Is My Social Security Number Confidential in my Bankruptcy Case?

 

Your Social Security Number should be kept confidential by all parties in your Michigan Chapter 7 or Chapter 13 bankruptcy case.

However, it is not always the case that this is so.

This Article will describe your obligation to provide and disclose your Social Security Number. It will then discuss the points in the bankruptcy process at which your Social Security Number is in danger of exposure. Finally, the Article will conclude with a discussion of what you can—and can’t—do about it when and if this happens.

 

Must I Disclose My Social Security Number if I File Bankruptcy?

 

You are indeed required to disclose your Social Security Number when you file for bankruptcy. The last 4 digits of your SSN must be included in the Voluntary Petition for Bankruptcy form that is filed to initiate a bankruptcy case. Your full Social Security Number is disclosed on a separate form attached in exhibit to the Voluntary Petition.

However, this Social Security Number Disclosure form is, unlike most of the rest of the documents filed on your bankruptcy case docket, not viewable by the public through the Federal Bankruptcy Court’s PACER system.

It is viewable by Bankruptcy Court personnel, including your judge and the United States Trustee overseeing the bankruptcy system’s integrity in the Eastern District and Western Districts of Michigan—but by no one else.

Thus, your Social Security Number is kept confidential from the prying eyes of the public—except when it isn’t.

 

Why Must I Disclose My Social Security Number?

 

Your Social Security Number is used (rightly or wrongly) to identify you within the financial system of the United States. The Internal Revenue Service and Michigan’s Department of Treasury utilize the Social Security Number for tax filing, payment, and collection purposes, namely.

However, it also serves to identify you within the credit reporting system in the United States. The three major credit bureaus catalogue your debt obligations and compile your credit score beneath the umbrella of your specific Social Security Number.

Public court records also reported to the credit bureaus in association with your Social Security Number.

This includes bankruptcy case filings.

The discharge of your debt granted at the end of your bankruptcy case is a Federal injunction prohibiting your creditors from collecting your pre-filing debt any longer.

To do this, however, your creditors must know that you filed for bankruptcy in the first place. Individual creditors are mailed a “Notice of Commencement” by the US Bankruptcy Court upon the filing of your case. (More on this Notice, below.)

Beyond that, though, the bankruptcy filing is reported via your Social Security Number to your credit bureaus. Your creditors are then required, once the discharge is granted, to describe your debts as “Not Owed, Discharged in Bankruptcy” pursuant to the US Bankruptcy Code and the US Fair Credit Reporting Act.

You want your bankruptcy discharge to work mechanically. Therefore, you want to disclose your Social Security Number.

 

When Is My Social Security Not So Confidential in Bankruptcy?

 

There are still leaks in the Social Security Confidentiality system.

The Notice of Commencement, or 21-Day Notice, mailed out by the Bankruptcy Court to each creditor and party in interest (including co-debtors and your landlord) includes, in print, your full Social Security Number.

Why is this? The electronic version maintained on your case docket in PACER includes only the last 4 digits of the SSN.

In 2003, creditors complained that truncating the Social Security Number to only 4 digits unduly hampers their ability to identify you in their accounting systems. Congress and the Bankruptcy Advisory Committee on Bankruptcy Rules was sympathetic to their plight (as they too often are).

One would think that sophisticated financial lenders maintaining massive databases of amounts of data related to money owed would be able to look up one of their own customers, right? Apparently not.

And, of course, postal mail is never intercepted, ripped open by third parties, or generally misdelivered, right? What could go wrong?

This remains an irritating feature of the bankruptcy filing process.

Otherwise, the other possible source of “Social Security Number Leak” are the documents filed by those same creditors in your bankruptcy case.

In particular, in Chapter 13 bankruptcies, creditors must file a form called a Proof of Claim in order to receive payment toward the debts owed from your Chapter 13 Trustee. This Proof of Claim must contain the identity of the creditor, the amount owed, as well as the nature of the debt owed (secured or unsecured, priority or non-priority, lease- or contract-based or not, etc.), among other things.

