[Federal Register Volume 65, Number 147 (Monday, July 31, 2000)]
[Notices]
[Pages 46735-46738]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-19204]


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DEPARTMENT OF JUSTICE

DEPARTMENT OF TREASURY

OFFICE OF MANAGEMENT AND BUDGET


Public Comment on Financial Privacy and Bankruptcy

AGENCIES: Department of Justice, Department of the Treasury, and Office 
of Management and Budget.

SUMMARY: The Department of Justice, Department of Treasury and Office 
of Management and Budget, in consultation with the Administrative 
Office of the U.S. Courts, are conducting a study (the ``Study'') of 
how the filing of a bankruptcy affects the privacy of individual 
consumer information that becomes part of a bankruptcy case. The Study 
will consider how the privacy interests of debtors in personal 
bankruptcy cases are affected by the public availability of information 
about them in those cases. It will also consider the need for access to 
this information and accountability in the bankruptcy system. Finally, 
it will consider how changes in business practices and technology may 
affect all of these interests. To assist in the Study, these agencies 
are requesting public comment on a series of questions.

DATES: To ensure their consideration in the Study, comments and 
responses to the questions listed below, along with any other comments, 
should be submitted by September 8, 2000.

ADDRESSES: All submissions must be in writing or in electronic form. 
Written submissions should be sent to Leander Barnhill, Office of 
General Counsel, Executive Office for United States Trustees, 901 E 
Street, NW., Suite 780, Washington DC 20530. Electronic submissions 
should be sent by email to [email protected]. The submissions 
should include the submitter's name, address, telephone number, and if 
available, FAX number and e-mail address. All submissions should be 
captioned ``Comments on Study of Privacy Issues in Bankruptcy Data.''

SUPPLEMENTARY INFORMATION:

I. Background

    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 the Plan, the President directed three 
federal agencies to conduct a study on ``how best to handle privacy 
issues for sensitive financial information in bankruptcy records,'' 
including ``the privacy impact of electronic availability of detailed 
bankruptcy records, containing financial information of vulnerable 
debtors.'' The Study, to be jointly conducted by the Department of 
Justice, the Department of Treasury, and the Office of Management and 
Budget (the ``Study Agencies''), will be prepared in consultation with 
the Administrative Office of the U.S. Courts, and will be completed by 
December 31, 2000. The Study Agencies are requesting public comment on 
a series of questions regarding privacy issues

[[Page 46736]]

related to records that are established in the course of bankruptcy 
proceedings conducted in federal courts, including questions raised by 
electronic access to such bankruptcy records. The Study Agencies 
solicit responses to any or all of the questions listed below and 
welcome any other comments on these topics.
    The Study Agencies also are aware of public attention in recent 
weeks focused on the troubling practice of organizations in bankruptcy 
seeking to sell personal data regarding their former customers, in 
violation of such organizations' privacy policies. Although this issue 
is outside the main scope of the Study--the privacy needs of debtors--
the Study Agencies believe that this topic also involves the 
intersection of privacy and bankruptcy, and merits further attention. 
In part because of pending regulatory enforcement actions and/or 
pending legislation, the Study Agencies are not making this subject 
part of the formal Study. Nevertheless, the Study Agencies invite 
comments about the effect that a business bankruptcy filing has on 
consumer/customer information that the business has collected. Comments 
should not address pending legislative proposals or regulatory 
activities. After reviewing the comments and any other developments, 
the Study Agencies will determine whether it is appropriate to examine 
this issue in greater depth.
    Currently, there are two different types of data maintained and 
used in a bankruptcy proceeding. The first is information in a court 
record that is made available to any member of the public. The second 
is information held by trustees administering bankruptcy cases that is 
not generally available to the public. These two categories of data are 
referred to here as ``public record data'' and ``non-public data,'' 
respectively, and they are described more fully below. Each is 
currently governed by a different set of rules and procedures, and the 
privacy and access interests in each may vary.

A. Public Record Data

    A consumer or individual who files a case under either chapter 7 or 
chapter 13 of the Bankruptcy Code, 11 U.S.C. 101 et seq., must provide 
detailed financial information as part of the schedules filed with the 
bankruptcy court. This includes a list of bank accounts and identifying 
numbers, credit card account numbers, social security numbers, balances 
in bank accounts, balances owed to creditors, income, a detailed 
listing of assets, and a budget showing the individual's regular 
expenses. By statute, 11 U.S.C. 107(a), all documents filed with the 
court are ``public records and open to examination by an entity at 
reasonable times without charge.'' Bankruptcy trustees (private 
entities appointed by U.S. Trustees) obtain this information in the 
course of administering cases assigned to them.
    Much of the information provided in connection with a bankruptcy 
case is similar to financial information that, in other contexts, such 
as banking and credit reporting, may be covered by a system of 
regulation designed to ensure the confidentiality of such information. 
For example, in other contexts, an individual would be given notice of 
what uses might be made of the individual's bank account information or 
social security number, and would have some degree of choice as to how 
such information will be used. Security safeguards may also attach to 
the information.
    In the past, access to public court record data has as a practical 
matter been quite limited. The individuals who obtained individual case 
files from the courts were those willing to spend considerable time, 
effort, and sometimes money. The development of electronic databases 
and other technologies allows for more widespread dissemination of 
information in bankruptcy records, along with far more convenient 
access, including access via the Internet. In some instances, courts 
are adopting technologies to convert their paper files to electronic 
form. This could result in a high volume of court records, including 
records containing sensitive personal information, appearing on the 
Internet.

