FROM THE OFFICE OF PUBLIC AFFAIRS

Today, The Treasury and Justice Departments along with the Office of Management and Budget announced the release of an important study of the protection of personal financial information which could be disclosed to the general public in a consumer bankruptcy proceeding.

Directed by President Clinton in April 2000, the study finds that sensitive personal information, such as bank account numbers and balances that are protected typically in other instances are often available in bankruptcy files. Therefore The Departments of Treasury and Justice along with the Office of Management and Budget are recommending that privacy protections be increased for individuals in the bankruptcy system.

The study calls for a balanced approach that will protect individual privacy while improving the effectiveness of the bankruptcy system. New bankruptcy information policies should limit the amount of highly sensitive personal financial data available in public case files to prevent identity theft and other abuse. At the same time, adequate information should remain publicly available to ensure the full accountability of the bankruptcy system. Parties with claims in bankruptcy should continue to have full access to all of the information they need to pursue those claims, subject to appropriate re-use and re-disclosure provisions.

The study finds that financial information in personal bankruptcy proceedings is generally available to the public without restriction. However, some of this information, such as details about a debtors financial accounts, is highly sensitive, and individuals have a privacy interest in such information that is not adequately recognized in the current system.

At the same time, access by creditors to detailed financial information is essential for the efficient operation of the bankruptcy system, as is access by governmental entities for law enforcement and other purposes. Public access to some information about bankruptcies plays an important role in the accountability of the system as a whole.

Finally, increased use of electronic information systems in bankruptcy proceedings can make the system more efficient, but may entail additional privacy protections in order to avoid large increases in the level of disclosure of sensitive personal data. Widespread access to such sensitive information can provide unwarranted opportunities for harm to consumers and other abuses.

Based on these findings, the study agencies recommend, among other measures, that:

The protection of personal privacy should be given greater emphasis in the bankruptcy system.

The general public should have access to core information about personal bankruptcies such as the fact that an individual has filed for bankruptcy and the identities of parties in interest in order to ensure the accountability of the system.

Access to other detailed information, such as bank account numbers and detailed profiles of personal spending habits, should be limited.

Creditors and other parties in interest in bankruptcies should continue to have access to detailed information about individual bankruptcies in order to pursue their legitimate claims as efficiently as possible.

However, private entities granted such access should be subject to re-use and redisclosure protections that restrict the use of the information to the pursuit of claims in a given bankruptcy proceeding.

Any new system developed to address the flow of data in personal bankruptcies should incorporate widely-recognized fair information principles, such as rights to access and correction and appropriate data security safeguards.

Finally, any policy regarding sensitive financial information in personal bankruptcies should not infringe upon the current ability of law enforcement and governmental entities to have access to and use of this information.