Small, tiny, I Owe my sister loan

[simon2020]

OK - so I owe my sister around $500 more (and there was a zero percent hand written promissory note) I have been paying $50 a month.

I know, I know, I know I should tell my attorney everything I owe, BUT since it is soooooooooo small and I will have some money left during the Ch 13 for food, gas, etc. what if I did not buy as much groceries for the month and just took $50 cash out of my bank and sent a money order to my sister?

Question: Do I have to submit my sister's name, address and amount I owe to her for my petition or could I just pay her from the rest of my income leftover after paying the trustee, mortgage?

**I really don't want her to know my business is what is comes down to.

If not what have some of you did with this kind of scenario --- owing a non-credit card creditor like a family or friend? Just curious to help me make a decision to tell my attorney or not.

[Flamingo]

Tell your attorney. You will have the option of including your sister in your Chapter 13 plan. If she does not want to be a part of your Plan, ask if you can slip her some money now and then or pay her in full when your Chapter 13 is over. But divulge all debts, no matter how trivial they appear to you, to your attorney.

[justbroke]

Technically, you can't pay your sister outside the plan if she is not at least included as a creditor.

Only those creditors having filed an allowed claim, will be paid in a Chapter 13. Paying your sister outside the plan, and your sister not being a creditor with an allowed claim... is against the bankruptcy code!!! (I didn't look up the section of the code, but it is pretty clear.)

You will need to add your sister as a creditor. Just don't put her on the mailing matrix (and she won't get notices). Your sister will need to file a Proof of Claim. She will get whatever percentage is being paid to the unsecured creditors who file an allowed claim.

Question: Do I have to submit my sister's name, address and amount I owe to her for my petition or could I just pay her from the rest of my income leftover after paying the trustee, mortgage?

You can just list her as a creditor on Schedule F - Unsecured Creditors. Don't put her on the mailing matrix... or at least tell your lawyer not to include her on the mailing matrix.

[Flamingo]

We owed friends $1100 at the time of our filing for funds that needed to be paid when we retained our attorney (we had part put into our Plan also). Our attorney advised us, when we told them of this loan, is to check with our friends to see whether or not they wanted to be part of our Chapter 13; if not, ask if they would mind waiting for the money or if we wanted to, we could maybe give them small amounts now and then to pay off the debt. Our friends did not want to be a creditor on our Chapter 13 and told us it didn't matter when we paid them back if at all (we have great friends!). We paid them back, with interest input by us, from a later tax refund. Friends/family may not want to be part of a Chapter 13 and will wait to be paid or even maybe let the debt go until you see better times. Your debt is small and paying small amounts here and there during your Plan years is not going to send your Plan into orbit. Just make sure you mention it all to your attorney as we did.

[justbroke]

Or, do as the big pink bird says. Nothing would stop you from using your disposable income to make small payments.

However, and I'll repeat this, it isn't how the system is supposed to work.

[MajorMike]

OMG...it's $500...I wouldn't include her, just pay her on the side.
that's crazy .....
If I loaned someone money, I wouldn't want them to include me, nor mention it.
Legal or not, I think a friend is only considered a creditor if it shows up on your credit report, or if you honestly can't afford to pay them. JUST MY OPINION.

[liz417]

OMG...it's $500...I wouldn't include her, just pay her on the side.
that's crazy .....
If I loaned someone money, I wouldn't want them to include me, nor mention it.
Legal or not, I think a friend is only considered a creditor if it shows up on your credit report, or if you honestly can't afford to pay them. JUST MY OPINION.

I agree with MM on this one!

[justbroke]

OMG...it's $500...I wouldn't include her, just pay her on the side.
that's crazy .....
If I loaned someone money, I wouldn't want them to include me, nor mention it.
Legal or not, I think a friend is only considered a creditor if it shows up on your credit report, or if you honestly can't afford to pay them. JUST MY OPINION.

A friend is an insider and a creditor by definition. However, I will agree that the amount is small and the Trustee probably wouldn't care.

[Flamingo]

justbroke is doing the right thing by stating what he is stating and is going by the letter of the law which is what should be done so I am sticking up for justbroke also as his advice is correct and he is covering all the bases.