B. Non-Public Data

    While substantial amounts of personal data are filed by debtors in 
the bankruptcy courts, additional data are gathered by bankruptcy 
trustees in the course of administering the cases assigned to them. The 
trustee often will collect information about claims filed by creditors 
in a given case. The trustee also may find it necessary to supplement 
information that a debtor has provided in the bankruptcy schedules, and 
may request tax returns, as well as supporting information about the 
value of the debtor's assets, amounts of liabilities, and routine 
living expenses. The trustee's files also may contain information 
gathered from investigations about alleged wrongdoing in the case. In 
chapter 13 cases, the trustee tracks a debtor's payments to creditors 
under a payment plan. In general, only the parties in interest in a 
bankruptcy case (as defined by the court) receive both public and non-
public data. By statute, the trustee ``shall, unless the court orders 
otherwise, furnish such information concerning the estate and the 
estate's administration as is requested by a party in interest.'' 11 
U.S.C. 704(7), 1302(b)(1). However, there are no well-defined limits on 
the trustee's authority to provide this information to others, nor on 
the authority of such third parties to use, sell, or transfer this 
information. In addition, some trustees and creditors are considering 
compiling information contained in bankruptcy records electronically 
for easier administration of bankruptcy cases in which they have a 
claim. They may also envision some possible commercial use.

II. Elements of the Study

    The Study will examine:
     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.

II. Questions to be Addressed

    The Study Agencies seek comment and supporting information from all 
sources, including bankruptcy professionals, consumer representatives, 
privacy advocates, creditors, information brokers, the academic 
community, and the general public. The Study Agencies will summarize 
the comments in the Study. Views are welcome on any aspect of this 
subject, but the following questions are offered to stimulate thought 
in specific areas of interest.

[[Page 46737]]

1.01  What types and amounts of information are collected from and 
about individual debtors, analyzed, and disseminated in personal 
bankruptcy cases?
    (1.1)  What types of information are collected, maintained, and 
disseminated in bankruptcy?
    (1.2)  Which of these data elements are public record data?
    (1.3)  Which are non-public record data held by bankruptcy 
trustees?
    (1.4)  How much data is at issue?
    (1.5)  Are certain types of data more sensitive than others; that 
is, are there types of data in which debtors would have a stronger 
privacy interest? If so, which ones?
    (1.6)  How valuable is the information in the marketplace?
2.0  What are the current practices, and practices envisioned for the 
future, for the collection, analysis, and dissemination of information 
in personal bankruptcy proceedings?
    (2.1)  What methods of data collection and aggregation are now used 
by the courts, creditors, trustees, and other private actors to 
collect, analyze, and disseminate public record data and non-public 
data?
    (2.2)  What methods are being contemplated for the future?
3.0  What access do various parties need to financial information in 
personal bankruptcy cases? Which individuals or entities require access 
to which particular types of information, for what purposes, and under 
what circumstances?
    (3.1)  What entities currently access public record data?
    (3.2)  What entities currently access non-public data from 
trustees?
    (3.3)  What specific data elements do they need, and for what 
purposes?
    (3.4)  Are the purposes for which the information is sought 
consistent with the public interest?

A. Public Record Data

    (3.5)  What data elements in public record data should remain 
public for purposes of accountability in the bankruptcy system? For 
other purposes?
    (3.6)  Is there certain information that need not be made available 
to the general public, but could be made available to a limited class 
of persons?
    (3.7)  If so, what are these data elements, to whom should they be 
made available, and for what purpose?
    (3.8)  Is there a need to make the following data elements publicly 
available: (a) Social security numbers, (b) bank account numbers, (c) 
other account numbers?

B. Non-Public Data

    (3.9)  What issues, if any, are raised by existing limitations on 
trustees' handling of personal information?
    (3.10)  Are all of the data elements held by bankruptcy trustees 
necessary for case administration purposes? If not, which data elements 
are not?
    (3.11)  What interests would be served by private or commercial 
enterprises collecting, compiling electronically, and redistributing 
information from bankruptcy cases?
4.0  What are the privacy issues raised by the collection and use of 
personal financial and other information in personal bankruptcy 
proceedings?

