Anyone considering personal bankruptcy is wise to learn as much as possible about how the bankruptcy court is likely to handle various debts. One common concern among potential bankruptcy filers is about family loans in bankruptcy.
Loans from family members or friends can be discharged or repaid through bankruptcy. In fact, these loans must be included in a bankruptcy filing.
One important thing to note about family loans is that they are treated like any other loan or debt in bankruptcy court, which means:
Because this might cause tension among family members, filers who owe their families money may want to consider speaking with family lenders before filing and perhaps working out a reaffirmation agreement.
The way a family loan is handled in bankruptcy court depends largely on what type of bankruptcy the filer chooses. Here's a look at the potential differences between the two most common types of personal bankruptcy.
Of course, each case is difference. If you would like to speak with an attorney specifically about your financial situation, please fill out this form for a free legal consultation.