Study of Financial Privacy 

and Bankruptcy

January 2001
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FINANCIAL PRIVACY IN BANKRUPTCY:

A Case Study on Privacy In Public and Judicial Records

Table of Contents

EXECUTIVE SUMMARY

1. INTRODUCTION: BANKRUPTCY DATA IN CONTEXT ....................... . . 1

(a) Clinton Administration Initiatives to Protect Financial Privacy ....................... ... 1

(b) Privacy in Public and Judicial Records ....................... ..................... 2

(c) Privacy and Corporate Bankruptcy ....................... ....................... . 3

(d) Outline of the Report ....................... ....................... ........... 4

(e) Limitations of the Study ....................... ....................... ........ 4

2. BANKRUPTCY LAW AND PERSONAL INFORMATION IN BANKRUPTCY ....... 5

(a) Overview of the Consumer Bankruptcy Process ....................... .............. 5

(b) Personal Information Collected from the Debtor ....................... .............. 8

(c) Access to the Debtor’s Personal Information.. ....................... .............. 9

(d) Limits on Access to the Debtor’s Personal Information ....................... ........ 10

(e) Judicial Branch Policy on General Public Access to Case Files ....................... . . 11

(f) National Data Center Policy on Access to Case Files ....................... ......... 12

(g) Financial Privacy Statutes That May Apply in Bankruptcy Proceedings .................. 13

(i) The Fair Credit Reporting Act ....................... ..................... 13

(ii) Gramm-Leach-Bliley Act ....................... ....................... . 13

3. THE NEED FOR GENERAL PUBLIC ACCESS TO FINANCIAL INFORMATION IN

BANKRUPTCY....................................... ....................... ................ 16

(a) Facilitating the Fair and Efficient Disposition of Bankruptcy Cases ..................... 16

(b) Promoting Public Trust and Accountability in the Bankruptcy System ................... 17

4. PRIVACY INTERESTS IN FINANCIAL INFORMATION IN BANKRUPTCY ...... 17

(a) Privacy Interests in Financial Information ....................... .................. 17

(b) Special Privacy Interests of Debtors in Bankruptcy ....................... .......... 19

5. MODELS FOR BALANCING PRIVACY AND ACCESS ....................... . . 20

(a) Introduction – Case-By-Case Determinations ....................... ............... 20

(b) Rules Based Models ....................... ....................... ........... 21

(c) Fair Information Principles ....................... ....................... ..... 24

(d) Hybrid Models ....................... ....................... ............... 24
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6. CONCLUSIONS ....................... ....................... ............ 27

(a) Findings ....................... ....................... ................... 27

(i) Access to Information is Necessary for Case Administration ..................... 27

(ii) Access to Information is Necessary to Ensure Accountability ..................... 27

(iii) Debtors Have a Privacy Interest in Certain Highly Sensitive Information ............ 28

(iv) Storage of Personal Information in Government Electronic Systems Poses New Privacy

 

Concerns..............................................................................................................................2

8

(b) Recommendations ....................... ....................... ............ 28

(i) Balance Interests In Efficiency, Government Accountability and Privacy ............ 28

(ii) Th General Public Should Have Access to Core Information

............................................30

(iii) Parties In Interest Should Have Access to the Full Range of Non-Public Information,

Subject to Re-use Limitations ....................... ..................... 32

(iv) Incorporate Fair Information Principles ....................... .............. 34

Appendix

I. Summary of the Public Comments

ii) Information Provided on the Bankruptcy Petition and Related Schedules

III. Bibliography
1/

For the purposes of this report, the term “private entities” include s the general public, parties in interest, and

other non-governmental entities, but does not refer to private bankruptcy trustees appointed under Title 28 U.S.C.

§ 586(a) or to governmental entities, including law enforcement and regulatory agencies. 

2

 The term “access” often is used by the privacy community to denote an individual’s access to his or her own

records. In this report, however, the Study Agencies use the term “acce ss” to refer more broadly to anyone’s

access to an individual’s records, including access by the general public or a limited category of individuals or

entities, as evident from the context of a particular discussion.

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Executive Summary

INTRODUCTION

In April 2000, President Clinton announced a plan to provide consumers with

comprehensive protection of their sensitive financial information. One set of issues was reserved

for special study: the implications for personal privacy of the availability of personal financial

information in bankruptcy cases. The President’s announcement noted that “bankruptcy records

contain detailed sensitive information about debtors (including account numbers, social security

numbers, account balances, income sources, and payment histories). In addition, aggregation and

electronic distribution of this information could lower bankruptcy costs, but it also could make

information easily available to neighbors, employers, marketers and predators looking for those

most likely to be lured by scams.”

The President directed three federal agencies, the Department of Justice, the Department

of the Treasury, and the Office of Management and Budget (the Study Agencies), to study how

best to handle private entities’1 access2 to personal financial information found in bankruptcy court

records.

ACCESS AND PRIVACY INTERESTS IN INFORMATION IN BANKRUPTCY

Bankruptcy is a process for adjudicating the debts of an individual or business unable to

meet obligations to creditors. In seeking relief, a debtor is required, particularly in cases involving

consumer debts, to provide significant amounts of personal information to the courts and trustees,

such as schedules of assets and liabilities, current income and expenditures, and a statement

detailing the debtor’s financial affairs. Current law does not explicitly balance the legitimate needs

for general public access to bankruptcy records and debtors’ interests in protecting the privacy of

their most sensitive financial information. Current law provides that all documents filed with the

court in a bankruptcy case are public records and are subject to public examination unless sealed,

and places no restrictions on how trustees can handle information about debtors in the course of

administering cases. 

Although information provided by debtors in consumer bankruptcy is essential to the

administration of cases and to the integrity of the bankruptcy system, the comprehensive data
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provided by debtors contains sensitive personal information, such as Social Security numbers,

bank or credit card account numbers, incomes, and detailed listings showing individuals’

medical expenses and other regular expenses. This information, if used improperly, can damage a

debtor’s ability to obtain the financial “fresh start” afforded by bankruptcy, and can be used to

perpetrate identity theft and other crimes. 

The emergence of new technologies has an impact on both general public access to

information in bankruptcy and the debtor’s interest in the privacy of such information. Increased

use of the Internet and other powerful databases – both in the judicial system and among the

general public – is lowering the barriers to access for parties that have an interest in that

information. Personal, often sensitive information, now may be accessed and manipulated from a

distance and used in ways not envisioned when the rules that currently govern such records were

created. This, in turn, heightens the interests of debtors in ensuring that this information is

protected from misuse by private entities.

REQUEST FOR PUBLIC COMMENT

 To assist preparation of the Study, in July the Study Agencies requested public comment

on a series of questions focused on: the types of information collected from individual debtors in

bankruptcy; the need for the general public to have access to such information; the privacy

interests of debtors; and the impact of technology on the debtor’s privacy, general public access,

and principles for the responsible handling of personal data. The Study Agencies received and

evaluated approximately 40 comments from the creditor industry, the information industry,

consumer and privacy advocates, bankruptcy experts, academics, and others.

OUTLINE OF THE REPORT

The body of this report discusses in greater detail the competing interests of private

entities in access to a debtor’s information in the personal bankruptcy process and the debtor’s

interest in privacy. It concludes with a set of recommendations on how the system can strike a

better balance between these interests. Chapter One introduces the issues and places them in

context. Chapter Two describes the consumer bankruptcy process and the types of information

collected from debtors during the process. Chapter Three explains the purposes of general public

access to bankruptcy records, emphasizing the importance of facilitating the efficient disposition

of cases and the need for public trust and accountability in the system. Chapter Four discusses

protecting the privacy of the debtor’s personal financial information in bankruptcy court filings in

the context of access and re-use by private entities. 

The report then turns to finding solutions to the conflict between access by the general

public and the debtor’s privacy. Chapter Five describes models illustrating how the interests of

privacy and general public access have been balanced with respect to other collections of personal

data. The report covers models that strike different balances between the need for access by the

general public to information and interests in privacy. The Study Agencies also considered the

need for adoption of “fair information principles” described in the body of the report. Finally,
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Chapter Six presents a series of findings and recommendations designed to foster a more

appropriate balance between the debtor’s privacy and general public access to this information in

the bankruptcy process.

LIMITATIONS OF THE REPORT 

The purpose of the report is to address the access and re-use by private entities of

personal information disclosed in bankruptcy filings. The report’s recommendations are not

intended to address the access or use of bankruptcy information by governmental entities in

connection with their important public responsibilities, or the communication of personal financial

information by or to governmental entities for functions they serve. The report also does not

address possible First Amendment issues regarding access to information in bankruptcy cases by

the public and the news media. 

The access and use of bankruptcy information by governmental entities serve important

purposes in protecting the integrity of the bankruptcy system, fighting crime and fraud, and

addressing other issues of public policy. 

CONCLUSIONS

The conclusions of the Study Agencies are divided into findings and recommendations. 

The key findings of the Study are: 

(1) The rights of parties in interest and the fair and efficient administration of cases require

that certain personal information be available to the courts, parties in interest and

governmental entities; 

(2) Ensuring accountability and preventing abuses of the bankruptcy system requires that

some personal information filed in bankruptcy cases be available to the general public; 

(3) Certain personal information collected from debtors in bankruptcy proceedings is highly

sensitive and, in other contexts, is protected by financial privacy laws; and 

(4) Information held by government, including the judicial branch, increasingly is being

collected, stored, and transmitted electronically. Although the use of electronic systems

provides more efficient services, it may create new hazards for the privacy of personal

information.

To address these findings, the Study Agencies submit the following recommendations:

(1) Balance Interests in Efficiency, Government Accountability and Privacy. The Study

Agencies recommend that the goal of protecting personal privacy be given increased 
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emphasis in the bankruptcy system. Bankruptcy information policy should better balance

society’s interests in fair and efficient case administration, bankruptcy system integrity,

government accountability, and the debtor’s privacy. As electronic tools for accessing

case information develop and improve, there is an increased need for analysis of access

issues to ensure the integrity and proper administration of the system. 

(2) The General Public Should Have Access to Core Information. The Study Agencies

recommend that the general public continue to have access to some general information so

that the public can hold the bankruptcy system accountable. At the same time, the Study

Agencies recommend that the general public not have access to certain highly sensitive

information that poses substantial privacy risks. This information may include, among

other items: Social Security numbers, credit card numbers, loan accounts, dates of birth,

and bank account numbers. Similarly, the Study Agencies recommend that schedules that

show detailed profiles of personal spending habits and debtors’ medical information be

removed from the record available to the general public. Finally, the Study Agencies

recommend that special attention be given to protecting information regarding entities or

individuals who are not parties to the bankruptcy proceeding. This includes detailed

personal and financial information regarding non-filing spouses, relatives, or business

partners.

(3) Parties in Interest Should Continue to Have Access to Non-Public Highly Sensitive Data,

Subject to Re-use and Re-disclosure Limitations. The Study Agencies recommend that

parties in interest and potential parties in interest have access to a broad range of

information collected in bankruptcy proceedings in order to exercise their rights and

responsibilities. When private entities have such access, however, the Study Agencies 

recommend that they generally be prohibited from reusing or re-disclosing the information

for purposes unrelated to administering bankruptcy cases. However, these re-use and redisclosure limitations should not restrict private entities from continuing to share

information with governmental entities, including law enforcement and government

regulatory entities. The Study Agencies recommend that as decision makers craft

information policy on non-public information, they do so in a way that does not infringe

upon the current ability of governmental entities to gain access and use of this information. 

The Study Agencies also recommend that the detailed information that appears in a

bankruptcy filing be available to academics and other researchers on a de-identified basis,

while preserving access for parties in interest and governmental entities. 

(4) Incorporate Fair Information Principles. The Study Agencies recommend that the

bankruptcy system incorporate fair information principles of notice, consent, access,

security, and accountability. 
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BROADER IMPLICATIONS OF THE STUDY

This report focuses on how to balance the need for access to information by private

entities and the debtor’s interests in the privacy of his or her personal financial information in the

context of bankruptcy cases and proceedings. The Study Agencies intend, however, that the

report’s methodology and principles also will contribute to the continuing debates over access to

records by the general public and privacy in non-bankruptcy contexts.

For example, one such debate – focusing on judicial records generally – is currently

underway. In the judicial branch, accessible files containing information relevant to individual

proceedings allow members of the general public and the media to monitor the judicial process

closely and prevent abuses of judicial power. At the same time, judicial files – beyond bankruptcy

filings in court – also often contain sensitive personal information. For example, personal injury

litigation may involve motions, depositions, and interrogatories that contain detailed information

about a patient’s medical condition, including the results of psychiatric examinations. An

individual’s privacy concerns may be heightened if that information is made available through a

simple name search on the Internet. The Administrative Office of the U.S. Courts has sought

public comment on the need to balance accountability and privacy concerns in light of more

widespread access to sensitive information in case files. 

