Reed Law Firm, P.A. - bankruptcy

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Can Chapter 7 trustees request passwords to filer accounts?

Filing for bankruptcy is rarely a pleasant experience, but the hope of relief from debt makes the effort worthwhile for many. Chapter 7 bankruptcy offers the chance to have many unsecured debts discharged, providing a fresh start for those in South Carolina who have been struggling to keep their heads above water. Through Chapter 7, the court assigns a trustee to manage each bankruptcy and determine which assets are exempt or nonexempt. However, recent actions by bankruptcy trustees in another state have many concerned about the security of filers.

A trustee's duty in a bankruptcy case is to examine the assets of a filer and determine if any can be recovered to repay creditors. When it comes to online accounts, such as PayPal or eBay, trustees generally ask the filer to disclose any balances, or, if the filer is not forthcoming, they may subpoena the transaction statements. Recently, however, several Chapter 7 bankruptcy trustees requested the login and password information from people who had filed for bankruptcy in their state.

Some advocates for the rights of those seeking bankruptcy protection feel this is a frightening breach of security. It may also make those filing for bankruptcy feel like criminals or intimidate people enough to cause them to avoid a bankruptcy they may need for financial recovery. There are other less invasive ways to gain the information in those accounts, including working with the filer's attorney.

Fortunately, the U.S. Trustee Program and the National Association of Consumer Bankruptcy Attorneys do not approve of the blanket requests for personal account logins or passwords, especially when the trustees do not offer a reason for requesting the information. Those in South Carolina who file for Chapter 7 bankruptcy will certainly want to ensure that their rights and privacy are protected as much as possible during the bankruptcy procedure. A bankruptcy attorney can work to provide that protection.

Source: bna.com, "Amazon Prime, eBay Passwords Sought from Bankruptcy Debtors", Daniel Gill, Aug. 7, 2017

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Columbia, SC 29210

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