There is nothing wrong with having loans from family members and choosing to filing bankruptcy. Your Charlotte bankruptcy attorney can help you sort through the details, but here are a few basics.
Bankruptcy Is Designed To Treat All Creditors Fairly
To this end, the bankruptcy trustee is interesting in knowing if you’ve recently re-paid any loans from family members. As a result, prior to filing, your attorney will ask you for a record of when you made payments on the loans, how much you paid and the family member’s name.
Can I Pay My Family Members Back After Bankruptcy
Yes. While the bankruptcy technically discharges the obligation to repay the loan, you are free to repay it if you decide to do so. Typically, clients reach out to family members prior to filing and let them know the loan must be included in the filing due to the rules of disclosure, but that they intend to repay the loan after the bankruptcy. The trustee will not interfere with this repayment, post-bankruptcy.
Avoiding Preferential Payments
The worst case scenario regarding loans from family members in bankruptcy involves the trustee determining the payments you made prior to filing, on loans from family members, were preferential payments. A preferential payment is subject to the trustee requesting the payment back from the creditor (your family member). Generally, if the payments in the last 90 days prior to filing exceed $600 and result in the family member receiving more than they would have otherwise been entitled to in the Chapter 7 filing, it is a preferential payment.
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If you have a question about this or any other financial topic, please feel free to call me at 704.749.7747 and I’ll be happy to provide guidance. You deserve answers.