New Privacy Rules Effective Dec. 1 2003 From Conception to Implementation

New Privacy Rules Effective Dec. 1 2003 From Conception to Implementation

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Beginning nearly a decade ago, the first bankruptcy courts commenced offering remote access to electronic case files, dockets, claims registers and, most desirably, case documents. In these early days, only a few courts took on this effort locally, such as the U.S. Bankruptcy Court for the Western District of Oklahoma, or were part of a national prototype group that included the U.S. Bankruptcy Courts for the Southern District of New York, Northern District of Georgia, Eastern District of Virginia, Southern District of California and District of Arizona. The major issues of debate at that time centered on the technical challenges of implementing such a sweeping change in court operations on a national level. However, by the late 1990s, as the public's interest in the Internet grew, as well as its desire for instantaneous access to bankruptcy case data, bankruptcy courts across the country quickly responded by installing local- or vendor-produced court imaging programs and began making these imaged documents available through court web sites. Concurrent with these individual local court efforts, the Administrative Office of the U.S. Courts (AOUSC) vigorously pursued its long-range plan to replace the courts' ailing legacy case-management systems with a new system, now affectionately known as Case Management/ Electronic Case Files (CM/ECF). CM/ ECF's main ingredient is the electronic filing of cases by outside filers, namely attorneys.

As a result of the simultaneous efforts of local bankruptcy courts and the AOUSC to rapidly develop electronic case files providing instantaneous access to records from any location by computer, a discourse quickly emerged concerning the privacy interests of debtors regarding their sensitive financial information disclosed on bankruptcy petitions, schedules and financial statements.1 While the right to inspect and copy bankruptcy case filing information as public records has long been recognized—by statute, common law and the Constitution—for all practical purposes, such access was severally limited by its storage on paper in individual courthouses. See Deyling, Robert, Privacy and Access to Electronic Case Files: Legal Issues, Judiciary Policy and Practice, and Policy Alternatives (May 5, 1999), available from the author at [email protected].

As of June 2003, 55 bankruptcy courts are live on CM/ECF and offer immediate electronic access to case data, and another 29 courts are actively in the migration process. It is anticipated that virtually all 90 bankruptcy courts will be live on CM/ECF within the next two years. Thus, society's apprehension about broad public disclosure of case documents containing sensitive personal and financial information is no longer a hypothetical possibility, but is now squarely before us.

Privacy Study, Papers and Policy

In recent years, as the rapid growth of information technology was being anticipated by the courts, the privacy issue moved front and center. See Deyling; Obee, Mary Jo and Plouffe Jr., William C., "Privacy in the Federal Bankruptcy Courts," 14 Notre Dame J.L. Ethics & Pub. Pol'y. 1011 (July 2000); and Alexander, Peter C. and Slone, Kelly Jo, "Thinking About the Private Matters in Public Documents: Bankruptcy Privacy in an Electronic Age," 75 Am. Bankr. L.J. 437 (Fall 2001).

In April 2000, a study was commissioned by President Clinton to identify the potential privacy issues at stake and to attempt to offer practical solutions for balancing the interests of the general public against those of individual debtors. This balancing act involves continuing to provide the public with access to fundamental bankruptcy information as well as the ability to monitor the integrity of the bankruptcy system against the need to protect certain highly sensitive personal information of debtors, primarily consisting of Social Security numbers (SSNs), financial account numbers, dates of birth and names of minor children.

The study, entitled "Financial Privacy in Bankruptcy: A Case Study on Privacy in Public and Judicial Records," was a joint effort of the Department of Justice, the Department of Treasury and the Office of Management and Budget. The main conclusion of the study was that while personal privacy issues should be addressed in the bankruptcy system, there remain certain parties in interest that will continue to have a need for this highly sensitive information in order to exercise their legal rights. For all other participants and the public in general, a more restricted access to personal bankruptcy information should be made available. See "Financial Privacy in Bankruptcy: A Case Study on Privacy in Public and Judicial Records," (Jan. 2001) (visited June 26, 2003),

Due to the variance in how local courts were managing the privacy issue, the Judicial Conference of the United States determined that a national policy on privacy and access to electronic case files should exist in the federal judiciary so that court records in all federal courts would be treated the same. Thus, in June 1999, a subcommittee of the Judicial Conference Committee on Court Administration and Case Management (CACM) was formed, known as the Subcommittee on Privacy and Public Access to Electronic Case Files (the subcommittee). The subcommittee received information from a wide variety of sources inside and outside the courts, and in November 2000 issued a proposed policy document for public comment, identifying potential options for dealing with privacy issues. After consideration of the extensive comments received and a public hearing held on March 16, 2001, the subcommittee produced its "Report on Privacy and Public Access to Electronic Case Files," which was endorsed by CACM and presented to the Judicial Conference for approval at its September 2001 meeting.

