Parents as creditors

[laurannm]

If I owe my parents say $3k or so that they loaned us back in March, and we file BK, I am required to list them as creditors (and also the money they gave me is not considered income on the means, right?)?

If I do list them as creditors, is there any negative impact to them? They already know we are filing so I am not concerned about that

Thanks

[keepmine]

Should have no affect.

[laurannm]

Thanks

And since it is a loan, it is not considered income for purposes of the means test?

[Stilltheone]

We listed my in-laws as creditors. They loaned us $1500 back in '04 and made my husband sign a legal contract in Dec. 07, stating we would make payments.

When the salary cut hit and we filed, we listed them. I also called them and told them that we wouldn't be making any payments to them...ever.

Since the filing, they refuse to speak with us b/c they want their money. Legally, we don't owe them a cent.

[laurannm]

We listed my in-laws as creditors. They loaned us $1500 back in '04 and made my husband sign a legal contract in Dec. 07, stating we would make payments.

When the salary cut hit and we filed, we listed them. I also called them and told them that we wouldn't be making any payments to them...ever.

Since the filing, they refuse to speak with us b/c they want their money. Legally, we don't owe them a cent.

You mention a legal contract...my parents and I never signed anything official, it was just a verbal agreement. Hopefully that won't be an issue?

and wow, that really stinks about the situation with your in-laws....

[krielly]

Well, maybe "legally" you don't owe them a cent, but what about morally?
Geez, I'm assuming your family helped you out in a time of need. Not like you can really put these folks in the same category as "predatory lenders".

I borrowed money from my sister and my mother and although it is taking me a long time to repay them at only $50/mo, I wouldn't think of NOT repaying them.....
Sorry, but I'm just not understanding your attitude about this.

[laurannm]

Do you think we will be required to produce some sort of official document or loan agreement between us and my parents?

[CindyLou]

I included my parents for a 10,000 loan. They understood and knew I intended to pay back. But by listing them it did two things: It made the money they had loaned me not be included in my income and also it allowed them to claim it as a loss on their income tax. (because they ultimately told me they were not going to accept my payment! I have great parents!)

So listing them is always better. Then you can work something out with them afterwards.

[morallyBR2]

Why are you listing them? If you have made any substantial payments to them, the courts can order them to return that money and disperse it evenly amongst your creditors.

[laurannm]

I haven't made any payments to them...we were essentially waiting until we had our finances in order. As per our attorney, listing them as a creditor means that the money they gave us is not considered income on the means, which is big in our case

[Stilltheone]

Well, maybe "legally" you don't owe them a cent, but what about morally?
Geez, I'm assuming your family helped you out in a time of need. Not like you can really put these folks in the same category as "predatory lenders".

I borrowed money from my sister and my mother and although it is taking me a long time to repay them at only $50/mo, I wouldn't think of NOT repaying them.....
Sorry, but I'm just not understanding your attitude about this.

My inlaws gave us $1500 towards a downpayment for our home. Originally, it was told to us that it was a gift. Then, my dh's stepfather wanted his money back. Had we known it was a "loan" we never would've "borrowed" the money in the first place.

I should mention that along with their legal contract we signed, there was also a four page letter, going into detail what a horrible person my husband was for not paying them back. "What a disappointment"..."I taught you better than that"....

I'm sorry, but morally, I don't owe those people anything. If they felt the need for a legal contract, that's fine. They didn't need to dictate 4 pages telling us what scum we were. They can take a flying leap.

[krielly]

I'm confused. If this was a gift, why did you sign a legal contract??

[Stilltheone]

I'm confused. If this was a gift, why did you sign a legal contract??

Because they threatened to take us to court and sue us if we didn't.

[krielly]

Wow. I can't imagine having in-laws like that. You have my sympathies!!!!

[AngelinaCat]

Try having CHILDREN like that. We borrowed some money from our son-in-law about two years ago to help us on our bills. There was no formal arrangement, but we agreed that we would pay back as we could with good interest. In August 2007 we sold a mortgage note we held at a substantial discount to the buyer, to get money to pay our bills. No guidance at all from the BK attorney, or we would NOT have done any of this. *See other posts by AngelinaCatHub and me*. I hate to keep retreading old ground.

Anyway, when time came to make a small (under $500.00) payment to son-in-law, DAUGHTER got on a HUGE snit-up about how we were spending HER INHERITANCE and ruining HER life, and HER place in the world. [Like what kind of inheritance can a cash register, computer technician have?]

We weren't present for this. We heard about this from our other, sensible, daughter and her husband. At which point I told hubby to pay the entire amount owed to son-in-law#1 and be done with it. We won't borrow anything more from them, EVER.

Now, since this was disclosed in the 2004(b) Exam, there is always the possibility that the Trustee could go after it. The total paid to son-in-law is around $1200.00, so there is the possibility the Trustee won’t bother.

BTW these are the hubby's daughters by his first marriage. I am wife#2. We have no children ourselves, other than a ‘God-daughter’ mentioned in other posts.