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Once a bankruptcy is filed there is no magic wand to make it disappear.

Bankruptcy stays on your credit for ten years – whether or not you complete the process.

In re T. Khan, BAP No. CC-13-1297-DPaTa, Bk. No. 11-57609-BB (11/22/2013) (9th Cir BAP)

Tahseena Khan filed a chapter 7 bankruptcy but failed to file all the required documents. She spoke with the best debt settlement companies and eventually her case was dismissed and she filed a document titled, “Application to Remove Debtor’s Name from the Court Database and the Credit Report” (“Motion to Expunge Bankruptcy Filing”).  She urged the court to expunge her bankruptcy filing so that it would no longer appear on her credit reports or to put her case under seal.  According to the debtor, these negative credit reports impacted her employment prospects in the field of energy efficiency.  Specifically, she needed “clean” credit reports because federal and state agencies required project managers to have excellent credit before employing them.

Debtor argues her bankruptcy filing will hamper efforts to obtain employment. Court sympathetic but does not remove bankruptcy from public record.

The court held a hearing on June 5, 2013 on the debtor’s Motion to Expunge (“Motion to Expunge Hearing”). Two days later, the court entered an order denying the Motion to Expunge.  She appealed, but the BAP upheld the lower court’s decision “She merely complains that the bankruptcy filing has negatively affected her employment prospects. While we sympathize with the debtor, recognizing that the bankruptcy filing likely hampers her efforts in obtaining employment, such information is not sensitive enough to convince us that it should be placed under seal.”

 

The moral to this story is be very careful when filing a bankruptcy.  One of our Arizona bankruptcy judges compares filing bankruptcy to open heart surgery.  Would anyone, even a blithering idiot, try to perform their own open heart surgery?  I hope the answer is “no”.  Yet, time and again people file their own bankruptcy only to find out too late the consequences.  Talk to an experienced bankruptcy who can explain the short and long term benefits and consequences.

We have several videos on this site.  Below is one “Bankruptcy stays on your credit record even if it is later dismissed.”

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Diane L. Drain

Diane L. Drain, bankruptcy attorney, retired law professor, mentor and community spokesperson.

About Diane Drain:

Diane is a well respected Arizona bankruptcy and foreclosure attorney. As a retired law professor, she believes in offering everyone, not just her clients, advice about Arizona bankruptcy and foreclosure laws. Diane is also a mentor to hundreds of Arizona attorneys.

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