The creditor must attached documentation to the Proof of Claim form establishing that it is the “real party in interest” entitled to be paid by the Chapter 13 Trustee.

It is not unheard of for creditors to fail to redact or black out Social Security Numbers, account numbers, birth dates, and other personally identifiable information (“PII”) in these filings.

 

Are Creditors Required to Keep Social Security Numbers Confidential?

 

A number of Federal legal rules require creditors to keep confidential your Social Security Number and in bankruptcy cases in particular.

First, above and beyond bankruptcy matters, the Federal Gramm-Leach Biley Act requires that creditors safeguard your Social Security Number.

This Act states that financial institutions have an affirmative and continuing obligation to respect your privacy. Namely, financial institutions are required to ensure that your information is confidential and secure and to protect against hazards to confidentiality, including unauthorized access to your confidential information.

Within the Bankruptcy context, Section 101(41A)(A) of the US Bankruptcy Code includes Social Security Numbers within its definition of “personally identifiable information.”

Federal Rule of Bankruptcy Procedure 9037(a) then further requires that Social Security Numbers, among other things, be redacted in any filing with the Bankruptcy Court.

 

What Can I Do if a Bankruptcy Creditor Leaks My Social Security Number?

 

So what do you do if a creditor fails to redact your Social Security Number in a Proof of Claim or any other filing made with the Court?

An experienced Detroit bankruptcy attorney will take a number of steps, bearing in mind a few realities:

1. The creditor has usually done this accidentally or carelessly and not maliciously;
2. The court will almost never sanction a creditor and requirement the payment of money damages for such a failure;
3. It only takes a second for your Social Security Number to swept up by a hacker or other bad actor on the lookout for such breaches in these publicly viewable documents.

 

Given these “realities,” your Detroit bankruptcy attorney will determine the best course of action for dealing with a SSN leak.

The last of these factors is the driving force: time is of the essence. What you want, ultimately, is for your Social Security Number to be properly redacted as quickly as possible.

While it may be tempting for an over-eager debtor or debtor’s counsel to attempt to use this failure to redact as an opportunity to seek money damages in the form of sanctions, the experienced Detroit bankruptcy attorney understands that is not likely to bear fruit.

The judges of the Eastern District of Michigan have not ruled in favor of debtor seeking damages for Social Security Number redaction failures. If some calculable material damage can be proved to be directly related to the breach, a good bankruptcy litigator might consider this an option.

Still, see “Reality #2,” above.

Otherwise, a phone-call to the creditor’s attorney (whose phone-number and email address are included in the Proof of Claim) will often get the document withdrawn and re-filed, properly redacted.

This is related to Reality #1, above. Accidents happen. They are unfortunate, but well-meaning professionals who, as is your bankruptcy lawyer, an officer of the court, will want to remedy the issue as quickly as possible.

But here’s another reality: some Proofs of Claim (a great many, in fact) are robo-filed by debt buyers, servicers, or aggregators in a willy-nilly fashion with very little quality control and oversight. They are not filed by well-meaning local creditors’ bankruptcy counsel. They are filed by … some “agent” as listed on the Proof of Claim with a phone-number that no human being will ever answer.

What do you do in this case?

Your bankruptcy lawyer will file a “ex parte” emergency motion seeking to have the unredacted document struck from the public record, usually without prejudice to the creditor’ right to re-file a properly amended document.

 

Social Security Numbers in Bankruptcy: The Bottom Line

 

The bottom line here is that you need to have a good bankruptcy lawyer working on your side in the first place to competently avail yourself of any of these options.

Attorney Walter Metzen is a Board Certified Bankruptcy Expert who has successfully represented Metro Detroit Chapter  7 and Chapter 13 bankruptcy clients for over 30 years.

If you are considering filing for bankruptcy in Michigan, contact us now to schedule your free, initial consultation.