The pertinent language of the Judicial Conference Policy addressing bankruptcy case files provides that "[d]ocuments in bankruptcy case files should be made generally available electronically to the same extent that they are available at the courthouse...and the Bankruptcy Code and Rules should be amended as necessary to allow the court to collect a debtor's full Social Security number, but display only the last four digits." See "Report of the Proceedings of the Judicial Conference of the United States," Privacy and Public Access to Electronic Case Files (September/October 2001),

To implement the privacy policy, the Advisory Committee on Bankruptcy Rules proposed an amendment to Rule 1005 to restrict the debtor's SSN to the last four digits only. However, this recommendation did not satisfy the public creditor body, credit data bureaus, taxing authorities, law enforcement or the Federal Trade Commission, which argued that they had a continuing need for the full SSN in order to accurately identify debtors and to ensure integrity in the bankruptcy system. In response to these concerns, additional rule amendments were proposed to Rules 1007 and 2002 to supplement the changes proposed to Rule 1005 by requiring that the debtor submit, but not file, a statement containing his/her full SSN, which will allow entities in possession of the full number to search court records. In addition, the entire SSN will be included on the §341 notice to creditors, but the return copy placed in the court's electronic case file will be truncated to display only the last four digits.

On March 27, 2003, the Supreme Court adopted the proposed amendments to Rules 1005, 1007 and 2002 and to Official Forms 1, 3, 5, 6, 7, 8, 9, 10, 16A, 16C and 19. Barring any action by Congress, these amendments and form changes will become effective on Dec. 1, 2003. See "Federal Rulemaking: Pending Rules Amendments Awaiting Final Action" (August 2001-December 2003 Amendments),

Summary of Bankruptcy Rule, Form Changes Effective Dec. 1, 2003

Rule 1005 is amended to require that the debtor use only the last four digits of the SSN on the caption of the petition. Federal tax identification numbers will continue to be reported in full. There is also a new requirement that the debtor include any names used during the last six years before filing to help with the identification process. Consistent with this rule change, the petition, Official Form 1, will indicate that it should contain only the last four digits of the individual debtor's SSN.

Rule 1007 is amended to include a new subsection (f) entitled "Statement of Social Security Number" and requires the debtor to submit (not file) a verified statement listing the full SSN at the time the voluntary petition is filed. This submission is not deemed to be a part of the court record in the case governed by §107 of the Code, and will not be available to the public either through electronic or paper access. This statement will be used by clerk's offices to provide the full SSN on the service copy of the §341 notice required by Rule 2002(a)(1) to be served on all creditors in the case. A new official form to meet the statement of SSN requirement is currently being drafted.

Rule 2002 is amended to require the clerk to include the debtor's full SSN on the §341 notice to creditors. This is the only notice in the case that will contain the full SSN. However, Official Form 9, when it is returned from the Bankruptcy Noticing Center after service and becomes part of the court's file in the case, will display only the last four digits of the debtor's SSN.

Impact of Privacy Rule and Form Changes on Attorneys, Debtors and Creditors

The burden of redacting SSNs and other personal identifiers, such as dates of birth, financial account numbers and names of minor children, will be placed on the filer, not the court. Thus, as Dec. 1, 2003, nears, attorneys representing debtors should ensure that they are using the most current versions of their bankruptcy petition software containing the privacy and disclosure changes adopted by the amendments, and that only the last four digits of the SSNs display on the petition page. Additionally, any other documents that are filed with the court, including attachments or supporting documents, should have these identifiers redacted to the last four digits. This includes financial documentation that creditors may file in support of a proof of claim.

The technical challenges facing the courts in implementing these new rule and form changes is quite extensive and is made particularly difficult because not all of the courts have yet migrated to CM/ECF. This requires that necessary changes be made to a number of case-management systems, not simply one version. For those courts currently on CM/ECF, a new version, 2.3, is expected to be released in September that will contain the modifications needed to implement the rule changes, including the noticing requirements. In addition, the court's PACER (Public Access to Electronic Case Records) and VCIS (Voice Case Information Systems) must also be modified to eliminate disclosure of the full SSN to the public. Also, the debtor's SSN will no longer be displayed on the public docket report or the case look-up in CM/ECF for non-court users.

Once Dec. 1, 2003 arrives, attorneys and other filers will be required to use the newly revised forms and to also submit the verified statement containing the full SSN required by amended Rule 1007. Moreover, in order for the clerk to timely serve notice of the §341 meeting of creditors, proposed Rules 1007(f) and 2002 contemplate that the filer submit the verified statement containing the full SSN to the court at the time the case is filed. Failure to immediately submit this information may result in the issuance of a deficiency notice for immediate action or case dismissal on an expedited basis.

For those attorneys currently filing cases electronically in CM/ECF, the technical changes to the system will still allow the filer to enter the full nine-digit number in the filer's petition software or in the CM/ECF case opening screens, but only the last four digits will be displayed in CM/ECF for non-court users. For this reason, some courts may choose to treat the debtor's signature on the statement in the same way that it is treated for the filing of the petition, schedules and statements, and another submission may not be required. This will be a local court decision depending on the local rules/ procedures of each district. However, the pdf version of the petition, attached to the electronic filing, cannot include the SSN, since it will attach to the docket entry and will be viewable by all persons with access to the electronic record. There are likely to be other options created for receiving the verified statement, but at the present time, these issues are still under discussion. In the end, the method prescribed will likely be a local court decision consistent with the electronic filing rules already in place in the district. The best advice is: Check with the court you are filing in!


1 The bankruptcy privacy issue was but a subset of a larger national debate over privacy in relation to the Internet, computer databases and the information highway, and a national concern over the protection of individual personal data from unauthorized disclosure and potential misuse. Return to article

Journal Date: 
Tuesday, July 1, 2003