State and local governments are also faced with this challenge. Generally speaking, state

and local governments operate under an open records system. As a result, one can visit a state or

local government office and view personal property records, tax records, marriage licenses,

recreational licenses, and professional licenses, among other personal data. As more of this

information becomes available electronically to remote and largely anonymous users, private

entities easily can gain access to the intimate details of an individual’s life by compiling a profile of

that individual based on a wide range of public record data. 

These areas – judicial records and state and local government records – are ripe for

further study. The Study Agencies hope that the methodology and principles applied in this

bankruptcy study may be drawn upon by researchers looking at public records and privacy more

broadly. 
3

See Federal Register Notice Requesting Public Comment on Financial Privacy and Bankruptcy, 65 Fed. Reg.

46735 (July 31, 2000). Available at http://www.usdoj.gov/ust/privacy/privacy.htm.

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1. INTRODUCTION: BANKRUPTCY DATA IN CONTEXT

1(a) Clinton Administration Initiatives to Protect Financial Privacy

On April 30, 2000, President William J. Clinton announced a legislative proposal to provide

American consumers with comprehensive protections for their sensitive personal financial data. 

Building on the foundation of strong new financial privacy protections signed into law as part of

financial services modernization legislation in 1999, this effort featured as its centerpiece the

proposed Consumer Financial Privacy Act. This proposed legislation was designed to close gaps

in existing laws, provide consumers with choice about the use of their data within rapidly growing

and diversifying financial conglomerates, and provide special protections for the use of medical

data and detailed information about individuals’ overall spending habits. In announcing the

proposed legislation, the President said: “your information doesn't belong to just anyone; every

consumer and every family deserves choices about how their personal information is shared.”

At the same time, the President identified one area for additional examination by the

Administration, directing the Department of Justice, the Department of the Treasury, and the

Office of Management and Budget to conduct a study of the privacy issues raised by the

availability of personal financial information in bankruptcy cases to the general public. A release

announcing this study said:

Bankruptcy records contain detailed, sensitive information about debtors

(including account numbers, social security numbers, account balances, income

sources, and payment histories). Aggregation and electronic distribution of this

information could lower bankruptcy costs, but it also could make information

easily available to neighbors, employers, marketers and predators looking for

those most likely to be lured by scams.3

In response to the President’s directive, the Study Agencies considered three

broad issues. First, the personal information about debtors collected in bankruptcy cases includes 

types of information that were the subject of the Administration’s financial privacy initiative. At

present, debtors filing for bankruptcy are required to submit substantial amounts of personal

information to courts and trustees. This information is crucial to several functions of the

bankruptcy system, including providing notice to interested creditors and other parties, facilitating

the administration of bankruptcy cases, protecting creditors’ rights, and allowing the general

public to monitor the functioning of the bankruptcy system. At the same time, the data submitted

by debtors contains highly sensitive personal financial information that, if used improperly, could

damage a debtor’s ability to regain a solid financial footing, and could be used to perpetrate

identity theft or other fraud. The potential for misuse of this data raises questions about

appropriate boundaries for its dissemination, particularly since the same financial information

openly available in bankruptcy files is often legally protected from disclosure when held by

financial institutions in other contexts. 
4 The Study Agencies recognize that bankruptcy information often can be obtained not only from data contained in

court files, but also, for example., from observation of bankruptcy proceedings and from materials filed with the

court in connection with dispositive motions -- in which case the information may form, in part, the basis for a

court’s adjudication. These alternative ways in which information may be disclosed in bankruptcy proceedings

present somewhat different privacy concerns and may raise significant common-law access and First Amendment

questions that typically are not as pronounced in a case where the records are not used as a specific basis for

adjudication. This report does not address those questions, nor possible First Amendment issues that

could arise if there were undue restrictions on the public and the media in accessing bankruptcy

case information.

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A second issue addressed by the study is the dramatic change in access by the general

public to information in bankruptcy cases. In particular, private bankruptcy trustees, interested in

providing improved access to information in bankruptcy cases, have begun planning for a data

center to collect information from trustees and disseminate this information electronically in

compiled form to creditors who subscribe to the data center. As part of their system

development, they are seeking input on what safeguards should be included to protect the

personal financial information contained in bankruptcy files from re-use by creditors that subscribe

to the data center.

Third, concerns about the collection and use of personal data have been accentuated by

proposals to collect information electronically for easier, faster, and less expensive dissemination

in bankruptcy proceedings. In the age of the Internet, where anonymous remote access and

dissemination of large amounts of information is possible, new questions arise regarding how to

safeguard personal privacy interests without inappropriately compromising access to information

crucial to the efficient functioning of the bankruptcy system. 

This report explores these and other issues and offers recommendations for consideration

by decision makers and participants in the bankruptcy system about how to strike an appropriate

balance between the values of government accountability, fair and efficient case administration,

and personal privacy. It focuses on access to the information provided by debtors as part of their

initial filing commencing a bankruptcy case, i.e., the identifying information about the debtor and

the details about the debtor’s financial condition provided to the court or bankruptcy trustee as

part of the administration of the case. The report also focuses on the way in which dissemination

of this information to private entities through electronic databases can heighten the legitimate

interests of debtors in their financial privacy.4

 

1(b) Privacy in Public and Judicial Records

This study’s discussion of access by private entities to data in personal bankruptcy court

files occurs against the backdrop of an ongoing, broader debate over privacy in public and judicial

records. Public accountability is a fundamental characteristic of the American system of

government. The primary vehicle for preserving that accountability has been the open, public

nature of the U.S. system of executive and judicial record keeping. In the judicial branch,
5

See Administrative Office of the U.S. Courts Press Release: Judiciary Seeks Public Comment on Internet Access

to Court Documents (November 13, 2000). Available at http://www.privacy.uscourts.gov/Press.htm.

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accessible files containing information relevant to individual proceedings allow members of the

public and the media to monitor the judicial process closely and prevent abuses of judicial 

power. State and local governments also generally make their records available to the general

public to enhance accountability.

However, the rapid growth of information technology has raised concerns about the

sensitivity of some of the information traditionally contained in public files. A presumption that

all information should be a matter of public record raised fewer privacy concerns when such

information was on paper in courthouses and other government offices, was time-consuming to

access, and more difficult to compile and analyze. Internet databases that provide instantaneous

access to all who seek it may change the calculus regarding the advantages and disadvantages of

keeping vast amounts of information in public files in the future. 

Some parts of the judiciary currently are reviewing how best to balance the need to make

court records publicly available against individuals’ interests in protecting personal privacy. The

Administrative Office of the U.S. Courts has sought public comment on the need to balance

accountability and privacy concerns in light of more widespread access to sensitive information in

case files.5

 Given the current debate, this report is timely in addressing issues related to one area

of the discussion, general public access to personal financial information in bankruptcy cases. It

may also serve as a useful resource for policymakers addressing other issues of privacy in public

and judicial records. 

1(c) Privacy and Corporate Bankruptcy

Although this report deals solely with personal bankruptcy proceedings, the Study

Agencies note the growing controversy regarding the disposition of customer information held by

companies that file for bankruptcy. In one instance, a retailer of significant size attempted to treat

information about customers in its files as an asset that may be sold to raise money to pay

creditors in a corporate bankruptcy. The retailer sought to sell its customer database despite

assurances to its customers that their purchasing and other data would be kept confidential and

would not be sold or transferred to outside entities.

The case involving the retailer and similar proceedings highlight significant uncertainties

regarding the treatment of personal financial data in corporate bankruptcy, including: the

ownership of data in corporate databases; the rules governing the transfer of data during changes

of corporate ownership; and the rights of consumers to control their personal data on an ongoing

basis, beyond the time at which data is supplied or collected. The sensitivity – as well as the sheer

volume – of data involved in this kind of situation merits further attention. This report is focused

on information involved in personal bankruptcy proceedings, and will not address these corporate
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bankruptcy issues directly. However, the Study Agencies believe that these issues should be

examined carefully in the future in an ongoing effort to better understand the privacy interests at

stake in all types of bankruptcy proceedings. 

1(d) Outline of the Report

This report discusses in greater detail the competing interests of access by the general

public and the debtor’s privacy in the personal bankruptcy process and concludes with a set of

recommendations on how the system can strike a better balance between these interests. Chapter

One introduces the issues and places them in context. Chapter Two describes the consumer

bankruptcy process and the types of information collected from debtors during the process. 

Chapter Three explains the purposes of general public access to bankruptcy records, emphasizing

the importance of facilitating the fair and efficient disposition of cases and the need for public

trust and accountability in the system. Chapter Four discusses reasons for protecting the debtor’s

privacy of personal financial information from access by the general public in the specific context

of consumer bankruptcy. 

The report then turns to identifying solutions to the conflict between general public access

and the debtor’s privacy. Chapter Five describes models illustrating how the interests of privacy

and general public access have been balanced in other contexts in which personal information is

collected. The report covers models that strike different balances between the need for access by

the general public to information and interests in privacy. The Study Agencies also considered the

need for adoption of fair information principles. Finally, Chapter Six presents a series of findings

and recommendations designed to foster a more appropriate balance between the debtor’s privacy

and general public access to information in the bankruptcy process.

1(e) Limitations of the Study

The purpose of the report is to address the general public access to personal information

disclosed in bankruptcy filings and the re-use of that information. The report’s recommendations

on these issues are not intended to address the access or use of bankruptcy information by

governmental entities, including for law enforcement, government debt collection, and regulatory

activities, in connection with their important public responsibilities, or the communication of

bankruptcy information by or to governmental entities for functions they serve. 

Governmental entities use bankruptcy information in a variety of contexts. If a government

entity has a claim in a bankruptcy case, it will be a “party in interest” and will obtain information

related to the case in the same manner as any other party in interest. Governmental entities,

including law enforcement, also may need access to bankruptcy information in other contexts,

such as representing the interests of the federal government, in the investigation and prosecution

of bankruptcy fraud, tax fraud and other crimes, and for regulatory and civil enforcement. Private

entities also may have an obligation or desire to share information with governmental entities in

connection with one or more of these or similar purposes. Significantly, the needs of law

enforcement and other legitimate governmental uses are afforded exceptions 
6/

See, e.g., Privacy Act, 5 U.S.C. § 552a(b)(7); Gramm-Leach-Bliley Act, Pub. L. No. 106-102, 113 Stat 1338,

1438 (1999) (15 U.S.C. § 6802(e)(5)). 

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from statutes and regulations governing privacy, or may be allowed broader rights of access and

use than private parties.6

The access to and use of bankruptcy information by governmental entities serve important

purposes in protecting the integrity of the bankruptcy system, detecting and prosecuting nonbankruptcy related crimes, and addressing issues of public policy. Indeed, the Study Agencies are

not aware of any alleged abuse of bankruptcy information by government agencies. This report is

not intended to address these needs, nor should it be considered as recommending any change in

current policy in this regard.

2. BANKRUPTCY LAW AND PERSONAL INFORMATION IN BANKRUPTCY

This chapter provides an overview of the consumer bankruptcy process, including a

description of the kinds of information a debtor must provide during a consumer bankruptcy case

and how that information is made available to the general public. This chapter also describes two

major financial privacy laws as they relate to information in the bankruptcy system.

2(a) Overview of the Consumer Bankruptcy Process

Bankruptcy is a judicial process for adjudicating the debts of an individual or a business

unable to meet obligations to creditors. A bankruptcy case is a collective proceeding involving a

debtor and the debtor's creditors. There are five types of bankruptcy cases provided for under the

Bankruptcy Code, two of which – Chapter 7 and 13 cases – commonly are referred to as

consumer bankruptcies. 

Chapter 7 and 13 Cases

A Chapter 7 proceeding, sometimes referred to as “Liquidation,” involves a courtsupervised procedure by which a trustee collects the assets of the debtor's estate, reduces them to

cash, and makes distributions to creditors, subject to the debtor's right to retain certain exempt

property and the rights of secured creditors. In many Chapter 7 cases, there is little or no money

available from the debtor’s estate to pay creditors. As a result, there are few issues or disputes,

and the debtor is normally granted a “discharge” of most debts without objection. This means

that the debtor will no longer be personally liable for repaying the debts.

