Disclosure of Social Security Number Does Not Give Debtors a Private Right of Action

By: Rebecca Rose
St. John’s Law Student
American Bankruptcy Institute Law Review Staff

Recently, in Matthys v. Green Tree Servicing, LLC (In re Matthys),[1] a bankruptcy court held that a debtor does not have a private right of action against the creditor who listed the debtor’s full social security number on its proof of claim. This holding is consistent with what the majority of courts have held in similar cases.[2] While the joint debtors in Matthys sought relief under various statutes, including Bankruptcy Code sections 105 and 107,[3] the court found that no private right of action existed. 

In Matthys, the debtors listed its lender as a secured creditor in their schedules.[4] The lender’s servicing agent included the debtors’ full social security numbers when it filed an electronic proof of claim.[5] The court granted the debtor’s Rule 9037[6] motion and removed the proof of claim from public access on PACER.[7] Next, the debtors brought an adversary proceeding against the servicing agent seeking damages for violating several statutes.[8] The court, however, found no private right of action existed under the Bankruptcy Code or any other statute.[9] Section 105(a) provides that bankruptcy courts “may issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of this title.”[10] The Matthys court concluded that it only had the power to hold the creditor in contempt, because the broad power under section 105 “is not limitless and . . . does not create a private right of action.”[11] The court stressed that while a private right of action can be expressed or implied in a statute,[12] courts are unwilling to go against congressional intent when searching for such a right.[13] 

Although several courts agree with the Matthys analysis,[14] other courts do find that a private right of action exists under section 105(a).[15] For example, in McKenzie v. Biloxi Internal Medicine Clinic (In re McKenzie),[16] the court held that it had the authority to compensate a debtor under section 105(a).[17]  McKenzie addressed similar facts to Matthys.[18] The McKenzie court justified its decision by citing several rare cases where section 105 was used to compensate the complainant, typically for actual damages and attorney’s fees.[19]   

In re Matthys raises many concerns, both for debtors and creditors. Merely holding creditors in contempt of court may not adequately deter them from carelessly disclosing social security numbers on proofs of claim. There are serious concerns about identity theft and the contempt remedy may not compensate the debtor for damages resulting from the creditor’s carelessness. On the other hand, some courts do recognize a private right of action.[20] Even if a debtor has no private right of action, the courts may still hold creditors in contempt under section 105.[21] Thus, courts can and do hold creditors liable for violating Rule 9037.[22]  Hopefully, the threat of this alone will ensure that creditors comply with Rule 9037 and protect a debtor’s private personal information.


[1] In re Matthys, Bankr. No. 09-16585-AJM-13, Adv. No. 09-50794,2010 WL 2176086, at *5 (Bankr. S.D. Ind. May 26, 2010).

[2] See infra note 14.

[3] Matthys, 2010 WL 2176086, at *1.

[4] Id.

[5] Id.

[6] Fed. R. Bankr. P. 9037 (“[I]n an electronic or paper filing made with the court that contains an individual’s social security number . . . a party or nonparty making the filing may include only . . . the last four digits of the social security number”).

[7] Matthys, 2010 WL 2176086, at *1. 

[8] The debtors sought relief under Bankruptcy Code Section 107, The Gramm-Leach-Bliley Financial Modernization Act, Federal Rule of Civil Procedure 5.2, Federal Rule of Bankruptcy Procedure 9037, and various tort claims such as invasion of privacy, negligent or intentional infliction of emotional distress, and negligence. Id.

[9] Id. at *2–3, 5. However, the court did send the complaint for contempt to trial, since the court, but not the debtors, has the power to do so. Id. at *5.

[10] 11 U.S.C. § 105(a) (2006).

[11] Matthys, 2010 WL 2176086, at *5.

[12] Id. at *2.

[13] Id. (citing Int’l Union of Operating Engineers, Local 150, AFL-CIO v. Ward, 563 F.3d 276, 283 (7th Cir. 2009)).

[14] Id. at *2–3, 5 (citing Newton v. ACC of Enter., Inc. (In re Newton), 2009 WL 277437 (Bankr. M.D. Ala. 2009); Carter v. Checkmate, Cash Advance Ctrs, LLC (In re Carter), 2009 WL 3425828 (Bankr. N.D. Ala. 2009)).

[15] See In re Gregg, 428 B.R. 345 (Bankr. D.S.C. 2009); In re Killian, Bankr. No. 05-14629-HB, Adv. No. 08-80250-HB, 2009 WL 2927950 (Bankr. D.S.C. July 23, 2009).

[16] In re McKenzie, Bankr. No. 08-51929-NPO, Adv. No. 09-05006-NPO, 2010 WL 917262 (Bankr. S.D. Miss. March 10, 2010).

[17] McKenzie, 2010 WL 917262, at *4.

[18] Id. at *1.

[19] Id. at *3–4 (citing American Airlines, Inc. v. Allied Pilots Ass’n, 228 F.3d 574, 585 (5th Cir. 2000); French v. American Gen. Fin. Srvcs. (In re French), 401 B.R. 295, 314 (Bankr. E.D. Tenn. 2009)).

[20] Id. at *4.

[21] Matthys, 2010 WL 2176086, at *5.

[22] Id.