Interviewer: Do you think bankruptcy as a whole gets a pretty bad rap sometimes?
Is the Stigma Attached to Bankruptcy Perpetuated by Creditors?
Court Koehler: It has a really bad stigma, and I think that that stigma is perpetuated by creditors because they don’t want you to enter bankruptcy. So they say you’re being lazy and you’re making promises and then turning around and not fulfilling them and just filing bankruptcy. I don’t see that in day to day practice.
What I see are people who have been trying really hard to fight an uphill battle with their finances and it’s a losing battle. They may have lost a job or they may have medical bills or something unforeseen like that. There’s just no way that they’re ever going to be able to pay back the back debts that they owe when it comes to interest rates and attorney fees from collection agencies. It just takes one debt that you already couldn’t afford and it escalates it to just a ridiculously unfathomable amount for an average person to handle.
Many People Delay in Filing Bankruptcy in an Effort to Pay Back Creditors—Even When It becomes a Hardship
I see are people that have struggled for too long and should have come and seen me earlier, but they’ve struggled and they’ve tried to repay their debts and they just can’t do it. It’s just not possible. Those people deserve a chance to keep their livelihood and not be just destroyed by these unforeseen circumstances like losing a job or having a medical condition.
That’s what the bankruptcy will provide for you. It’ll provide you the opportunity to have a second chance and to get back on track financially and have a fresh start. It does have that stigma that people that file bankruptcy are giving up or they’re cheating their creditors, but it’s not that way in reality.
Bankruptcy Filing Is Common and You Most Probably Are Acquainted with a Person That Has Filed
You would be surprised that many of the people that you know probably have gone through bankruptcy. It’s something that they don’t talk about and don’t tell people about when they come over for dinner, oh, I filed bankruptcy. They don’t say that. So people don’t realize how common it is and how much it can be legitimately needed in just a lot of cases.
Is Your Bankruptcy Going to become Public Knowledge?
Interviewer: If I filed for bankruptcy, how private is it going to be? Are my friends or my work going to find out about it?
Court Koehler: No. For the most part, no, they won’t. The reason that you hear about it with celebrities is because technically speaking, when you file bankruptcy, it is a public record. If someone wants to go and look specifically for you and try to figure out if you’ve filed bankruptcy, they could probably find that out.
While the Information Is Considered Public Knowledge, the Average Person’s Bankruptcy Filing Isn’t Newsworthy
If they have your name or they have your social security number, information about you, they could find out if you filed bankruptcy. That being said, when you file bankruptcy, the court is not going to release a press statement to CNN and say so and so filed Chapter 13 bankruptcy today. They’re not going to send letters to anybody.
The people that will find out about it are the people that are your creditors that you owe money to. Your job doesn’t even need to find out unless you have a wage garnishment that needs to be stopped. That’s the only reason they would need to know about it. Your family, your friends, and your job for the most part, won’t know about it, unless you want them to and you tell them yourself.