A. Public Record Data

    (4.1)  Do debtors' have privacy interests in information contained 
in public record data made available through the bankruptcy courts? If 
so, what are those interests? Do they vary by data element? If so, how?
    (4.2)  What are the benefits of a public record system for court 
records in bankruptcy cases?
    (4.3)  What are the costs of collecting and retaining data in 
bankruptcy cases?
    (4.4)  To what extent do individuals who file for bankruptcy 
understand that all of the information contained in the public 
bankruptcy file is available to the public?
    (4.5)  Should debtors in bankruptcy be required to forego some 
expectation of privacy that other consumers have under other 
circumstances?
    (4.6)  Are there characteristics about debtors in bankruptcy that 
raise special concerns about wide public dissemination of their 
personal financial information?

B. Non-Public Data

    (4.7)  What are debtors' expectations about what uses and 
disclosures of information will be made by bankruptcy trustees?
    (4.8)  What, if any, privacy interests lie in non-public bankruptcy 
data held by bankruptcy trustees?
    (4.9)  If non-public data were made widely available to the public 
or to creditors for other non-bankruptcy purposes, what might be the 
consequences?
    (4.10)  Are privacy interests affected if the distribution of non-
public data bankruptcy information is for profit?
5.0  What is the effect of technology on access to and privacy of 
personal information?
    (5.1)  Do privacy issues related to public record data in 
bankruptcy cases change when such data are made available 
electronically? On the Internet? If so, how?
    (5.2)  Do privacy interests in non-public data change when such 
data are compiled electronically for ease of administration of 
bankruptcy cases? For commercial use? For other use?
    (5.3)  Are new technologies being used to improve access to court 
records? Non-public bankruptcy data? Should they be? Why or why not?
6.0  What are current business or governmental models for protecting 
privacy and ensuring appropriate access in bankruptcy records?
    (6.1)  What statutes, rules, or policies can serve as models for 
maintaining appropriate levels or access and privacy protection for 
public bankruptcy records? For non-public bankruptcy information held 
by trustees?
    (6.2)  What statutes, rules, or policies are ineffective in 
providing appropriate access and privacy interests?
    (6.3)  What statutes, rules, or policies, are otherwise relevant to 
this Study?
7.0  What principles should govern the responsible handling of 
bankruptcy data? What are some recommendations for policy, regulatory 
or statutory changes?

A. Public Record Data

    (7.1)  To what extent are privacy safeguards appropriate for public 
record data? If safeguards are appropriate, what should they be? How 
should they be crafted to ensure that they do not interfere with 
legitimate public needs to access certain bankruptcy data?
    (7.2)  Should notice about the public nature of bankruptcy filings 
be provided to individuals who file for bankruptcy? What form should 
such notice take?
    (7.3)  Should there be any restrictions on the degree of 
accessibility of such information, such as rules that vary if 
information is made available electronically? Via the Internet? If so, 
what should they be? Should policies on the handling of information in 
bankruptcy cases be technology neutral, so that the rules for dealing 
with information are the same regardless of what medium is used to 
disclose such information? Why or why not?
    (7.4)  Are there any data elements in public record data that 
should be removed from the public record and held instead as non-public 
data by bankruptcy trustees or courts?
    (7.5)  Is there some experience with other public records that is 
relevant to the privacy and access issues in bankruptcy cases? Do any 
records or

[[Page 46738]]

filing systems, for example in the courts, provide instruction in this 
regard?

B. Non-Public Data

    (7.6)  To what extent are privacy safeguards appropriate for non-
public data held by bankruptcy trustees in bankruptcy cases? If some 
safeguards are appropriate, how should they be structured? How should 
they be crafted to ensure that they not interfere with the needs of 
bankruptcy trustees to administer their cases?
    (7.7)  Should debtors receive notice of what uses and disclosures 
will be made of their information in the hands of bankruptcy trustees? 
What would be the effects of such disclosures?
    (7.8)  Should restrictions be imposed on the use and disclosure of 
information held by bankruptcy trustees? If so, what types of 
restrictions? What would be the effects of such restrictions?
    (7.9)  Should debtors be permitted to access the information held 
about them by bankruptcy trustees? If so, under what circumstances? 
What would be the effects of such access?
    (7.10)  If bankruptcy data are compiled and made easily and widely 
available to users outside of the bankruptcy system, should these users 
be charged for the collection and distribution process? How would the 
amount of the charge be set?

    Dated: July 21, 2000.
Kevyn Orr,
Director, Executive Office For United States Trustees, Department of 
Justice.
    Dated: July 24, 2000.
Gregory A. Baer,
Assistant Secretary for Financial Institutions, Department of the 
Treasury.
    Dated: July 21, 2000.
John T. Spotila,
Administrator, Office of Information and Regulatory Affairs, Office of 
Management and Budget.
[FR Doc. 00-19204 Filed 7-28-00; 8:45 am]
BILLING CODE 4410-40-P; 4810-25-P; 3110-01-P