List informal loan from father as debt? Don't want him to know about BK!!

[emmacat]

A few years ago my father paid off two of my credit cards ($6,000) that had raised interest to 30%. I've been informally paying him back interest free at $100 a month for over two years. There's no formal agreement and other than a "balance transfer" in 2005, it's not on my credit report. He probably wouldn't care if I stopped paying him all together.

My lawyer said I don't need to list this as a debt on my chapter 7 bk paperwork, just stop making payments to him for now (or pay him in cash). Can I get in legal trouble for this?

I DO NOT want my father to find out I'm filing bankruptcy (i.e. I don't want him to get a letter from the bankruptcy court). Does the court mail letters out to all the listed creditors, including listed family members?

My Questions:
1) If I list him, will he get a letter from the court that I've filed for bk and/or when I've been discharged? (I don't mind if he gets a letter of the discharge)

2) If I don't list this informal "loan" to my father am I committing perjury?

3) At the 341, will the trustee ask me under oath if I've listed all my debts?

4) Is this technically a debt?

Thank you for the help!

[OhioFiler]

Sounds like a gift to me!

[Flamingo]

...
My Questions:
1) If I list him, will he get a letter from the court that I've filed for bk and/or when I've been discharged? (I don't mind if he gets a letter of the discharge)

2) If I don't list this informal "loan" to my father am I committing perjury?

3) At the 341, will the trustee ask me under oath if I've listed all my debts?

4) Is this technically a debt?

Thank you for the help!

(1) Yes.
(2) Follow your attorney's advice. All debt is supposed to be listed in your filing.
(3) Uncertain as to any verbiage used in the courtroom but you do sign your filing petition stating the information contained in your filing is true and correct so I would check with your attorney as to your concerns here.
(4) It's a debt if you promised to pay your father back. You would have an oral contract.

I would follow your attorney's advice as to this situation and not worry about it.

[frustrated7]

We owe money to our inlaws right now and we are required to list them on our BK forms, even though we will pay them back when this is over and even though it is an informal loan with no legal papers floating about.

1) Yes, if he is listed he will receive a notice that you are filing BK. Why are you concerned if he finds out you are filing BK if you don't care if he gets a letter after you are discharged?

2) You are required to sign your BK petition, which is a legal document, and you are required to include all debts owed, even those to family members which are informal and which you plan to pay back. We didn't want to do this either, but we would rather list family members and deal with them than to not list them and have it come out later and our BK denied.

3) I have not had my 341 yet (not officially filed yet), but it is my understanding that the trustee will ask you, under oath, if you have listed all of your debts.

4) Did your father give you this money? If he didn't give it to you, then it is a loan. There may not be a paper trail of it, but it still exists; otherwise, you would not have been paying him back each month.

Is your attorney aware you have been paying him back $100 a month for the past two years? The reason I ask is that this will be considered an insider payment, since that is what we are going through right now. In addition to owing my inlaws, we previously did owe money to my parents which we paid back, and now it is highly likely the trustee will go after my parents for the return of all money we paid to them ($2,000). The look back period for insiders is one year.

Your attorney should know the specific trustee who will be handling your case, but be sure your attorney really understands your situation. From everything I have read and been told from attorneys (we consulted another one before deciding on the one we retained), there is not really any way around the insider payment issue and ALL debts must be listed. You may get away with not listing something and nobody may ever find out, but do you really want to risk it?

However you decide to proceed, best of luck to you.

[emmacat]

Thanks for all the advice. I'm leaning towards calling it a gift, but I did email my lawyer today and gave her all the details. I'm supposed to sign the paperwork tomorrow and I think she's filing for me Thursday.

After stressing about this for months, I have so much peace about filing and having a new life. What's helped me is to to not get emotional about the bankruptcy, but treat is as a business decision for my life. Freedom awaits.

[dabusted]

I had to file BK after my first divorce 15 years ago. I had asked my grandparents to "lend" me money several times over the preceding years, but there was never any loan agreement, no payments were ever made, and they never asked when they would be repaid. I assume they had a record of what they had lent me (and my siblings) and planned for that amount to be deducted from my inheritance when they passed away (so that no grandchild was favored more than another).

Anyway, they were quite old when I filed. I considered the money technically a debt so - trying to "do the right thing" - I listed it as such, and the bankruptcy court sent them the standard notice. They never spoke to me about the letter, but five years later when they had both passed away, I was told that getting the letter from the court had broken their hearts and as a result, they wrote me out of their will.

Draw whatever moral from this story that you want. But anyone who thinks BK is an "easy" way out can go *%#$ themselves. It is not easy. And I hate that I am back in this situation again as I divorce for the second time. I have, however, at least finally realized how my attitudes and behaviors got me back into this mess and that I have to make serious changes in my life. (This is where I have found Dave Ramsey's materials helpful, and I'll probably do DA for awhile too.)

[emmacat]

Everyone's situation is different. I tried Dave Ramsey's plan. It doesn't work when your expenses are more than your income. I have a master's degree, was working 4 part-time jobs, no cable tv, never ate out, shopped at the thrift store for clothes. Eventually the stress got to me and I started having some serious health problems. I incurred debt not because I can't manage my money, but because I ran a nonprofit organization for 10 years helping underprivileged kids. It was underfunded and I was underpaid. BK is a decision I should have made a long time ago. I've been suffering long enough. It's freedom, finally, for me!