In a Chapter 13 proceeding, sometimes referred to as “Adjustment of Debts of an

Individual With Regular Income,” the debtor usually remains in possession of the property of the

estate and makes payments to creditors through the trustee, based on the debtor's anticipated

income over the life of a plan that is approved by the court, usually three to five years. Unlike in

proceedings under Chapter 7, the debtor does not receive an immediate discharge of debts. The
7

 11 U.S.C. § 701.

8

 Fed. R. Bankr. Proc. 3002(c).

9

 11 U.S.C. § 1302.

10 28 U.S.C. § 586(b).

11 11 U.S.C. § 1302.

12 Fed. R. Bankr. Proc. 3002(c).

13 11 U.S.C. §§ 1321, 1322.

14 11 U.S.C. § 343.

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debtor must complete the payments required under the plan before the discharge is received. The

debtor is protected from lawsuits, garnishments, and other creditor action while the plan is in

effect. Thus, a Chapter 13 proceeding often enables the debtor to keep a valuable asset, such as a

house.

Appointment of The Trustee

Chapter 7 and Chapter 13 trustees are not federal employees, but rather are private

individuals appointed pursuant to Title 28 U.S.C. § 586(a), and supervised by the Department of

Justice.

 Following a Chapter 7 filing, an impartial case trustee is appointed by the United States

trustee, or in Alabama and North Carolina, the Bankruptcy Administrator, to administer the case

and liquidate the debtor's nonexempt assets.7

 If, as is often the case, all of the debtor's assets are

exempt or subject to valid liens, there will be no distribution to unsecured creditors. Typically, as

mentioned above, most Chapter 7 cases involving individual debtors are "no asset" cases. If the

case appears to be an "asset " case at the outset, unsecured creditors who have claims against the

debtor must file their claims with the clerk of court within 90 days after the first date set for the

first meeting of creditors called under § 341 of the Bankruptcy Code.8

Upon the filing of the Chapter 13 petition, an impartial trustee is appointed to administer

the case.9

 If the number of cases so warrants, the United States trustee or Bankruptcy

Administrator may appoint a standing trustee to serve in all Chapter 13 cases in a district.10 A

primary role of the Chapter 13 trustee is to serve as a disbursing agent, collecting payments from

debtors and making distributions to creditors.11 In a Chapter 13 case, unsecured creditors who

have claims against the debtor must file their claims with the court within 90 days after the first

date set for the meeting of creditors.12 The debtor must file a plan for the repayment of

creditors.13

Meeting of Creditors

A "meeting of creditors," commonly referred to as a "341 meeting" is usually held 20 to

40 days after the petition is filed. The debtor must attend this meeting, at which creditors may

appear and ask questions regarding the debtor's financial affairs and property.14 The trustee also

attends this meeting and the debtor must provide the trustee with financial records requested by

the trustee. 
15 11 U.S.C. §§ 1324, 1325.

16 11 U.S.C. § 1326(a)(1).

17 11 U.S.C. § 1326(a)(2).

18 11 U.S.C. § 1328(a).

19 11 U.S.C. § 1328(a).

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Confirmation of the Plan (Chapter 13)

After the meeting of creditors is concluded, the bankruptcy judge must determine at a

confirmation hearing whether the debtor’s plan for repayment of creditors is feasible and meets

standards for confirmation set forth in the Bankruptcy Code.15 Within thirty days after the filing

of the plan, even if the plan has not yet been approved by the court, the debtor must start making

payments to the trustee. 16 If the plan is confirmed by the bankruptcy judge, the Chapter 13

trustee commences distribution of the funds received in accordance with the plan "as soon as

practicable."17

Discharge

A discharge in a Chapter 7 or Chapter 13 case releases the debtor from personal liability

for discharged debts and prevents the creditors owed those debts from taking any action to collect

the debts against the debtor or his or her property. In most Chapter 7 cases, unless a complaint

has been filed objecting to the discharge or the debtor has filed a written waiver, the discharge will

be granted relatively early in the case, that is 60 to 90 days after the date first set for the meeting

of creditors.

A Chapter 13 debtor is entitled to a discharge upon successful completion of all payments

under the confirmations plan.18 In return for the willingness of the Chapter 13 debtor to undergo

the discipline of a repayment plan of three to five years, a broader discharge is available under

Chapter 13 than in a Chapter 7 case. As a general rule, the debtor is discharged from all debts

provided for by the confirmation plan or disallowed, except certain long-term obligations (such as

a home mortgage), debts for child support, and debts for most government funded or guaranteed

educational loans or benefit overpayments.19

Adversary Proceedings and Contested Matters

In addition to the bankruptcy process described above, there are two types of litigation

that may arise in the course of a bankruptcy proceeding: adversary proceedings and contested

matters. Adversary proceedings resemble ordinary federal court civil lawsuits. They include most

actions: to recover money or property; to determine the validity, priority, or extent of a lien; to

determine the debtor's right to a discharge in bankruptcy or the dischargeability of a particular

debt; and to obtain an injunction or other equitable relief, as well as several other categories of

important suits. 

The procedures and practice in an adversary proceeding are similar to those in an ordinary

civil action in the federal district court. The Federal Rules of Civil Procedure are made applicable

for the most part, being incorporated verbatim by reference or sometimes with modifications to
20 28 U.S.C. § 1408.

21 11 U.S.C. § 521(1).

22 See Official Form 1. The specific information required on the bankruptcy petition, related schedules, and

statement of financial affairs is included in Appendix II.

23 11 U.S.C. § 727(a).

24 18 U.S.C. § 152 (imposing criminal sanctions on persons who knowingly and fraudulently give false

information, withhold information, conceal property, or present a false proof of claim in connection with a

bankruptcy case).

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accommodate special bankruptcy requirements. Thus, an adversary proceeding involves the filing

of a complaint, an answer, and the other pleadings and motions permitted by the civil rules. The

discovery rules, the rules governing trial, judgment, and provisional and final remedies are all

made applicable in whole or to a considerable extent.

Bankruptcy litigation that is not an adversary proceeding is defined as a "contested

matter." Examples of contested matters include: objections to claims or to the debtor's asserted

exemptions; disputes concerning relief from the automatic stay, or the debtor's right to use a

secured party's collateral, or to assume or reject an executory contract; and proceedings involving

objections to confirmation of a repayment plan under the rehabilitation Chapters of the

Bankruptcy Code. 

2(b) Personal Information Collected from the Debtor 

Both Chapter 7 and Chapter 13 cases begin with the debtor filing a petition in a

bankruptcy court serving the area where the debtor lives.20 In addition to the petition, the debtor

is required to file with the court schedules of assets and liabilities, current income and

expenditures, and executory contracts and unexpired leases, as well as a statement answering

detailed questions about the debtor's financial affairs.21 To complete the Official Bankruptcy

Forms that make up the petition and schedules, a debtor must compile:

a list of creditors and the amount and nature of their claims;

the source, amount, and frequency of the debtor's income;

a list of all of the debtor's property; and

a detailed list of the debtor's monthly living expenses, such as, food, clothing, shelter,

utilities, taxes, transportation, and medical expenses. 

Many items, such as insurance policies and annuities, must be itemized and valued and the

policy numbers disclosed. If a debt is a charge account or related to a credit card, the account

number must be provided in addition to the name and address of the creditor. In addition, the

schedule of current income must include the names, ages, and relationships of all dependents of

the debtor. The debtor's Social Security number also appears on the front of the voluntary

petition.22 A debtor who fails to make full and complete disclosure risks denial of a discharge23

and criminal penalties.24

Bankruptcy Rules also contain provisions regarding information about the debtor that

must be filed with the court. Rule 3001(c) requires that an original or duplicate of any writing
25 Official Bankruptcy Form 16B (Short title) modifies the definition of the title of the case in Rule 1005 for many

documents.

26 11 U.S.C. § 107(a). As discussed further below, § 107(b) provides for certain exceptions to this

general rule.

27 H.R. Rep. No. 595, 95th Cong., 1st Sess. 317-318 (1977); S. Rep. No. 989, 95th Cong, 2d Sess. 30 (1978).

-9-

that is the basis of a claim against a debtor be filed with the proof of claim. Pursuant to this rule,

a variety of documents containing personal financial information may be filed with the bankruptcy

court. Under Rules 1005 and 9004(b) the bankruptcy petition and every other

document filed by the debtor must contain the title of the case, which includes the debtor’s Social

Security number and tax identification number.25

As discussed above, the debtor is required to attend the meeting of creditors, at which

time supplemental information may be obtained through examinations of the debtor by the trustee

or creditors, who appear and ask questions regarding the debtor's financial affairs. Rule 2004

provides for further examination of the debtor or of other entities on order of the court. A Rule

2004 examination permits a broad range of inquiry into all matters relevant to the debtor's

financial affairs, which includes an inquiry into the validity of a creditor's disputed claim. Rule

2004 is designed to enable the parties in interest and primarily the trustee, to conduct an

examination in addition to the examination of the debtor at the meeting of creditors regarding

matters that relate to the general administration of the estate, including matters relating to the

debtor's right to a discharge of an individual debt. Although transcripts of these examinations can

be made, they are not routinely made a part of the court record. Similarly, the documents

produced are not typically made a part of the record until used in litigation. 

2(c) Access to the Debtor’s Personal Information

General Public Access Under Bankruptcy Code § 107(a)

Under § 107(a) of the Bankruptcy Code, information filed in a bankruptcy case generally

becomes part of the public record. Section 107(a) provides: 

Except as provided in subsection (b) of this section, a paper filed in a case under

this title and the dockets of a bankruptcy court are public records and open to

examination by an entity at reasonable times without charge.26

Section 107(a) essentially codifies for the bankruptcy courts the common law right of

general public access to court records. The legislative history of § 107 makes it clear that all

documents filed with the bankruptcy court are subject to public review. 27 In practice, therefore,

any paper filed with the court in a bankruptcy case is subject to public inspection unless sealed

(see discussion below).
28 See generally Mark D. Bloom, et al., Reorganizing in a Fish Bowl: Public Access vs. Protecting Confidential

Information, 73 Am. Bankr. L. Rev. 775 (Fall 1999); William T. Bodoh & Michelle M. Morgan, Protective

Orders in the Bankruptcy Court: The Congressional Mandate of Bankruptcy Code Section 107 and its

Constitutional Implications, 24 Hastings Const. L. Q. 67, 76-81 (Fall 1996).

29 See In re Orion Pictures Corporation, 21 F.3d 24, 27 (2d Cir. 1994); In re In re Phar-Mor, Inc., 191 B.R. 675,

679 (Bankr. N.D. Ohio 1995).

30 See, e.g., United States v. McVeigh, 119 F.3d 806, 811 (10th Cir. 1997); United States v. Amodeo, 71 F.3d. 1044,

1047-50 (2d Cir. 1995).

31 11 U.S.C. § 704(7).

32 18 U.S.C. § 154.

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Under the Bankruptcy Code, therefore, public disclosure issues are resolved under §107.28

Consequently, some courts take the position that a bankruptcy court need not balance the equities

in deciding a general public access issue because Congress already did so when it enacted §107.29

Pursuant to this approach, a bankruptcy court would focus on whether the information at issue

falls under an exception to access set forth in §107(b), which is discussed further below. 

The mandatory nature of §107(a) and the comprehensiveness of documents subject to it,

therefore, may afford bankruptcy courts less flexibility in resolving disclosure issues than courts

operating solely under the common law doctrine of general public access, which leaves a

determination regarding the presumptive right of general public access to the discretion of the trial

court.30

Access by Parties In Interest Under Bankruptcy Code § 704(7)

Under § 704(7) of the Bankruptcy Code, a trustee appointed in a bankruptcy case has a

statutory duty to provide information concerning a debtor’s estate and its administration at the

request of any party in interest.31 A bankruptcy trustee also is subject to fines and forfeiture of

office for refusing a party in interest a reasonable opportunity to inspect documents and accounts

relating to a debtor’s estate.32 There are no statutory limitations on further dissemination of the

information provided by the trustee, but the court retains discretion to limit disclosure in

situations where protection is warranted.

2(d) Limits on Access to the Debtor’s Personal Information 

Limits on Access Under Bankruptcy Code § 107(b)

As described above, there are some limitations under §107 as to what material becomes

part of the public record. Specifically, §107(b) provides:

(b) On request of a party in interest, the bankruptcy court shall, and on the

bankruptcy court's own motion, the bankruptcy court may:

(1) protect an entity with respect to a trade secret or confidential

research, development, or commercial information; or

(2) protect a person with respect to scandalous or defamatory matter

contained in a paper filed in a case under this title.
33 2 Collier on Bankruptcy, &107.03[2] (Matthew Bender 15th Ed. Revised). 

