Money owed to family

[wjnicki]

I have a quick question. I had a car with Americredit at 18.90 apr the total amount due was 13K. In the Begining of March my mother paid the car off, but I now have to pay her. It knock the car payment from 455 to 262 per month which helped out alot. Well Last week the car was totalled in an accident. I can afford to pay her and another car payment. I have about 19K in debt that I am going to file bankrupcty on In June/July timeframe. I was wondering If I could include the debt I owe my mother in the bankruptcy too. I know it will cause issues between us, but I''m willing to take that. I have a daughter that I need to take care of. Please advise.

[SinkingFast]

Yes you can include Mom in your BK. In fact if you did pay her now, before filing BK, the Trustee would view it as a Preferential Payment to an Insider. Family, friends, close business associates are all called Insiders. The Trustee may even go after Mom to get the money back anyway.

If you do include Mom in your BK filing,............ You should know there is no Law that says you can't VOLUNTARILY repay Mom, or any Creditor, after BK.

So maybe when you tell Mom you're gonna list your debt with her,......... Tell her first that you HAVE to. And that after the BK is done, and all the dust is settled, you'll work on a way to repay her.

Maybe that will help to soften the blow and save your relationship.

[ilovemycaitybug]

Wow... yeah that is a toughie but I understand. Your children come first! And Sinking is right, you do need to list her. Good luck for your relationship, I'm sure it will work out. Blood is thick!

[HHM]

Has there been any insurance payout? If so, what happened to it?

Since this is your first post, maybe you can fill us in on your story...although $19,000 is a lot of money and people have filed BK on less amounts, it is still a relatively low amount to be filing BK. What is your situation such that you feel like you need to file BK.

[CATCHMEIFYOUCAN]

Family Members - Friends

Why list your Mom at all - unless you dont have a good relationship and she'll try to sue you! I owed a couple of family members money and my SO but I never listed them on my BK. NO ONE needs to be involved like that, I have a very understanding family so they know they'll get paid whenever. Well I guess everyone's relationship is DIFF.

Best Wishes, CMIYC

[JollyGG]

I did not list money owed to family in my chapter 7 petition. But I wish we would have on the off chance we would have gotten pushed into a 13. That was never an issue, but if that had been my family would have at least gotten something over that 5 years.
The only reason I did not list them was because my mother is a little disaproving of our decision to file and I didn't need them her reminded of it in the mail when I listed her as a creditor.

[wjnicki]

[HHM]

Jeez, did you ever pay a bill in your life. That is an awful lot of misc collections...do you just throw your bills in the garbage when they came in the mail or did you at least look at them (its a joke)

I would probably leave you mother out of it. You have two sticky issues, (1) if you owe money on the car, the insurance money is supposed to go to your lien holder (in this case your mother). (2), then there is the whole relationship issue with your mother which is beyond the scope of this board. Since your probably not at risk for a chapter 13, you can probably leave your mother off, but at the same time, you cannot claim any payments to her as an expense. Finally, was your mother ever put on the title of the vehicle?

[SinkingFast]

I worried that if you spent the whole $9K on a car, you may not be able to cover it with an Exemption in BK. That's a lot of equity to leave flapping in the breeze. But in Maryland, you have a sizeable WildCard Exemption that it looks like you could use to protect the car.

http://www.bankruptcyinformation.com/MD_exemp.htm

You definitely wanna check that out with attnys as you Consult around. Be sure you can protect a $9K asset before you go sinking all the funds into a car.

[spell]

Did you ever consider this: you say that most of this debt is old/bad. With that $9100 you might be able to buy a $1000 car and settle most if not all of these debts for half their current balances.

Another thing to look into. Did you have gap insurance on the car? Read through all of your paperwork, sometimes they throw it in to protect themselves and aren't all that forthcoming about doing it. But this type of insurance covers the gap between what the car is worth ($9100) and what is owed on it ($12,726).

Oddly, once you decide to stiff mom, you can do that without formal bankruptcy. Unless she's really mean, she won't sue you over it. And it holds the same emotional cost either way.

[wjnicki]

[QUOTE=HHM;87516]Jeez, did you ever pay a bill in your life. That is an awful lot of misc collections...do you just throw your bills in the garbage when they came in the mail or did you at least look at them (its a joke)

To tell you the truth: Yes I did pay my bills on time. I still look at the bills. Most of the collections are medical bills from when I didn't have insurance for myself and got so sick I had to be hospitalized for 2 weeks and are also from went I went into pre-term labor with my daughter at 16wks and was put on bedrest for the remainder of the pregnancy. At the time i was living at home with my mother b/c I was 21. But as soon as I went on bedrest and could not contribute to the household expenses; she kicked me out. Luckily a friend and her husband let me move in with them until my daughter was born.

No my mother was never put on the Title. I did not get the GAP insurance either I checked with the dealership and on my paperwork.

I would love to get a car for less than 1000, but with my job I travel from Maryland to Northern VA a lot and need a reliable vehicle. (Traffic is unbearable at times).

I know I have to keep my exemptions down. I have seen a few cars for around 5k with low mileage and am going to check them out today.

[CindyLou]

The law says you have to include ALL creditors. You do not have a choice. You can have your case dismissed if you do not list all of your creditors. It is in your best interest to include her!!