruptcy filing, you may be unable to keep the news of your insolvency from spreading. In many communities, the stigma surrounding bankruptcy is powerful and may linger for years. The social stain of bankruptcy may last longer than its practical effects, which can include limited access to credit and high interest rates on credit cards and personal loans. If you're thinking about filing for bankruptcy and worry about its potential to harm your reputation, you'll need to keep a few things in mind.
First, bankruptcies nearly always become part of the "public record." As time goes on, your bankruptcy's legal file will grow to include pertinent financial records, copies of sworn testimony, court records, and other information that pertains to your case. Once your debts have been discharged and your bankruptcy proceedings are dissolved, law enforcement personnel and potential employers may view these records. In addition, a record of your bankruptcy will appear on your credit report for 5 to 10 years after your filing.
Your creditors have a vested interest in your bankruptcy proceedings. Accordingly, they'll each receive a written notice of your filing and will be invited to participate in the proceedings.
In certain circumstances, this might cause word of your filing to spread among your neighbors. For instance, you might have defaulted on a loan issued by the community bank at which several of your acquaintances work. Once they become aware of your situation, it's unlikely that they'll be able to keep it a secret.
In addition to the verbal rumor mill, news of your bankruptcy may spread through print media sources. If you own your own business or your filing involves valuable assets, information about your filing may be printed in the trade reports that bankers receive regularly. These can be distributed nationally and may contribute to the continued spread of rumors surrounding your bankruptcy.
However, it's unlikely that your name will be printed in your local retail newspaper. As most bankruptcies involve relatively small pools of cash and assets, media outlets don't treat them as newsworthy. The chances of your financial misfortune becoming an official news item will increase if you live in a small, tight-knit town or occupy a prominent position in your local business community. Even so, you'll be far more likely to see your name in your local paper after you're arrested on an impaired-driving charge.