Privacy and Bankruptcy
This section explores some key infomation regarding the collection and distribution of personal information collected during the bankruptcy process:
Personal Information Collected from the Debtor
Access to the Debtor's Personal Information
Limits on Access to the Debtor's Personal Information
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 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.
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