Is this a concern?

[humrc]

i received a personal loan from a family member 15 months ago. since then my job first cut our 6yr string of OT to nothing and then cut back 32hrs a week.

we are now considering BK and wonder if the 495 payment we pay directly to her will be an issue for a chapter7. we are falling behind on our CC's and have already had a car repo'd. we have a house that is current and are worried about them forcing us to give it up. think its upside down a good 30K+

our income is 58957 gross anually family of 5 and we live in S. california. we are very nervous. have more questions but this is the one that sticks out right now. thank you for your help.

[JRScott]

It would be considered an insider payment. Since you have chosen to pay them over the car, ccs etc. I know that might not be the reason but that's how the court will see it. The Trustee could go after the amount paid to the insider to distribute to all creditors.

If you think your headed to bk I'd approach the family member and tell them the situation. Perhaps agree that you'll pay it once things improve for you but right now you just can't afford to pay them. You would have to list them legally on the bk petition, but you can after bk go back and pay anyone you want to even if the debt is discharged.

[humrc]

i think i understand that they ned to be listed, but how is that debt to them discharged?

[JRScott]

Just like anyone else you owe.

They would be a non priority non secured creditor of yours. They would be listed in the petition and included on the creditor matrix. They will receive from the court a notification of your bankruptcy. Should assets be available they'll be made aware of that by the trustee in time.

Assuming the debt is able to be discharged and I can't see how it couldn't be with an insider since generally only child support, alimony, taxes and student loans are not dischargeable then at the time of discharge you'll be free of the debt. However you can freely go back and pay whatever debts after your bk that you want, including all of them at some point if your means improves. Since it is a family member though I'd go and talk to them about it let them know of your financial trouble so as to avoid any hard feelings.

[humrc]

this is my first month missing payments on CC's. Have not met with a lawyer yet. still coming to terms with this. i will talk to them, but should i stop paying this now or wait till i can actually afford to file? may be a few months.

[JRScott]

I'd stop paying it immediately.

Looks a lot less problematic if you stop paying the insider when you stop paying the other people. I'd just go to the family member and explain the situation. It is also less likely the trustee would come after the money if you stop paying all at the same time.

[humrc]

sorry, i have another question. me and this family member have a joint checking account. it is not used very often however how will it be taken by the court. sorry, i know this is a mess but i when i mess up its usually "messed up"!!

[JRScott]

It is probably best for neither of you to deposit money in that account, and make sure the balance is low enough that you can exempt it.