PayPal, EBay Accounts and Passwords — the New Practices For People Filing Bankruptcy

If you are thinking of filing for bankruptcy and have a balance sitting in a PayPal or EBay account, you must disclose it on the schedules you prepare and file with your bankruptcy petition.  These accounts are just like bank accounts you have parked your money in, or like security deposits held by landlords and utility companies, all of which have to be disclosed to the trustee in the schedules.  And if they are not covered by an exemption, the trustee can arguably seek to liquidate the funds in these accounts and pay them over to creditors in a Chapter 7 case.

There is another issue, however, that is coming up on the horizon and that is the trustee asking for passwords for Amazon and EBay accounts when the debtors are going in for their Section 341 meetings.  In case you don’t know, the 341 meeting is the face-to–face sitdown that every debtor has to have with a trustee in either a Chapter 7 or a Chapter 13 case.  The trustee is supposed to do some investigation and see if what the debtor claims as his or her assets and liabilities and his or her income and expenses is true and correct.  Trustee’s do have fairly broad investigatory powers and in some jurisdictions have even asked debtors for the passwords to their Amaon and EBay accounts.

Most debtor’s attorneys will fight the request as an invasion of privacy and as a potential breach of security protocol.  If what the trustee is wanting to get at is a record of a debtor’s spending history, for example, the trustee can request that and the debtor can go on to his or her Amazon or EBay account and print it out and provide it.  There is no reason for the trustee to have the actual password itself.  And these requests are even more surprising given the amount of investigatory work the trustee already has to do looking into the debtor’s financial situation.  Still, some trustees are apparently requesting these passwords as part of their oridinary course investigation.

As you can see, there are a lot of moving parts to think about when you are filing for bankruptcy and a good attorney can help walk you through the process and catch things you may have forgotten about yourself.  If you think you may need to file bankrutpcy, don’t hesitate to reach out to our office for a consult.