Loan from relative

[help4mydebts]

A relative loaned me money, will the trustee require a statement or proof from my relative? I'm trying to find out so I can let my relative know to be prepared for it. Thanks!

[justbroke]

Under which chapter of bankruptcy are you filing? Trustee's typically do not police or care about claims that are filed. Should you list your relative as a secured creditor in the bankruptcy, the proof would be something demonstrating a lien, as well as the installment agreement. If you listed your relative as an unsecured creditor, they would need to file a Proof of Claim along with documentation of the debt. The secured creditor would also need to file a Proof of Claim.

If you file a Chapter 7 and are determined to be a no-asset case, a proof of claim is rather meaningless because there is no distribution. If you file a Chapter 7 with assets or a Chapter 13, a proof of claim is important.

[help4mydebts]

Justbroke, I am pretty sure I will be filing a no asset Chapter 7. I do not plan to list my relative as a creditor. If I am understanding correctly, would it matter in a Chapter 13 even if I did not list my relative as a creditor? I'm not too familiar with Chapter 13's. Thanks!

[LadyInTheRed]

You must list all of your debts and creditors on your petition. Your family member will get notice of your BK filing as do all creditors. The debt will be discharged, but that doesn't mean you can't repay the debt after the discharge.

[justbroke]

Justbroke, I am pretty sure I will be filing a no asset Chapter 7. I do not plan to list my relative as a creditor. If I am understanding correctly, would it matter in a Chapter 13 even if I did not list my relative as a creditor? I'm not too familiar with Chapter 13's. Thanks!

There is no difference in how you list creditors in a Chapter 7 or Chapter 13. You should list all creditors (persons, entities) to which you owe money. If there is some sort of agreement to pay and some terms, then the person is a creditor. The only downside is should the relative decide to sue you later, it could get complex.

Do you plan to pay the relative? You can, after your case is discharged. There is no prohibition on paying back any creditor. Be very careful should you start (or have) paying back your relative before you file. If it's over a certain amount, the Trustee could try to claw it back for the bankruptcy estate, making you an asset case.