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Chapter 7 bankruptcy trustees target online accounts

On Behalf of | Aug 21, 2017 | Bankruptcy

Court protection offers several benefits for Richmond residents seeking debt relief with a Chapter 7 bankruptcy. Certain assets can be sheltered from creditors, and bankruptcy forces creditors to deal with the trustee instead of the debtor. However, it has been reported that two trustees may be jeopardizing debtors’ sensitive information by requesting login information for popular websites. With the U.S. Trustee Program withholding support, it is unclear whether electronic snooping is a new trend in personal bankruptcy cases.

An attorney involved in one of the two cases of personal bankruptcy shared that the trustee had demanded log-in information for the debtor’s Paypal, eBay and Amazon Prime accounts. The routine questionnaire with this abnormal request also demanded the debtor keep the accounts open and passwords unchanged for at least 10 days. Trustees routinely ask for information found on typical account statements, and this behavior is a significant departure from that norm.

The primary trouble with such requests is that they constitute an invasion of privacy. As one Chapter 7 bankruptcy lawyer put it, the trustees have many ways to go about getting this information without treating debtors like criminals. Another concern is that lax IT security may result in lost or stolen login information. The U.S. Trustee Program responded that it did not support the demands, but it did not condemn them either.

A large part of the attorney’s role in Chapter 7 bankruptcy happens before the first paper is filed with the courts. This involves informing the debtor of the eligibility requirements as well as pointing out that a credit counseling course must be taken in advance of filing the petition.