Borrowing money from family

[jbr12]

What are the general guidelines to follow as far as borrowing money from family pre-bk? I am in a sticky situation right now as we have to be out of our apartment by the end of the week and we don't have the money to pay for a security deposit and none of the landlords we've talk to will work something out.

I've talked to a couple of family members and they are going to be loaning me a large chunk of money to get into a new place and get a number of bills (fiance's, not mine) up to current. I'm filing and we'll be working with her credit, so we have to keep it in good standings.

My question is, will this large transfer of money look suspicious once I file? I'm hoping to file before Thanksgiving time. Is this loan considered a cash advance? If the money disappears from my account in no time from paying bills, will it even be looked at? I understand I want my bank account to be as low as possible when I file, but seeing as thats a ways off, it shouldn't be a problem.

[chmastal]

herher putting the money down for the deposit doesn't look suspicious in the trustee's eyes because it was never in your bank account in the first place, and she is not the one filing!

I don't think this is deceitful, just make the things easier when filing. We all need to have shelter, & if family is willing to help provide that ultimate basic need, then that has nothing to do with your bankruptcy.

JMHO

[lrprn]

What are the general guidelines to follow as far as borrowing money from family pre-bk? [edit]

My question is, will this large transfer of money look suspicious once I file? I'm hoping to file before Thanksgiving time. Is this loan considered a cash advance? If the money disappears from my account in no time from paying bills, will it even be looked at? I understand I want my bank account to be as low as possible when I file, but seeing as thats a ways off, it shouldn't be a problem.

Going by the letter of the law, if you receive this money gift this close to filing, if discovered it will be considered a part of your bankruptcy estate and give the trustee access to take it to distribute to your creditors. Is there any way you can wait to file longer than Thanksgiving?

As chmastal suggests, you could ask your family to give the money to your fiance and keep it out of your filing paperwork....however, do understand that is taking a risk because if it is discovered (unlikely but possible if the trustee looks at your finances back 90 days before filing and you have to answer how you paid off your deposits), that's fraud for sure, no matter how fast the money disappears from the account. You'll have to decide if that's worth the risk (albeit it's a very small risk).

Hang in there - keep us posted on how your bk journey is going. We're here to help if we can.

[CATCHMEIFYOUCAN]

Depending on where you file, you are allowed so much cash in your "savings." I'm filing in the state of Virginia. I hit the lottery for $2000 just before i filed, I used that money to pay the lawyer to file, nobody said anything (why would they, especially the lawyer - he's got his dough! A few days before my 341 meeting, I won another $1600, I did not put in in my account, I just kept the cash on me and spent it on the necessities (groceries, etc) and "non trackable," things.
I did tell my lawyer, and he said its not a problem! I would consult your lawyer.
In my opinion I don't see anything wrong in using the money for the neccessary things in life - especially shelter.
In my opinion I think the trustee will look at it like, well if your friends or relatives want to give you the money, than dont expect to pay them back. I think thats what they call "outside/inside lenders," (friends, relatives) because one of the questions on the BK is do you owe money to friends/relatives? If so list them. Then they send them a letter telling them, basically, your not getting paid, this person has filed Bankruptcy.

Someone correct me if I'm wrong

Best wishes, catchmeifyoucan

[razorguns]

if it's 'borrow', it's a 'debt' and you have to disclose that to the trustee. If it's a luxury item or obtained with the intent to remove it via bk - it could cancel your bk or at least force the trustee to look at your app like a hawk.

Best to stay out of the radar and just have the family pay off some of your bills. Avoid cash.

r

[SinkingFast]

The Trustee could very well look at your bank statements and say, "Where did this large deposit come from?"

You're best off to have the family pay thru your fiance's acct or pay the bills direct themselves rather than run the money thru your bank acct.

