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Some trustees are seeking too much information in bankruptcies

On Behalf of | Aug 21, 2017 | Chapter 7 Bankruptcy

Texas residents interested in bankruptcy matters might like to know about what trustees are allowed to do in bankruptcy cases. With Chapter 7 bankruptcy, trustees may liquidate a debtor’s assets in an effort to pay back creditors. As part of this process, two trustees in Maryland have demanded access to debtors’ online accounts. However, people and groups have raised concerns about this practice.

The U.S. Trustee Program, bankruptcy attorneys and a representative of the National Association of Consumer Bankruptcy Attorneys are all wary about asking for account passwords as standard practice in bankruptcy matters. In the Maryland cases, the trustees provided a questionnaire that asked for the log-in information for accounts with Amazon Prime, PayPal and eBay. The document also told debtors not to change the passwords and to keep the accounts active.

When asking for passwords, privacy concerns are a big issue. The questionnaire did not make clear who will have access to the information or what the information will be used for. While this usually does not happen in Chapter 7 bankruptcy cases, trustees might ask about accounts and transactions.

Conventional wisdom seems to suggest that asking a debtor for account passwords is not always wrong. However, trustees should have a reason for needing this information. If legitimate concerns exist about a person’s transfers and assets, then asking for passwords may be warranted. However, trustees could first get account information by asking for statements or getting a subpoena.

When it comes to debt collection, not everyone plays by the rules. Even those who are acting in good faith may sometimes have misconceptions about proper debt practices. This may make it important to consult an attorney when considering bankruptcy. An attorney could ascertain whether bankruptcy may be in one’s best interests and if one is eligible for Chapter 7.