will family get my assets in bk

[eddiep]

I borrowed money from FIL trying to keep my ship from sinking and we have not been able to pay him back. Originally we were not going to list him as a creditor but my MIL is in poor health and may have to go to nursing home and I know someone will be looking into their finances. I am afraid that if we do not list him as a creditor and he gets flagged for "gifting" he may be forced to collect the money from us. We have already talked with him about this and our intentions to repay him when this is over with and he agrees that this way both of our butts are covered. We will be an asset case, we are expecting a large settlement on a personal injury lawsuit any day. Our lawyer has already warned us that he may be able to exempt some of it but obviously not all of it which is fine. What are the chances he will get some of our money? Will he need to do anything like file a claim?

[justbroke]

What Chapter of bankruptcy are you filing? 7 or 13?

[eddiep]

We are filing chapter 7.

[JRScott]

He would be an unsecured creditor and legally you have to list him.

Once listed he'll receive official notification from the court of the bankruptcy.

When the time comes usually after the Trustee notifies creditors that there is money to be had, he'll need to file his claim to his portion. The Trustee will then collect all such claims and decide who will get what. Obviously priority debts are paid first. So its hard to say how much your FIL would receive.

Keep in mind as an asset case you will discharge on time, however you will not close until all money is distributed.

[eddiep]

what is a priortiy debt? I am reaffirming my car and house, both are current all of my other debt is to cc. (and lots of it!)

[keepmine]

Things like taxes and court ordered child/spousal support are priority debts.

http://doney.net/bkcode/11usc0507.htm