34 See 2 Collier on Bankruptcy, &107.03[1] (Matthew Bender 15th Ed. Revised); Krause v. Rhodes, 671 F.2d 212,

219 (6th Cir. 1982); In re Halkin, 598 F.2d 176 (D.C. Cir. 1979); Ad Hoc Protective Committee for 10%

Debenture Holders v. Itel Corp. (In re Itel Corp.), 17 B.R. 942 (B.A.P. 9th Cir. 1982).

35 See In re Ionosphere Clubs, Inc., 156 B.R. 414, 433 (S.D.N.Y. 1993); In re Continental Airlines, 150 B.R. 334,

339-341 (D. Del. 1993).

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Whether certain information at issue falls under the §107(b) exception is a question of fact

to be determined by the court.33 Section 107(b) is generally viewed as a restriction on the general

public’s right of access warranted only when dissemination of the subject information risks

substantial and serious harm and there is no less intrusive means of protection. 34 Some

bankruptcy courts apply a balancing of interests approach even when information is sought that

falls squarely within a §107(b) exception. 35

Limits On Access Under Bankruptcy Rule 7005

 Bankruptcy Rule 7005, which incorporates Federal Rules of Civil Procedure 5 (Federal

Rule 5) also provides some limit on access to documents filed in adversary proceedings in

bankruptcy court. Federal Rule 5 provides:

Rule 5. Serving and Filing Pleadings and Other Papers

. . . 

 (d) Filing; Certificate of Service. All papers after the complaint required

to be served upon a party, together with a certificate of service, must be

filed with the court within a reasonable time after service, but disclosures

under Rule 26(a)(1) or (2) and the following discovery requests and

responses must not be filed until they are used in the proceeding or the

court orders filing: (i) depositions, (ii) interrogatories, (iii) requests for

documents or to permit entry upon land, and (iv) requests for admission.

Federal Rule 5 provides some protection to personal information that is disclosed in

discovery, but not used in the course of litigation. However, Bankruptcy Rule 7005, which

incorporates Federal Rule 5, applies only to adversary proceedings in bankruptcy court. Many

issues in bankruptcy court, such as the validity of claims and exemptions, are litigated as

contested matters and not as adversary proceedings. Because there is no prohibition against filing

discovery materials obtained during the course of contested matters, additional personal financial

information may become part of the court record.

2(e) Judicial Branch Policy on General Public Access to Case Files

Case files are maintained by the clerk of court as the official record of litigation in the

federal courts. As a general rule the public case file consists of all pleadings, orders, notices,

exhibits, and transcripts filed with the clerk of court. It is currently standard practice that case

files are open for inspection and copying during normal business hours. There is also a general

presumption that court files are available to anyone upon request. Courts do not make access
-12-

determinations based on the status of the requestor. The federal judiciary also offers various

electronic public access (EPA) services that allow the public to gain quick access to official court

information and records from outside the courthouse.

Disputes over access to case files are addressed on a case-by-case basis by individual

judges. Judges address privacy interests in case files mainly through discretionary sealing of files

or documents. Although judges may act on their own initiative, sealing of case files usually

occurs on a case-by-case, or document-by-document, basis in response to a motion to seal.

The federal courts are moving swiftly to create electronic case files, and to provide general

public access to those files through the Internet. This transition from paper files to electronic files

is transforming the way case file documents may be used by attorneys, litigants, courts, and the

public by providing new access capabilities. The creation of electronic case files means that the

ability to obtain documents from a court case file no longer will depend on physical presence in

the courthouse where a file is maintained. Increasingly, case files may be viewed, printed, or

downloaded remotely by anyone, at any time, through the Internet. 

Electronic files are being created in two ways. Many courts are creating electronic images

of all paper documents that are filed. Other courts are receiving electronic court filings over the

Internet directly from attorneys, so that the original file is no longer a paper file, but a collection

of the electronic documents filed by the attorneys and the court. Over the next few years

electronic filing, as opposed to making electronic images of paper documents, will become more

common as most federal courts begin to implement a new case management system, called Case

Management/Electronic Case Files (CM/ECF). That system gives each court the option to create

electronic case files by allowing lawyers and parties to file their documents over the Internet. 

CM/ECF also allows the courts to combine electronic images with other electronic documents to

create a complete electronic case file.

The courts plan to provide general public access to electronic files, both at the courthouse

through public computer terminals, and remotely, through their Internet websites. The web-based

systems will contain both the dockets (a list of the documents filed in the case) and the actual case

file documents.

2(f) National Data Center Policy on Access to Case Files

The National Association for Chapter Thirteen Trustees (NACTT) is in the process of

establishing a National Data Center (NDC) that will make case information maintained by the

private trustees assigned to the debtor’s bankruptcy case available over the Internet to parties in

interest. The NDC has indicated that it will contract with the private trustees regarding 

transmission of the information and will provide debtors notice that parties in interest will have

Internet access to their case information. In addition, by signing the contract, private trustees

agree to investigate and rectify errors in the data reported should errors be discovered. To

protect against parties in interest re-disclosing debtor information to outsiders, the NDC also will

contract with creditors to ensure that they only use this information with respect to bankruptcy

claims, and to prohibit the selling or re-disclosing of debtor information. Finally, the NDC has

asserted that it will establish and maintain a secure electronic database to prevent unauthorized

access, and limit accessibility of debtors’ sensitive information. 
36 15 U.S.C. §§ 1681 et seq.

37 See 15 U.S.C. § 1681a(d)(1). These permissible purposes are limited to situations where the consumer report is:

(1) provided in response to a court order or grand jury subpoena; (2) made pursuant to the consumer’s written

instructions; (3) used in connection with a credit transaction, insurance underwriting or other transaction initiated

by the consumer, such as leasing an apartment if there is a legitimate business need for the report; or (4) used for

employment purposes. A report may also be provided when the consumer has applied for a government benefit,

when the user intends to offer credit or insurance to consumers meeting specified criteria, or in specified

circumstances involving a legitimate business need (such as to review an account to determine if the consumer

continues to meet the terms of the account). See 15 U.S.C. § 1681b(a).

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2(g) Financial Privacy Statutes That May Apply In Bankruptcy Proceedings

In addition to the Bankruptcy Code and other bankruptcy rules and policies, there are two

general financial privacy statutes that may have relevance to the collection and use of information

in the bankruptcy process: the Fair Credit Reporting Act and the Gramm-Leach-Bliley Act.

2(g)(i) The Fair Credit Reporting Act

The Fair Credit Reporting Act (FCRA)36 governs certain kinds of financial and other

personal information included within the definition of a “consumer report.” This generally

includes information bearing on any one or more of the following characteristics of an individual: 

credit worthiness, credit standing, credit capacity, character, general reputation, personal

characteristics, or mode of living (the seven factors), where the information is intended to be used

as a factor in establishing the individual’s eligibility for credit or insurance, for employment

purposes, or for any other purpose permitted under the FCRA.37 An entity that collects this type

of information may be deemed to be a “consumer reporting agency” under the FCRA, and as

such, subject to certain restrictions on its use and disclosure of the information. 

Information about a bankruptcy debtor’s bank cards, auto loans and leases, mortgages,

and student loans, including credit limits, payment histories, and high credit balances – all of

which may be made available in a bankruptcy case – is precisely the type of information covered

by the FCRA. However, since the FCRA does not apply unless this information is used or

expected to be used in order to make credit, employment or other types of decisions about an

individual specified in the FCRA, the use of this information to administer the bankruptcy process

is not likely to implicate the FCRA. Nonetheless, if an entity regularly collects the type of

personal information described above from bankruptcy court records and other phases of the

bankruptcy process and communicates it for any of the purposes covered by the FCRA, that entity

may be deemed to be a consumer reporting agency subject to the FCRA. The FCRA then would

govern the processing of the information by the entity that collected it, by organizations that

furnish the information to the entity, and by recipients of the information, i.e., users of consumer

reports. 
38 See GLBA, tit. V, 113 Stat. 1436-1445 (15 U.S.C. § 6801 et seq.).

39 Under subtitle A of title V of the GLBA, a financial institution generally is any banking institution, securities

entity (such as a broker-dealer, mutual fund, or investment adviser), or insurance company, as well as any other

business that engages in activities that are financial in nature under section 4(k) of the Bank Holding Company

Act of 1956. See 15 U.S.C. § 6809(3); 12 U.S.C. § 1843(k).

40 Under the GLBA, a consumer is an individual who obtains from a financial institution financial products or

services to be used primarily for personal, family, or household purposes. See GLBA sec. 509(9) (15 U.S.C. §

6809(9)).

41 The FCRA, however, requires financial institutions to give individua ls notice and the opportunity to block the

sharing of certain information among affiliated companies. See 15 U.S.C. § 1681a(d)(2)(A)(iii).

42 The federal regulators for the various categories of financial institutions subject to the GLBA have issued

comparable implementing regulations that require full compliance beginning July 1, 2001. See 65 Fed. Reg.

35161 (June 1, 2000) (Federal Reserve Board, Federal Deposit Insurance Corporation, Office of the Comptroller

of the Currency, Office of Thrift Supervision); 65 Fed. Reg. 40333 (June 29, 2000) (Securities and Exchange

Commission); 65 Fed. Reg. 31721 (May 18, 2000) (National Credit Union Administration;) 65 Fed. Reg. 33645

(May 24, 2000) (Federal Trade Commission). Implementing regulations of the various State insurance regulators

are still pending.

43 See GLBA secs. 502, 503 (15 U.S.C. §§ 6802, 6803).

44 65 Fed. Reg. 35198 (June 1, 2000)(to be codified at 12 C.F.R. § 40.3(n)).

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2(g)(ii) Gramm-Leach-Bliley Act of 1999

 Title V of the Gramm-Leach-Bliley Act of 1999 (GLBA)38 limits the extent to which

banks, insurance companies, or other financial institutions39 may disclose personal information

about consumers40 with whom they do business. As discussed further below, the GLBA’s

disclosure limitations appear to have limited application to information about a debtor generated

in a bankruptcy case because much of that information is made part of the public record and,

therefore, is outside the scope of the GLBA’s limits on disclosure. Moreover, the GLBA does

not restrict a financial institution’s ability to disclose information to its affiliates.41 Consequently,

the GLBA does not appear to provide comprehensive legal protections for debtors’ privacy

interests in the bankruptcy context.

 It is important to note, however, that the GLBA’s financial privacy provisions are in the

early stage of implementation, and full compliance with their requirements is not required until

July 1, 2001.42 Consequently, many interpretive issues that are likely to arise – such as how the

law applies to information generated in the bankruptcy process – have not ripened to the point

where the agencies charged with administering the law have had the opportunity formally to

address them. Nonetheless, it is possible to discuss the GLBA’s requirements generally and to

identify specific issues that may bear on how the law applies in the bankruptcy context. 

 The GLBA provides that before a financial institution may disclose nonpublic personal

information about a consumer to a non-affiliated company, the institution must give the consumer

notice of the types of companies that may receive the information and the opportunity to prevent

(i.e., opt out of) the disclosure.43 In general, nonpublic personal information is any personally

identifiable financial information about the consumer, other than publicly available 

information.44 Nonpublic personal information includes not only specific information about an

individual’s finances – such as annual income, outstanding loans, and payment history – but also

any identifying information – such as an individual’s Social Security number, address and
45 A consumer’s account numbers and access codes for credit card, deposit, and transaction accounts also are

nonpublic personal information. The GLBA bars a financial institution from disclosing this type of information to

non-affiliated companies for marketing purposes, except in certain limited circumstances. See 15 U.S.C. §

6802(d); See, e.g., 65 Fed. Reg. 35203 (June 1, 2000) (to be codified at 12 C.F.R. § 40.12).

46 A customer relationship is a continuing relationship between a consumer and a financial institution under which

the financial institution provides one or more products or services to the consumer that are to be used primarily for

personal, family, or household purposes. See, e.g., 65 Fed. Reg. 35197 (June 1, 2000)(to be codified at 12 C.F.R. §

40.3(i)(1)).

47 65 Fed. Reg. 35198 (June 1, 2000)(to be codified at 12 C.F.R. § 40.3(o)(2)(C)).

