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Attorneys balk at bankruptcy trustee demands for online passwords

People filing for bankruptcy in Massachusetts understand that they must disclose financial information for review by the court's trustees. An attorney in another state, however, ran into an unsettling request for the login and password information for the PayPal, Amazon Prime and eBay accounts of his bankruptcy client.

Chapter 7 debtors were receiving the unusual information request, which the lawyer described as invasive. The trustees asking for access to online accounts did not give a reason to support the request. Another attorney and board member of the National Association of Consumer Bankruptcy Attorneys who reviewed the case called the demand frightening. The absence of a reason to justify the request troubled him. Trustees have the right to examine account statements, but a blanket request for passwords is rare. Although debtors need to disclose any cash balances as part of the bankruptcy process, he said that could be done without granting total online access.

A third attorney reacting to the issue doubted that many trustees possessed the IT security skills to keep passwords and accounts safe. In his opinion, onerous and unjustified requests for access to online accounts represented intimidation and could prevent people from filing for bankruptcy protection.

A person filing for Chapter 7 bankruptcy can expect trustees to scrutinize financial records. However, an attorney could take actions to protect the person's rights during the investigation. Legal support could help a client fully disclose records of debts, assets and income. As the case proceeds, an attorney could promote the debtor's best interests and strive to achieve a settlement that grants a fresh start. In addition to interacting with the trustees, an attorney could take over communications with creditors and end the harassing phone calls and letters directed at the client.

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