[jbr12]

Well, problem is we have a joint account and the monies were already transferred to my account as of this morning. I had a free consult today and the lawyer told me as long as I don't PAY a large chunk to any family, receiving the money wouldn't be an issue. He said worst case scenario, the money has to be added to my avg monthly income for the means test... He said as long as we use the money to pay bills and its not just sittinig in the account (ie, the account being as close to zero as possible on the filing date) then we would be fine... Does this sound right to others out there?

While this money is 'borrowed' money from my family, there will be no written payback agreement. Does it still have to be listed on my bk creditors list? If we do write up an agreement, is that something that could be 'reaffirmed' in my bk case? I mean, even if I did file and included them in my file, after bk, I would still make every effort to pay them back, dispite the 'discharge'.... is that something that would cause problemsw?

[razorguns]

borrow the money after the 341. won't kill you.

r

[jbr12]

Like I just said, the money has already been borrowed... and yes, I was in a situation where I desperately need the money to put a security deposit on a new apartment... we had to be out of our current apartment by the end of this week... it was kind of a dire circumstance.

[CATCHMEIFYOUCAN]

Just my opinion, I think the biggest question that the Trustee will want to know is what did you do with the money, and if you can prove that you used to get a new apt, etc and prove it, it might suffice. After all the money is already spent. I would think he would understand a person(s) needs shelter!

Catchmeifyoucan

[jbr12]

I'll just keep very good receipts from now until I file... that way if theres any questions, I'll atleast be able to cover myself. One thing the atty yesterday mentioned is I was going to include day care on my expenses, but I don't technically have a child... She's my fiance's, even though I pay child care. He said all that would do is stir up the pot and get him looking closer at everything.

[FoolAndHisMoney]

While this money is 'borrowed' money from my family, there will be no written payback agreement. Does it still have to be listed on my bk creditors list? If we do write up an agreement, is that something that could be 'reaffirmed' in my bk case? I mean, even if I did file and included them in my file, after bk, I would still make every effort to pay them back, dispite the 'discharge'.... is that something that would cause problemsw?

Yes it does have to be listed as a debt. If the money just popped up in your bank account then it's income and will be part of the means test calculation and part of the estate if it's still there the day you file.

If you explain that it's just a loan then it won't count as income, but the family member that made the loan has to be listed as a creditor. If you knowingly don't list this the way it should it won't look very good for you. You may want to wait if you can.

You don't need to reaffirm this. You can just pay it back after your case is closed. You can payback any creditor you want after your case is closed.

[razorguns]

Like I just said, the money has already been borrowed... and yes, I was in a situation where I desperately need the money to put a security deposit on a new apartment... we had to be out of our current apartment by the end of this week... it was kind of a dire circumstance.

that's fine. Just don't complain when the Trustee then puts you in his radar, and concentrates on your case for the rest of the afternoon.

The goal is to do everything so your case looks straightforeward and simple. Not stick out red flags everywhere and ask to be scrutinized further. That's what gives Trustee's job security.

r

[BassBoy]

Yes it does have to be listed as a debt. If the money just popped up in your bank account then it's income and will be part of the means test calculation and part of the estate if it's still there the day you file.

If you explain that it's just a loan then it won't count as income, but the family member that made the loan has to be listed as a creditor. If you knowingly don't list this the way it should it won't look very good for you. You may want to wait if you can.

You don't need to reaffirm this. You can just pay it back after your case is closed. You can payback any creditor you want after your case is closed.

I concurr with FOMO. You'd be better off listing the debt, and you can pay it back after your discharge.

I wouldn't do anything that would cause a red flag to be raised. It's better to be 100% honest, rather than run the risk of your case getting dismissed.

On the other hand, and IMO, it's kinda awkward to file BK on a family member or friend, but again, family and friends won't turn their back on you and if you explain that you'll repay it, then there should be no cause for hard feelings.

[SinkingFast]

The goal is to do everything so your case looks straightforeward and simple. Not stick out red flags everywhere and ask to be scrutinized further.

r

MEGA DITTO'S to this statement!!

It's not that what you did WAS wrong. It's the appearance what you did has to an outsider, the Trustee, looking back on what happened.