48 See, e.g., 65 Fed. Reg. 35202 (June 1, 2000) (to be codified at 12 C.F.R. § 40.7(g)(1)).

49 See, e.g., 65 Fed. Reg. 35202 (June 1, 2000) (to be codified at 12 C.F.R. § 40.7(g)(2)).

50 See, e.g., 65 Fed. Reg. 35202 (June 1, 2000) (to be codified at 12 C.F.R. § 40.7(g)(2)).

51 See GLBA sec. 509(4)(B) (15 U.S.C. § 6809(4)(B)). In some cases, a consumer’s opt-out direction will apply to

publicly available information, such as where it is made part of a list of consumers that is derived from nonpublic

personal information. See, e.g., 65 Fed. Reg. 35198 (June 1, 2000)(to be codified at 12 C.F.R. § 40.3(n)(2)(i)).

52 See, e.g., 65 Fed. Reg. 35199 (June 1, 2000) (to be codified at 12 C.F.R. § 40.2(p)(1)(i)).

53 11 U.S.C. § 107(a).

54 The one exception may be in the case of account numbers and account codes for a debtor’s transaction accounts. 

The GLBA generally prohibits financial institutions from disclosing this information to nonaffiliated companies

for marketing purposes, without regard to whether the information is publicly available. See 15 U.S.C. § 6802(d);

See, e.g.,65 Fed. Reg. 35203 (June 1, 2000) (to be codified at 12 C.F.R. § 40.12).

-15-

telephone number – that is obtained by a financial institution for the purpose of providing a

financial product or service to the individual.45 In addition, the fact that an individual has obtained

a financial product or service from a financial institution as a consumer, or has a customer

relationship46 with a financial institution, is nonpublic personal information if it is not publicly

available.47

 If the consumer exercises his right to opt out of the disclosure of his nonpublic personal

information, the financial institution must honor the consumer’s opt-out direction until the

consumer revokes it.48 Furthermore, the opt-out direction applies to any nonpublic personal

information collected by the financial institution that is related to the institution’s customer

relationship with the consumer, even if the customer relationship has terminated.49 Consequently,

the opt-out direction continues to be effective as to nonpublic personal information collected by a

financial institution as a party in interest in a bankruptcy proceeding filed by one of its customers

or former customers.50 

 Although a debtor’s opt-out direction continues to apply during the bankruptcy process, it

generally does not apply to information that is publicly available.51 A financial institution may

consider information to be publicly available if the institution reasonably believes that the

information is lawfully made available to the general public from, among other sources, federal 

government records.52 As discussed above, documents filed in bankruptcy cases are generally

available for public inspection pursuant to § 107(a) of the Bankruptcy Code53 and current judicial

branch policy. These documents include the identities of a debtor’s creditors and detailed

information about his assets and liabilities. Consequently, the existence of a debtor’s customer

relationship with a financial institution and the details of that relationship become publicly

available as a result of a bankruptcy filing and, therefore, would not be subject to the debtor’s

right to opt-out of disclosure by the financial institution.54
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In contrast, other financial information about the debtor that is generated in a bankruptcy

case may be available only to parties in interest. For instance, in a Chapter 13 case, a debtor’s

record of making payments to a trustee pursuant to a payment plan generally is not the type of

information that would be included in a document filed with the court. The trustee may provide

this information to the parties in interest, however, so that they may verify that the trustee is

distributing payments in accordance with the terms of the plan. This type of information probably

would not be considered to be publicly available under the GLBA and, therefore, might be subject

to a debtor’s right to opt-out of disclosure of the information. 

In sum, the GLBA’s disclosure limitations appear to have limited applicability in the

bankruptcy context because a large amount of information detailing a debtor’s customer

relationship with a financial institution becomes part of the public record in a bankruptcy

proceeding and, therefore, is outside the scope of the GLBA.

3. THE NEED FOR GENERAL PUBLIC ACCESS TO FINANCIAL

INFORMATION IN BANKRUPTCY

This chapter examines the need for access by the general public to financial information in

bankruptcy proceedings. In particular, this chapter reviews the two main purposes of access:

facilitating the fair and efficient disposition of cases, and promoting public trust and accountability

in the bankruptcy system. 

3(a) Facilitating the Fair and Efficient Disposition of Bankruptcy Cases

As discussed above, a debtor must file with the bankruptcy court schedules listing assets,

income, liabilities, the names and addresses of all creditors, and the amount owed to each creditor. 

This information generally is necessary for the identification and collection of assets and the

proportionate distribution to creditors that is central to the bankruptcy process. 

The clerk of court uses the information contained in the debtor's schedules to notify all

listed creditors that the debtor has filed a bankruptcy petition. Once the creditors receive notice,

they are required to file proofs of claim in order to share in any distribution from the debtor's

property. Creditors use the account numbers and the Social Security number provided by the

debtor to positively identify the debtor, whose name may be similar to that of other account

holders. Account balance information submitted by the debtor allows the creditor to compare the

amount the debtor thinks he or she owes the creditor with the creditor’s own records. In

addition, by looking at the amount of the debtor’s other liabilities, the nature of those liabilities,

and the debtor’s assets and income, the creditor can evaluate what if any dividend it will receive

on its claim. 

The information in the schedules and the statement of financial affairs also allows the

trustee to challenge unjustified claims by creditors, investigate possible misconduct by the debtor

before and during the bankruptcy, and recover claims that the bankruptcy estate may have

against third parties, including entities who may have received fraudulent transfers or preferential

payments from the debtor during the period immediately before bankruptcy.
55 See 2 Collier on Bankruptcy, &107.01 (Matthew Bender 15th Ed. Revised).

56 In re Continental Illinois Securities Litigation, 732 F.2d 1303, 1308 (7th Cir. 1984).

57/

Republic of the Philippines v. Westinghouse Electric Corp., 949 F.2d 653, 660 (3d Cir. 1991)

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At the end of the liquidation process, individual debtors normally receive a "discharge" of

all pre-bankruptcy claims against them, except for certain non-dischargeable claims, such as

support of dependents or taxes. Any party in interest, including creditors and the trustee in

bankruptcy, may object to the discharge of a particular claim or to the debtor's general discharge,

on grounds such as fraud by the debtor (e.g., that debtor failed to disclose all assets). If a timely

objection is made, the bankruptcy court will hold a hearing. The financial information contained

in the debtor's schedules and statement of affairs is important in the determination by a trustee,

creditor, or law enforcement investigator of whether a debtor has tried to defraud a single creditor

such that a specific claim should not be discharged or whether the debtor has tried to defraud all

creditors such that the debtor should be denied a general discharge.

In a Chapter 13 case, the trustee will use the information in schedules filed by the debtor

to determine whether the debtor is eligible for relief under Chapter 13 and whether the debtor's

repayment plan meets the requirements of the Bankruptcy Code. The creditors will use the

information to determine whether to object to confirmation of the plan. 

3(b) Promoting Public Trust and Accountability in the Bankruptcy System

Section 107(a) of the Bankruptcy Code codifies the general public's right under common

law to inspect and copy public documents, including judicial records.55 The right of general public

access to court case files is a subset of the more general public “right to know” about the

workings of government. The courts have consistently recognized the salutary purposes of

general public access, focusing on the public’s need to ensure judicial fairness and accountability. 

Courts have noted, for example, that general public access to court records: “allows the citizenry

to monitor the functioning of our courts, thereby insuring quality, honesty, and respect for our

legal system”;56 “diminish[es] possibilities for injustice, incompetence, perjury and fraud”; and

promotes “a more complete understanding of our judicial system and a better perception of its

fairness.”57

4. PRIVACY INTERESTS IN FINANCIAL INFORMATION IN BANKRUPTCY

This chapter examines the protection of personal financial information and the special

privacy interests of debtors.

4(a) Privacy Interests in Financial Information

Privacy is considered by many Americans to be a fundamental right. Over time, the legal

framework protecting individual privacy has evolved to respond to changes in the way sensitive

personal information is obtained, retained, and used. Personal financial records, which can

include lists of purchases, bank account numbers, and other unique identifiers, contain some of the
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most sensitive information about individuals. If used unscrupulously, this information can cause

substantial harm. 

In a world of paper records and unaffiliated financial institutions, which characterized the

U.S. financial system for most of its history, financial privacy concerns were relatively minor. 

Information on individuals was difficult to obtain, was not widely shared among institutions, and

was not generally used as an asset for marketing or other purposes. Today, however, three major 

developments are raising new concerns about protection of personal financial information.

First, financial information now flows much more rapidly, and in much greater volumes,

than ever before. An ordinary desktop computer is now significantly more powerful than the

mainframe of 30 years ago, and can store, manipulate, and analyze far more information at vastly

lower costs. Advances in telecommunications allow this information to be sent anywhere in the

world instantaneously, at similarly low costs. These technological developments have created

opportunities for the sharing of information among institutions that were scarcely envisioned even

a few years ago. In addition, the advent of large databases available through the Internet creates

new opportunities for access by the general public to information about individuals, often without

the subject’s knowledge or consent. The free flow of information that is now possible offers

many advantages in economic efficiency and individual well-being. At the same time, it poses

potential new threats to a debtor’s privacy. 

A second key change is the growing integration and consolidation among financial

services providers. Interstate banking and branching have allowed banks to grow larger than ever

before, and the removal of regulatory restraints has allowed financial services organizations to

enter lines of business that were previously off limits. Banks, for example, may now affiliate with

firms ranging from travel agencies to health insurance providers. This integration will allow firms

and consumers to benefit from “economies of scale,” in which the provision of related financial

services together can better meet consumers’ demands at a lower cost. But these economies

stem, in part, from an ability to share consumer data across affiliated entities – and that sharing

also raises legitimate privacy concerns. 

A third change is the increasing use of electronic means of purchasing and payment. 

Americans’ increasing use of credit cards, debit cards – and more recently electronic bill payment

– in lieu of cash now allows financial services companies to collect enormous amounts of detailed

information about an individual’s transactions. Until recently, neither institutions nor individuals

were able to create detailed lifestyle portraits using such information.

The creation of electronic case files and the electronic collection and dissemination of

bankruptcy information are in their earliest stages. Data on the actual harm resulting from these

developments are relatively scarce. However, these developments could create a risk for possible

misuse or objectionable re-use. As the comment submitted on behalf of 20 State Attorneys

General noted, “the ready availability of such information, particularly when it may be easily

obtained and copied from electronic filings that can be accessed from the Internet, greatly

increases the concerns about the uses to which the data might be put. . . . The ability to obtain
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large amounts of information at low cost makes the use of bankruptcy data for commercial

purposes economically feasible in ways that were not possible when the data had to be handgathered in person from individual clerk’s offices.”

The consequence of each of these developments can be better targeting of financial

products to individual consumers, which can lower prices and improve service. However, these

trends also may increase the risks of illegal, discriminatory, or invasive uses of highly sensitive

personal information. Included among the concerns raised by the State Attorneys General and 

privacy advocates are:

Identity Theft. More widespread availability of information such as Social Security numbers,

credit card numbers, and other personal identifiers create greater opportunities for unscrupulous

individuals to commit identity theft. 

Predatory Lending. Greater sharing of information within and among financial institutions

could lead to an increase in the use of such information by unscrupulous lenders. For example,

marketers engaged in predatory lending may use this information to target especially vulnerable

debtors. Although limiting access to detailed personal information in bankruptcy filings will not

by itself eliminate predatory lending practices, it is one step that can be taken to address this

problem.

4(b) Special Privacy Interests of Debtors in Bankruptcy

Beyond these general financial privacy concerns, the bankruptcy process raises some

particular issues involving the handling of financial information. Much of the data available to the

general public from a bankruptcy proceeding generally is not readily available from other sources. 

This includes: bank account numbers and funds in those accounts; Social Security numbers;

market value of real property; market value of automobiles; employment income; cash on hand;

alimony and other support due; alimony and other support owed; account numbers with creditors

and amount owed to creditors; and medical expenditures, among other information. Although

credit reporting agencies currently are permitted to provide some financial information to private

entities and individuals, they are subject to specific regulations and penalties for improper

disclosure. The comprehensive nature of the information required in bankruptcy proceedings, and

the fact that such information is often restricted in other contexts, suggests that there may be

reasons to reconsider the current system, which allows unrestricted access to such data by the

general public.

In addition, debtors in bankruptcy face a combination of two circumstances that may make

them particularly vulnerable to misuse of data available about them. First, debtors in 

bankruptcy are by definition facing extraordinary financial difficulties. Many end up in the

bankruptcy system in order to relieve pressure from collection agents and others who threaten to

repossess homes and other real property. As noted in a recent joint report of the Treasury

Department and the Department of Housing and Urban Development, such consumers often are
58 See Curbing Predatory Home Mortgage Lending: A Joint Report, U.S. Department of Housing and Urban

Development and U.S. Department of Treasury at 72 (June 2000).

