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CUNA Regulatory Comment Call

August 1, 2000

EXECUTIVE SUMMARY

• The Department of Justice, Department of Treasury, and the Office of Management and Budget are conducting a study of how the filing of a bankruptcy affects the privacy of consumer information that becomes part of a bankruptcy proceeding. The study will consider how these privacy interests are affected by the public availability of such information, while considering the need for access to this information and the accountability in the bankruptcy system.
• The study is expected to be completed by December 31, 2000. To assist in this study, these agencies are now requesting public comment on a number of issues.

Comments on the study are due by September 8, 2000. Please submit your comments to CUNA by September 1, 2000. Please feel free to fax your responses to CUNA at 202-371-8240; e-mail them to Associate General Counsel Mary Dunn at mdunn@cuna.com or to Assistant General Counsel Jeffrey Bloch at jbloch@cuna.com; or mail them to Mary or Jeff in c/o CUNA's Regulatory Advocacy Department, 805 15th Street, NW, Suite 300, Washington, DC 20005. You may also contact us if you would like a copy of the request for comment or you may access it on the Internet at the following address:http://www.usdoj.gov/ust/privacy/privacy-study.htm

BACKGROUND

A person who files for bankruptcy must provide detailed financial information as part of the schedules that are filed with the bankruptcy courts. This includes a list of the accounts with financial institutions that includes the account numbers and the balances, credit card account numbers, social security numbers, balances owed to creditors, income sources, list of assets, and a budget showing the debtor's expenses. By statute, this and all other information filed with the court are publicly available. However, in other non-bankruptcy contexts, such as banking and credit reporting, there are regulations and other safeguards designed to ensure the confidentiality of this information.

In the past, such access by the public has, as a practical matter, been quite limited. Obtaining this information required considerable time, effort, and sometimes money. However, the development of technology and Internet access raises the possibility that this sensitive information may be obtained easily by others who may use the information for fraudulent purposes.

Bankruptcy trustees have access to this public information and often receive other sensitive information from debtors, such as tax returns, additional information about assets and liabilities, an accounting of living expenses, payment schedules to creditors, and information about alleged wrongdoing. This information is not generally available to the public, but is needed to administer bankruptcy cases, and trustees are allowed to provide this information to creditors, attorneys, and others with a legitimate interest in the case. However, there are no well-defined limits on the trustee's authority to disclose this information to others or limits on the authority of these other parties to use, sell, or transfer this information.

DESCRIPTION OF THE REQUEST FOR COMMENT

On April 30, 2000, the President announced the "Clinton-Gore Plan to Enhance Consumers' Financial Privacy: Protecting Core Values in the Information Age." As part of this plan, the President directed that a study be conducted on how best to handle privacy issues for sensitive information in bankruptcy records. This specifically includes the review of the electronic availability of detailed bankruptcy records and the impact that this may have on privacy.

The Department of Justice, Department of Treasury, and the Office of Management and Budget are currently in the process of conducting this study of how the filing of a bankruptcy affects the privacy of consumer information that becomes part of the bankruptcy case. The study will consider how these privacy interests are affected by the public availability of such information, while considering the need for access to this information and the accountability in the bankruptcy system. The study will also consider how changes in business practices and technology may affect these privacy interests.

To assist in this study, these agencies are now requesting public comment on a number of issues. The issues that may be of concern to credit unions are reflected in the questions that follow this summary. The study is expected to be completed by December 31, 2000 and will specifically examine the following issues:

• The types and amounts of information that are collected from and about individual debtors, as well as analyzed and disseminated, in personal bankruptcy cases.

• Current practices, and practices envisioned for the future, for the collection, analysis, and dissemination of information in personal bankruptcy proceedings.

• The needs of various parties for access to financial information in personal bankruptcy cases, including specifically which individuals or entities require access to which particular types of information, for what purposes, and under what circumstances.

• The privacy issues raised by the collection and use of financial and other information in personal bankruptcy cases.

• The effect of technology on access to, and the privacy of, a debtor's personal information.

• Business or governmental models that can provide access to, and protect debtors' privacy interests in, bankruptcy records.
• Principles for the responsible handling of information in bankruptcy records, and recommendations for any policy, regulatory, or statutory changes.

The request for comment also requests input about the effect that a business bankruptcy filing has on information that the business has collected. The agencies conducting the study believe that this merits attention and may examine this issue further after receiving comments. However, this is not part of the formal study because of pending enforcement actions and legislation.

• What types and amounts of information do you collect from individual debtors in personal bankruptcy cases? How do you use these various types of information?
  
  

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• What are your current practices for collecting information from debtors? How do you think these practices will change in the future?
  
  

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• Are you satisfied with the access you have to financial information in personal bankruptcy cases? Do you believe there is certain information that is currently publicly available but could be made available only to a limited class of persons, such as creditors? Do you believe that social security numbers, bank account numbers, and other account numbers should be included in this category? Should restrictions on this information vary based on whether the information is available electronically?
  
  

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• As mentioned in the above summary, certain information is not public but is collected and disseminated by bankruptcy trustees. Is all of the information collected by the trustees necessary for the administration of the bankruptcy case? Do the existing limitations on the trustee's handling of the information raise any problems? Would you support the idea of commercial firms collecting, compiling electronically, and redistributing this information? Do debtors have a privacy interest in this non-public information?
  
  

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• Should there be restrictions on the use and disclosure of information that is not public but is collected by the bankruptcy trustee? If so, what types of restrictions should apply?
  
  

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• As mentioned in the above summary, certain information collected during a bankruptcy proceeding is publicly available. Do debtors have a privacy interest in this information? Do these interests vary based on the type of information? Do debtors understand the loss of privacy of this information? Should they be expected to forego any privacy expectation? What are the benefits of having this information publicly available?
  
  

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• Do the privacy interests of bankruptcy information change when such information is available electronically?
  
  

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• What are some government or business models, rules, or statutes that maintain the appropriate balance between access and privacy of bankruptcy information? Are there any that are ineffective in maintaining this balance?
  
  

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• Should there be privacy safeguards for bankruptcy information? If so, how can they be structured so as not to interfere with your need for the information? Should notice about the public nature of the information be given to debtors?
  
  

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• Other comments?
  
  

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