59 See e.g., United States v. Beckham, 789 F.2d 401, 409-15 (6th Cir. 1986)(trial court "must set forth substantial

reasons for denying" access to its records).

60 5 U.S.C. §552(b)(6); see U.S. Dept. of Justice v. Reporters Committee for Freedom of the Press, 489 U.S. 749,

772 (1989). In Reporters Committee, a case involving a database of information summarized in a criminal "rap

sheet," the Supreme Court recognized a privacy interest in information that is publicly available through other

means, but is "practically obscure." The Court specifically noted:

the vast difference between the public records that might be found after a diligent search of

courthouse files, county archives, and local police stations throughout the country and a

computerized summary located in a single clearinghouse of information. 

489 U.S. at 764. In weighing the public interest in releasing personal informa tion against the privacy interests of

individuals, the Court identified a public inte rest in access to information that would "shed light on the conduct of

any Government agency or official," 489 U.S. at 773, not information about a particular private citizen. The

Court also noted "the fact that an event is not wholly private does not mean that an individual has no interest in

limiting disclosure or dissemination of the information. " 489 U.S. at 770.

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targeted for credit offers on unfavorable terms, exacerbating a cycle of financial trouble.58

Second, once a debtor enters bankruptcy, he or she cannot receive a bankruptcy discharge for

another seven years under Chapter 7, or three years under Chapter 13. Consequently, if an

individual coming out of bankruptcy falls victim to a predatory practice and lands once again in

financial difficulty, he or she will have no recourse to the bankruptcy system to protect basic

assets such as a home. 

5. MODELS FOR BALANCING PRIVACY AND ACCESS

5(a) Introduction – Case-by-Case Determinations

In determining how the competing interests in access to information and protection of

personal financial information may be balanced in the consumer bankruptcy process, it is helpful

to compare the approach embodied in current bankruptcy law to approaches used in other

contexts. 

The federal bankruptcy statutes and case law under them reflect a case-by-case approach

to balancing access by the general public and protection of personal financial information, with

that balance weighted heavily in favor of access for the general public and parties in interest,

except as to “scandalous or defamatory” information. Under common law in non-bankruptcy

cases, there is a presumption that court records are open to the public, though courts exercise

discretion in balancing interests in access by the general public and individual privacy interests,

and may seal records or grant protective orders upon the showing of a compelling interest.59

Similarly, with respect to federal executive branch records, the courts use a balancing test under

the Freedom of Information Act to weigh individuals’ interests in preventing “clearly unwarranted

invasions of personal privacy” from the disclosure of personal information in government records,

versus the general public’s interest in access to records in order to shed light on the workings of

the government.60
61 See H.R. 4380, 106th Cong, 2d Sess. secs. 3, 4 (2000); S. 2513, 106th Cong, 2d Sess. secs. 3, 4 (2000).

-21-

5(b) Rules Based Models

As an alternative to calling on the courts or others to determine whether personal

information should be disclosed or kept private, one could also use a “rules-based approach,”

which would generally apply across the board. Each of the following models for balancing access

by the general public and the debtor’s privacy can be viewed on a continuum from a fully open to

a full closed system of information management. Although there are many differences in the

particulars of such sets of rules, they usually combine elements of three basic conceptual models,

which restrict access by the general public to information based upon: 1) the content of the

information; 2) the identity of the recipient of the information; or 3) the recipient’s intended use of

– or ability to use – the information. 

This section briefly describes these three conceptual models for access and gives examples

of how they are reflected in particular statutes or rules. It then outlines a set of generally

recognized “fair information principles” that may provide additional guidelines for the

implementation of any of these models. Finally, it illustrates how the access models and fair

information principles are combined in practice into hybrid approaches that achieve a balance

between the protection of personal information and access appropriate to a particular situation. 

Limits on Access to Information Based on the Content of the Information

One approach to protecting personal information is to limit access by the general public

based on the content of the information. Some types of information may be considered more

sensitive than others because of the consequences that may result from disclosure of the

information. For instance, disclosure of personal health information or genetic information may

result in inappropriate discrimination against an individual in credit or employment decisions. 

Disclosure of certain personal identifiers or financial account information, such as an individual’s

Social Security number, may facilitate identity theft. 

The Administration has recognized a number of categories of sensitive information and has

taken steps to establish enhanced protections in these areas, including: consumer financial

information, Social Security numbers, individual health information, and information collected

from children on the Internet. There are several federal laws that incorporate enhanced privacy

protections for these categories of information. The Administration has also proposed additional

protections for personal information held by financial institutions. For instance:

• The GLBA, which generally allows financial institutions to share consumers’ personal

financial information with non-affiliated companies under specified conditions, places stricter

limits on sharing of account numbers and account codes for a consumer’s transaction

accounts.

• The President’s proposed Consumer Financial Privacy Act (introduced in both the House and

Senate in May of 2000) would amend the GLBA to impose stricter limits on financial

institutions’ disclosure of consumers’ health information and information about a consumer’s

personal spending habits.61
62 See Pub. L. 105-277, div. C, title XIII, 112 Stat. 2681-728 (Oct. 21, 1998).

63 See 18 U.S.C. 2721(a), (b) (as amended by Pub. L. No 106-346, sec. 309 ___Stat. ___ (Oct. 23, 2000)).

64 See GLBA secs. 502, 503 (15 U.S.C. §§ 6802, 6803).

65 For example, where the recipient of personal information about an individual is a fiduciary to the individual, the

recipient likely is subject to a legal duty to refrain from appropriating the information for its own benefit.

66 See 5 U.S.C. § 552a(e)(1).

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• The Children’s Online Privacy Protection Act limits the circumstances in which web-site

operators may collect personally identifiable information from children on the Internet.62

• The Driver’s Privacy Protection Act of 1994 (DPPA), which limits the extent to which state

departments of motor vehicles may disclose information about individuals in motor vehicle

records, places stricter limits on disclosure of an individual’s photograph or image, Social

Security number, and medical or disability information than on other personal information

contained in such records.63

Limits on Access to Information Based on the Identity of the Recipient

Another approach to protecting personal information is to limit the categories of entities

eligible to receive the information. A particular industry, market, or activity may be structured in

a manner that makes identity-based distinctions feasible or desirable. The current bankruptcy

system, with its distinction between “parties in interest” and all other private individuals and

entities, illustrates how such divisions can be made in statute or regulation. A clear example is

provided by the GLBA, which limits the conditions under which a financial institution may

disclose consumers' personal financial information to entities that are not affiliated with the

financial institution. Disclosures of such information to affiliated companies, in contrast, are not

restricted.64

Most federal laws that limit access by recipient also explicitly limit the purpose for which

recipients may use the information, as discussed in the next section. Even where a law does not

impose an explicit purpose limitation on the recipients, there may be an implicit limitation on how

they use the information, based on other laws that govern their conduct.65

Limits on Access to Information Based on a Recipient’s Use of the Information

Another method for protecting the debtor’s privacy interests in personal information is to

restrict the purposes for which the information may be disclosed to another entity and/or the

purposes for which the information may be re-used and re-disclosed by recipients. There are

several federal laws governing the use, collection, or disclosure of personal information that

reflect this approach to some degree. These include:

• The Privacy Act of 1974, which generally permits a federal agency to collect, use,

and disseminate only such information about an individual as is relevant and necessary

to accomplish a purpose of the agency set forth in a statute or Executive Order.66

• The GLBA, which specifies certain purposes for which financial institutions may
67 See 15 U.S.C. § 6802(b)(2), (e); see, e.g., 65 Fed. Reg. 35203, 35204 (June 1, 2000) (to be codified at 12 C.F.R.

§§ 40.11, 40.13).

68 See 12 U.S.C. §§ 3402-3413.

69 See 18 U.S.C. § 2721(a)-(c) (as amended by Pub. L. No 106-346, sec. 309 ___Stat. ___ (Oct. 23, 2000)).

70 See 15 U.S.C. § 1681b(a).

71 See 5 U.S.C. § 552a(b) (Privacy Act of 1974); 12 U.S.C. 3413 (Right to Financial Privacy Act); GLBA sec.

502(e) (to be codified at 15 U.S.C. § 6802(e)); § 18 U.S.C. 2721(a), (b) (as amended by Pub. L. No 106-346, sec.

309 ___Stat. ___ (Oct. 23, 2000))(DPPA); 15 U.S.C. §§ 1681b, 1681u (FCRA).

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disclose consumer’s personal financial information to non-affiliates without a

consumer’s permission, and the purposes for which such information may be redisclosed.67

• The Right to Financial Privacy Act, which identifies the purposes for which a federal

agency may obtain an individual’s financial records from a financial institution

without following certain procedures specified in the statute.68

• The DPPA, which specifies the permissible purposes for which state departments of

motor vehicles may disclose information about individuals in motor vehicle records to

any person or entity, as well as the permissible purposes of any resale or re-disclosure

of the information.69

• The FCRA, which specifies the permissible purposes for which consumer reporting

agencies may sell individual’s credit reports to other entities.70

Although these laws address bodies of information created for a variety of different

purposes, they all generally allow the use or disclosure of information for one or more of the

following purposes:71

 

• law enforcement/legal compliance

• use in judicial proceedings 

• fraud prevention

• protection of public or individual safety 

• research

In sum, statutes based on the purpose limitation model establish a general rule

prohibiting or placing conditions on the collection, use, or disclosure of personal information,

except where those activities are done for one or more purposes specified in the statute.
-24-

5(c) Fair Information Principles

As noted above, “fair information principles” (FIPs) do not provide a rationale for the

dissemination of particular types of information to particular groups. However, once

policymakers have decided which entities have a right to receive which information, FIPs provide

important guidance for implementing privacy policies in a manner that is consistent and

transparent. FIPs first were articulated in a Health, Education, and Welfare Commission report

on privacy in 1973. In 1980, the Organization for Economic Cooperation and Development also

established requirements for protecting privacy built around a comprehensive set of FIPs. As

discussed in the next section, several existing statutory schemes governing repositories of

personal information incorporate one or more of these principles, which are:

• Notice - Entities collecting personal data from individuals should provide them notice about

what uses will be made of that information and/or for what purpose.

• Limitation on Collection - Entities should limit the data they collect to what is necessary to

their purpose.

• Limitation on Use - Entities should not disclose data for purposes other than those specified,

except as authorized by law.

• Choice - Entities should provide, where appropriate, choice as to how their information will

be used and/or disclosed, particularly when the information is being used or disclosed beyond

the stated purpose of the information collection.

• Access - Individuals should have reasonable access to the information that entities hold about

them. They also should have the right to request correction or deletion of incorrect

information. 

• Security - Entities should ensure that the personal data they collect is secure from

unauthorized access and disclosure. This includes not only network security, but also physical

security of data (e.g., locked cabinets where appropriate) and personnel security (e.g., limiting

access to personnel whose functions require such access). 

• Accountability - There should be an enforcement or other mechanism to ensure that entities

are held accountable for complying with these principles. 

5(d) Hybrid Models

Existing federal laws that govern collection, maintenance, and disclosure of databases of

personal information usually are hybrids of the various models discussed above. As a starting

point, these laws often specify a category of information to which special requirements – such as

access limitations and security standards – will apply. The limitations on private entities’ access

to the information may include one or more of the FIPs, such as requiring notice and choice for an
72/

 See GLBA sec. 502(e)(5) (15 U.S.C. § 6802(e)(5)). 

-25-

individual before his personal information is disclosed, as well as limitations on the use of the

information, once disclosed. Existing laws also may incorporate other FIPs, such as the right for

consumers to review their information and have errors corrected. In addition, existing federal

laws governing collection, use, and disclosure of personal information usually include mechanisms

for ensuring the accountability of those who maintain the databases at issue, through regulatory

enforcement and/or private rights of action. 

For example, the GLBA and the FCRA each reflect a combination of these approaches: as

with many other statutes governing privacy, GLBA includes an exception to access and re-use

restrictions to allow information to be shared for law enforcement and other governmental

purposes, when statutory standards have been met;72 and FCRA similarly allows the protected

information to be shared for law enforcement and governmental purposes.

GLBA

Type of Information Covered: 

Personally identifiable financial information about a consumer, other than publicly available

information, held by the consumer's financial institution

Any list, description, or other grouping of consumers (and the publicly available information

pertaining to them, such as their addresses) that is derived using any personally identifiable

financial information that is not publicly available, such as account numbers

Eligible Recipients/Notice & Choice: 

A financial institution may disclose a consumer's information to:

• any affiliated company

• any non-affiliated company, provided the consumer receives notice of the

 disclosure and does not opt out

• Non-affiliated companies may re-disclose the information to other non-affiliated

companies described in the notice given to the consumer

Purpose Limitations:

• A financial institution may disclose a consumer's information to non-affiliated companies

without the consumer's permission for purposes such as:

< to effect, administer, or enforce a transaction authorized by a consumer

< to protect the confidentiality or security of the financial institution's records 

< to protect against or prevent actual or potential fraud, unauthorized transactions,
-26-

-26-

 claims, or other liability

Entities that receive information for one of the permissible purposes specified above

generally may re-disclose or re-use the information only to carry out the activity for which the

disclosure initially was made

Security:

Financial institutions are required to ensure the security, integrity, and confidentiality of

customer records

Accountability:

Federal financial regulators may take a range of enforcement actions, including cease-anddesist orders, restitution orders, and civil money penalties, against institutions that fail to

comply with the consumer financial privacy requirements of the GLBA

FCRA

Type of Information Covered: 

Consumer report information -- i.e., personal data bearing on an individual’s credit

worthiness, credit standing, credit capacity, character, general reputation, personal

characteristics, or mode of living, where the information is collected or communicated to be

used to make determinations about the individual, such as eligibility for credit, insurance,

employment, or for other purposes permitted by the FCRA

Eligible Recipients: 

Consumer reporting agencies may provide consumer reports to entities that intend to use the

information for a permissible purpose

Purpose Limitations:

Permissible purposes for the disclosure of consumer reports include:

In response to a court order or grand jury subpoena

In accordance with the written instructions of the consumer who is the subject of the report

For child support collection purposes, if requested by an appropriate state or local agency

For specified business purposes, such as:

< in connection with a credit transaction or insurance underwriting involving the

individual

< to determine the individual’s eligibility for a license or other government benefit

< in connection with an offer of credit or insurance to individuals meeting specified
-27-

criteria

< in other specified circumstances involving a legitimate business need in connection

with a transaction initiated by the consumer

Individuals’ Access and Correction Rights:

An individual may obtain a copy of the information in his or her file at a consumer reporting

agency and may dispute the accuracy and completeness of the information

Security:

Consumer reporting agencies must have procedures to verify the identities of recipients of

consumer reports and the permissible purposes for which the reports will be used

Accountability:

The FCRA provides for enforcement by federal agencies and the States, and permits private

rights of action by consumers

The relative complexity of the various requirements of the GLBA and the FCRA

demonstrates the challenge of accommodating the interests of all parties that may have a stake

in how various types of personal information are collected, maintained, and disseminated. 

These laws also make clear that different approaches and combinations of approaches may be

appropriate in different contexts. This is particularly the case where a database contains a

number of different types of information, some of which may be more sensitive than others. 

The personal information about a debtor collected and aggregated in the course of a

consumer bankruptcy proceeding may be one of the most comprehensive databases of

information ever created about the debtor. Moreover, as discussed above, there may be a large

number of competing individual and institutional interests in access to and security for that

database. Consequently, it seems clear that some combination of the models discussed above,

as well as other new approaches tailored to the needs of the bankruptcy process, will be needed

in balancing individual privacy interests and rights of access to information in the bankruptcy

context.
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6. CONCLUSIONS

This chapter details a series of findings and recommendations regarding the privacyaccess balance for the bankruptcy process.

(a) Findings

6(a)(i) Access to Information is Necessary for Case Administration

The rights of parties in interest and the fair and efficient administration of cases require

that certain personal information be available to the courts, parties in interest, and governmental

entities. Creditors, trustees, creditors’ and debtors’ attorneys, other parties in interest, and

governmental entities often need detailed financial information about debtors in order to

efficiently carry out their respective functions. 

6(a)(ii) Access to Information is Necessary to Ensure Accountability

Ensuring public accountability and preventing abuses of the bankruptcy system require

that some personal information filed in bankruptcy cases be available to the general public. In

the bankruptcy context, accountability includes the public’s policing of debtors’ use of the

system, as well as evaluating how the system is working overall. As with the administration of

justice more generally, public access to some personal information is necessary so that the press,

oversight organizations, and others can assure accountability. 

6(a)(iii) Debtors Have A Privacy Interest in Certain Highly Sensitive Information

Certain personal information collected in bankruptcy proceedings is highly sensitive and

is protected from access by the general public in other contexts by financial privacy laws. 

Individual debtors have a privacy interest in such information that is not expressly recognized in

the current bankruptcy system. The increasing ease of electronic access to this information is

heightening debtors’ interests in ensuring that this information is protected.

6(a)(iv) Storage of Personal Information in Government Electronic Systems Poses

New Privacy Concerns

Information held by government, including the judicial branch, increasingly is being

collected, stored, and transmitted electronically. While the use of electronic systems by the

government provides better service to users, more efficient processing of transactions, and a host

of other benefits for the American people, there is a corresponding need to safeguard the privacy

of personal information that is electronically compiled and transmitted to private entities. 

Because electronic systems create the capability to release greater amounts of personal

information to more remote and anonymous users, the shift to electronic systems will sometimes

require additional protections in order to avoid a large increase in the actual level of disclosure of

personal information.
73/

The following recommendations are proposed to address issues of access and re-use of personal financial

information in bankruptcy cases by private entities. They are not to be read to apply to access and use by

governmental entities, including law enforcement or regulatory agencies, or the communication of this information

by or to these governmental entities. Governmental use and access is outside the scope of this Study. 

-29-

6(b) Recommendations73

6(b)(i) Balance Interests in Efficiency, Government Accountability, and Privacy

The Study Agencies recommend that the goal of protecting personal financial

information be given increased emphasis in the bankruptcy system. Bankruptcy

information policy should better balance society’s interests in fair and efficient case

administration, bankruptcy system integrity, government accountability, and the

debtor’s privacy. As electronic tools for accessing case information develop and

improve, there is an increased need for analysis of access issues to ensure the

integrity and proper administration of the system. 

Upon filing for bankruptcy, a debtor gets the immediate relief of the automatic stay that

precludes virtually all collection actions against him or her, and the prospect of a discharge of

any further obligation to repay his or her debts. In order to obtain such relief, however, the

debtor must make detailed disclosures of his or her personal financial information at the

commencement of the case, or soon thereafter. The bankruptcy system currently treats the

debtor’s personal financial information as “open record” information that is generally available to

the public. While this approach well serves the important functions of fair and efficient case

administration and accountability in government, it may not provide adequate protection of

personal financial information. 

The growing use of computer technology and electronic communications will have an

impact on debtors’ privacy interests in the personal information they provide in the bankruptcy

process. Prior to recent technological advances, information provided by individuals in

bankruptcy was accessible only by requesting a copy of the debtor’s schedules from the court, or

by reviewing the bankruptcy file at the court. However, the proliferation of electronic

technology now allows, or will soon allow, myriad private entities or individuals to obtain

unmediated and widespread access to an individual’s most sensitive information. With the

widespread use of the Internet, almost anyone can anonymously obtain the most personal details

of an individual’s life without limitation on how the information is used. 

The Study Agencies believe that debtors should not be required to forego reasonable

personal privacy protections and expose themselves unnecessarily to risk in order to obtain the

protections of bankruptcy. Rather, there should be a balance between debtors’ interests and

other needs of the bankruptcy system. 
-30-

The recommendation for balancing of interests in the bankruptcy process is supported by the

following public comments:

• Mary Jo Obee, Chief Deputy Clerk of the U.S. Bankruptcy Court of the Western District of

Oklahoma, commented that unlimited access to bankruptcy information: (1) harms privacy

rights by providing greater access than necessary to achieve the public benefit; (2) limits

the fresh start by placing a stigma on debtors; (3) contributes unnecessarily to threats of

physical harm to parties; (4) contributes unnecessarily to identity theft, credit fraud and

lender redlining; and (5) under new technology, may hinder individuals from seeking

redress under the bankruptcy laws. 

• The Federal Trade Commission commented that concern regarding the availability of

sensitive information is heightened with the increasing availability on the Internet of courts’

public record data.

• The Privacy Rights Clearing House commented that with the widespread use of the

Internet, almost anyone can anonymously obtain access to the most personal details of an

individual’s life without limitation on how the information is used.

• The Center for Democracy and Technology commented that if computerized systems are

designed without an eye towards protecting privacy, they can enlarge existing privacy

loopholes and present unique challenges to protecting privacy.

• The New Jersey League - Community and Savings Bankers commented that it supports

efforts that properly balance the legitimate information sharing needs of a creditor with the

obligations to protect consumer privacy. 

6(b)(ii) The General Public Should Have Access to Core Information 

The Study Agencies recommend that the general public continue to have access to

some general information so that the public can hold the bankruptcy system

accountable. This information includes the fact that an individual has filed for

bankruptcy, the type of bankruptcy proceeding, the identities of parties in interest,

and other core information. 

At the same time, the Study Agencies recommend that the general public not have

access to certain highly sensitive information that poses substantial privacy risks to

the debtor. This information may include, among other items: Social Security

numbers, credit card numbers, loan accounts, dates of birth, and bank account

numbers. Similarly, the Study Agencies recommend that schedules that show

detailed profiles of personal spending habits and debtors’ medical information be

removed from the public record.
74/

11 U.S.C. § 301; H. R. Rep. 95-595, 95th Cong., 1st Sess. 321 (1977); S. Rep. 95-989, 95th Cong., 2nd Sess. 31

(1978).

-31-

Finally, the Study Agencies recommend that special attention be given to

protecting information regarding entities or individuals who are not parties to the

bankruptcy proceeding. This includes detailed personal and financial information

regarding non-filing spouses, relatives, or business partners.

Bankruptcy cases are different from other civil litigation.74 For example, the schedules

that are required to be filed early in a bankruptcy case include information that far surpasses the

notice standard of traditional civil litigation. Bankruptcy cases try to anticipate all financial

information that a creditor would need to evaluate its rights against the debtor, and requires the

debtor to provide that information. 

Certain general information in the bankruptcy system should remain available to the

general public in order to allow members of the press, oversight organizations, and others to

monitor the functioning of the executive branch (e.g., United States Trustee Program), private

trustees, and the courts in bankruptcy cases. General information that falls into this category

includes, among other data items: the fact that an individual has filed for bankruptcy; the type of

bankruptcy proceeding; the identities of parties in interest; and other core information necessary

to serve the accountability function. 

The Study Agencies believe that an appropriate balance can be achieved if the process

provides general public access to the core information while limiting access and use of sensitive

information to parties in interest and for governmental purposes. The Study Agencies believe in

promoting public accountability, but are concerned that unlimited general public access to 

bankruptcy information may harm debtor privacy rights by providing greater access to private

entities than necessary to achieve a public benefit while contributing unnecessarily to identity

theft, threats of physical harm, credit fraud, and lender redlining and individual profiling. That

concern is heightened with the increasing availability on the Internet of Social Security numbers,

credit card numbers, bank account numbers, loan account numbers, dates of birth, and other

sensitive personal information. 

The risk of identity theft and predatory lending practices may be increased by the

disclosure of schedules that show the profiles of personal spending habits, medical information,

Social Security numbers, credit card numbers, loan account numbers, dates of birth, and bank

account numbers. The FTC identified common forms of identity theft as: taking over an existing

credit card account; taking out loans in another person’s name; writing fraudulent checks using

another person’s name and/or account number; and opening a telephone or wireless service

account in another person’s name. In extreme cases, an identity thief may completely take over a

victim’s identity, including being arrested in the victim’s name. 

Several credit card companies commented that such personal identifiers must continue to

be publicly available so that all entities can determine whether a particular bankruptcy relates to a
-32-

specific individual. However, the bulk of the public comments supported restricting access by

the general public to highly sensitive information. The needs of the credit card industry and other

parties in interest are accommodated in Recommendation 6(b)(iii) below. The following public

comments supported these recommendations:

• Mary Jo Obee, Chief Deputy Clerk of the U.S. Bankruptcy Court of the Western District

of Oklahoma, and others commented that §107 of the Bankruptcy Code may need to be

revisited, and that consideration should be given to defining public data and non- public

data clearly. Only limited general case information should remain public, although

access for parties in interest would remain unchanged.

• The Center for Democracy and Technology commented that an effective information

policy should protect the rights of the individuals who participate in the bankruptcy

system by limiting the use and disclosure of their personal information to that necessary

to support the bankruptcy process. General information about the debtor may need to be

available to the public to ensure that all those with a stake in the outcome may

participate. However, detailed information, currently considered public records under §

107 of the Bankruptcy Code, such as bank account numbers, credit card account

numbers, Social Security numbers, and bank balances are not necessary to ensure that

parties with an interest are notified of a debtor’s filing. Also, public disclosure of such

information breaches personal privacy and places individuals at risk of additional

financial harm.

• The Federal Trade Commission, an agency mandated to establish the federal

government’s centralized depository for identity theft complaints, commented that

disclosure of non-public data, as with public data, may facilitate identity theft and other

illegal conduct. The FTC also commented that finance-related fraud constitutes 80

percent of the identity theft crimes reported to it. 

• The Privacy Rights Clearinghouse commented that if bankruptcy and trustee files are

available online to the general public, they should be available in the form of a “digest”

of the key data elements. Personal identifiers, such as Social Security numbers,

represent a gold mine to dishonest individuals as well as to the rising number of

organized criminal enterprises that specialize in systematic identity theft. Such scams

not only victimize the debtor, but the bankruptcy courts as well by clogging the system

with fraudulent filings.

• The National Association of Consumer Bankruptcy Attorneys commented that given the

broad dissemination of public record information, debtors are entitled to have their

information protected from unnecessary disclosure.

• Several financial associations and information service providers commented that certain

personal information should be available in bankruptcy cases to protect the rights of

parties in interest and debtors, but that the information made available to the public

should be limited to general information that promotes public accountability.
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• The New Jersey Credit Union League commented that making sensitive information

available on the Internet would expose debtors, who are already in precarious financial

positions, to an enhanced risk of identity theft, and that this unintended result outweighs

any possible benefits.

6(b)(iii) Parties in Interest Should Continue to Have Access to a Broad Range of

Non-Public Information, Subject to Re-use and Re-disclosure Limitations.

The Study Agencies recommend that parties in interest and potential parties in

interest have access to a broad range of information collected in bankruptcy

proceedings in order to exercise their rights and responsibilities. 

However, when private entities have such access, they should generally be

prohibited from reusing or re-disclosing the information for purposes unrelated to

administering bankruptcy cases. These re-use and re-disclosure limitations should

not be construed as restricting private entities from sharing information with

governmental entities. 

The Study Agencies also recommend that the detailed information that appears in

a bankruptcy filing should be available to researchers in a manner that would not

identify individuals.

The report’s recommendations are not intended to address the access or use of

bankruptcy information by governmental entities in connection with their

important public responsibilities, or the communication of personal financial

information by or to governmental entities for functions they serve.

Creditors, parties in interest and their agents, law enforcement, or other governmental

entities – but not the general public – should continue to have access to the full range of

information necessary to administer cases, subject to re-use and re-disclosure limitations. It is

essential for parties in interest to have broad access to comprehensive debtor information in

order to: (a) determine whether entities are entitled to recovery before their contractual rights

are forever terminated; (b) participate effectively in the bankruptcy process; (c) ascertain the

accuracy of debtors’ claims; and (d) communicate efficiently with trustees about bankruptcy

cases. When private entities have such access, however, the Study Agencies propose that they

generally be prohibited from reusing or re-disclosing the information for purposes unrelated to

administering bankruptcy cases. However, these prohibitions do not include re-disclosing

information to law enforcement or for other governmental purposes.

Court officials, including private trustees, who have responsibility for administering

bankruptcy cases, need full access to comprehensive debtor information for all cases coming

under their purview, subject to appropriate re-use and re-disclosure restrictions.

As for the creditor community, an entity that believes that it is a party in interest in a

bankruptcy case should, perhaps upon adequate showing, have access to information sufficient to
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determine whether it has an interest in the case. However, under the Study Agencies’

recommended use and disclosure limitations, if the private party determined not to file a claim in

that case, it would be prohibited from using or disclosing the data for any purpose, with

exceptions for disclosure to law enforcement or other governmental entities.

Agents of parties in interest necessarily will need to collect and make available in an

efficient manner a wide range of information from many cases. It is important that these

activities also be subject to re-use and re-disclosure restrictions that protect debtors’ privacy

interests. As noted, one of the recognized “fair information practices” provides that data only 

be used and disclosed to advance the purpose for which it was collected. As described above,

several existing systems outside of bankruptcy adopt this principle and impose re-use and redisclosure limitations.

Limitations on re-disclosure of bankruptcy information by private entities will supplement

existing statutes governing financial privacy, such as the FCRA, which may not reach all entities

involved in the collection and redistribution of this information. The protections of the FCRA

are limited to “consumer reporting agencies” and those of GLBA are limited to “financial

institutions.” However, entities may become involved in the collection and dissemination of

financial information without falling within either of these categories. The recommended

limitations on re-disclosure of sensitive bankruptcy information by private entities will help close

any statutory gap. 

The Study Agencies separately recommend that detailed information that appears in a

bankruptcy filing be available to researchers on a de-identified basis. This approach protects the

debtor’s privacy while assisting public and private entities in understanding various aspects of the

bankruptcy system and in making or considering policy decisions about the bankruptcy system. 

Notably, the lack of such information was pointed out during the recent debate on bankruptcy

reform in the 106th Congress. 

An additional recommendation concerns the special needs of law enforcement. Law

enforcement officials throughout the country often use public record information – including 

bankruptcy information – to assist in their investigations. Public records can help to locate

individuals, identify assets, verify personal relationships, and otherwise further enforcement

efforts. The Study Agencies recommend that as decision makers craft information policy on

non-public information, they do so in a way that does not infringe upon the current ability of

governmental entities to gain access and use of this information.

Although a few public commenters supported allowing bankruptcy data to be collected

and distributed by third parties, most of the comments were opposed to the commercial use 

and/or non-bankruptcy related use of private debtor information. The following public

comments supported these recommendations:

• The FTC suggested that commercial use of highly personal and sensitive data should be

prohibited for several reasons. First, such disclosure may facilitate identity theft or other

illegal conduct. Second, trustees receive sensitive private information as a result of
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governmental action, and the use of non-public information for commercial purposes

appears to be outside the scope of their responsibilities. Third, the commercial use of

debtor information conflicts with the trustees’ fiduciary duties and responsibilities, and the

Department of Justice’s policy prohibiting trustee’s from using estate funds for their

personal benefit. Finally, the commercial sale of debtor information may implicate

concerns under the FCRA.

• The National Association of Attorneys General commented that due to the protections

afforded in bankruptcy, it is important that information be widely available to parties in

interest. However, measures should be established regarding the appropriate uses of

bankruptcy information, and there should be restrictions on the release of data that is

particularly susceptible to abuse, with penalties for any misuse of information.

• The National Association of Consumer Bankruptcy Attorneys commented that debtors

should not be required to forego any expectation of privacy, except to the extent that their

information is necessary to the administration of the bankruptcy process. All possible

precautions and protections should be implemented to preclude any unwarranted disclosure

of personal information. 

• The Ohio Credit Union League commented that bankruptcy information should be

categorized as public or non-public and as to who may have access. There should be

restrictions on and penalties for the use and disclosure of non-public information.

• The Center for Democracy and Technology commented that there may be legitimate public 

 interest considerations for providing aggregate reports, stripped of information that may 

identify specific individuals, on debtors’ interactions with the bankruptcy system and 

creditors.

6(b)(iv) Incorporate Fair Information Principles.

The Study Agencies recommend that the bankruptcy system incorporate fair

information principles of notice, consent, access, security and accountability.

Notice: The Study Agencies recommend that debtors who file for bankruptcy be

informed in writing that certain information that they disclose in their petitions

and schedules may be disclosed to the general public and that, consistent with

current law, all information may be disclosed to parties in interest, law enforcement

and other governmental entities. 

Current bankruptcy laws and rules do not make explicit provision for a debtor to receive

notice of the potential use and distribution of the personal information he must submit to the

court in the course of a bankruptcy case. The Study Agencies believe that many individuals may

not be aware that their personal information will be made widely available to the general public.

Debtors could be provided with adequate notice regarding the collection and

dissemination of their information by several methods. For example, notice could be provided

directly on the petition and schedules that a debtor must file. Notice also could be provided

through counseling with a debtor’s attorney.
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Several public commenters stated that debtors should relinquish their right to privacy in

exchange for the protections afforded by the bankruptcy process. However, most of the

comments supported the concept that bankruptcy incorporate fair information principles,

including providing debtors with adequate notification. The following public comments

supported these recommendations:

• Many of the public comments noted that debtors are generally fearful of and unfamiliar with

the bankruptcy process, and do not envision that their files may be available for review by

 any member of the public.

• Mary Jo Obee, Chief Deputy Clerk of the U.S. Bankruptcy Court of the Western District of

Oklahoma, commented that generally individuals have no idea that anyone other than those

listed on their schedules, the trustee, and the courts will ever see their information.

• The FTC commented that because certain information necessarily must be put on the public

record during a bankruptcy case, consideration should be given to ensuring that debtors are

given notification as soon as possible in the bankruptcy process as to how their information

will be used and whether and how it will be disclosed. Individuals cannot fully understand

the consequences of pursuing relief from their debts unless they are informed of the

consequences and the extent and means by which their personal and financial information

will be divulged to parties in interest and the general public.

• Several commenters suggested that debtors’ attorneys should be required to explain the

potential loss of privacy when advising their clients as to whether bankruptcy is an

appropriate course of action.

Consent: The Study Agencies recommend that debtors’ affirmative voluntary

consent be required in order for creditors, trustees, other parties in interest, and

their agents to re-use or re-disclose information reported in the bankruptcy process

for purposes unrelated to administering a particular case, except for re-use and redisclosure of information to law enforcement or other governmental entities. 

This recommendation is based on the assumption that consent is implied for uses of data

by private entities related to the bankruptcy process and that explicit consent is required for

unrelated uses by private entities. The voluntariness of consent is quite important – individuals

should not be coerced into providing their consent for such transfers. This recommendation was

supported by most of the public commenters. 

Several federal laws provide relevant frameworks for consent requirements for the re-use

and re-disclosure of non-public information by private entities. For example, the GLBA provides

for certain allowable uses and disclosures of financial information. Beyond those uses,

consumers must be provided an opportunity to object to the disclosure of their personal

information to non-affiliated entities. The FCRA also allows disclosure for certain “permissible

purposes.” Beyond those, disclosure may occur only with the consent of the consumer. These

re-use and re-disclosure limitations, however, should not restrict private entities from sharing

information with governmental entities.
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Access: The Study Agencies recommend that individual debtors have the right to

reasonable access of their file, and the right to challenge the accuracy of

information it contains. 

 Fair information principles provide that individuals should have reasonable access to the

information about them maintained by private entities. Further, in instances where their

information is used to facilitate decisions about them, individuals should have the right to request

correction of that information. 

In a related context, the FCRA assures the accuracy of personal information by providing

consumers with the ability to discover whether adverse information is in their files, inspect that

information, and demand that all inaccuracies be corrected in a timely manner.

Security: The Study Agencies recommend that adequate security standards be in

place for private entity access to all information flows in the bankruptcy system. 

The Study Agencies believe that there should be mechanisms to minimize the risk that

unauthorized entities gain access to information that could compromise the personal financial

information of the debtor, or the integrity of the data. Accordingly, measures should be

established and implemented to ensure that only authorized users have access to non-public

information and that re-disclosure limitations are followed. The development and

implementation of security standards are particularly important in the new networked

environment. Therefore, if a new privacy protection structure is established, special emphasis

should be placed on limiting access by private entities, through proper security standards, to

certain sensitive data, such as Social Security numbers and other personal identifiers.

This recommendation was supported by several public comments, including:

• The Center for Democracy and Technology recommends that the entity collecting the data

be required to secure the information it maintains. Not only does the emergence of

advanced information systems promote access to government records, but also highlights

the weaknesses in the handling of personal information contained in bankruptcy records. 

• The Credit Union National Association commented that if bankruptcy information is made

available electronically, it may be acceptable to secure the information by use of passwords.

Accountability: The Study Agencies recommend the development of mechanisms to

ensure that private entities engaging in improper use or re-use of a debtor’s

personal financial information are held accountable for their actions.

Fair information principles provide that there should be an enforcement or other

mechanism to ensure that private entities are held accountable for noncompliance with the

standards regarding notification, use and disclosure, consent, access, and security of information. 

The accountability mechanism for bankruptcy records should be designed to ensure that private

entities that violate the fair information principles are held accountable by legal remedies,

disciplinary action, or other effective mechanisms.
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The principle of accountability was supported by most of the public commenters,

 including:

• The Ohio Credit Union League commented that there should be disclosure restrictions on,

and penalties for the misuse of, information deemed to be non-public information in the

bankruptcy process.