Forgiven Debt

[petej]

I'm not getting a clear opinion from my attorney on this one. A family member "loaned" me a substantial amount of money to help me pay a divorce settlement several years ago. There was no contract, just a "maybe in the future you could pay us back." I have paid them back several thousand dollars so there is a paper trail. Recently they sent me an email that told me not to worry about paying them back (they are pretty well off to say the least) and I guess they heard through the grapevine that I am struggling financially, although they do not know about the BK.

I want to be 100% honest on the petitions, but do I need to list them as a creditor? If the trustee looks at my bank statements they will certainly see the checks written (about a year ago) to them. Any input would be appreciated.

Pete

PS I'm beginning to get frustrated with my legal counsel

[HHM]

Your attorney can't really tell you what to do, all they can do is give you some guidence on what would happen if you do A or B, but the decision is YOURS, not your attorneys.

I wouldn't worry about it too much and I would not list it. The payments are over a year ago (most trustees only ask for 6 mos worth of bank statements. Even if the trustee found out, it is a non-issue, your family member forgave the date.

[Flamingo]

As long as you mentioned the situation to your attorney, I would not worry about it and send a big thank you card to your family member.

[petej]

Thanks HHM. I'm pretty sure the trustee will be looking at 1 year or more of bank statements because I'm a small business owner. So they probably will see the 2 checks written to my relative with "loan repayment" written on the bottom of the checks. I just want to do the right thing and this seems like a fuzzy area. Let me ask this....if I leave them off the creditors list and the trustee sees the "loan" repayments and starts to ask questions...what is the worse that could happen? Fraud? Dismissal?

I just want to do this right thing. But it would be nice NOT to include them because if I do then my whole family will learn about the BK....not something I really want to share right now, I already feel bad enough

[parsoc48]

We listed a family member as a creditor and provided a copy of an agreement we signed; he's not well enough off to forgive the debt , too bad! But if your relatives have, you certainly don't owe them any more and can tell the Trustee that, if he asks.

see the 2 checks written to my relative with "loan repayment" written on the bottom of the checks

And I'm not sure if they actually look at cancelled checks, just bank statements.
Just follow your attorney's lead, he/she should know what the red flags are in your area. Good luck!

[wayne-o]

I wouldnt worry about it. If its been more than a year big deal. Its not a debt anymore. Don't list them and good luck with your bk

[petej]

"As long as you mentioned the situation to your attorney, I would not worry about it and send a big thank you card to your family member."


You are so right Flamingo. I big thank you card is in order!! I'm very fortunate that they would let that debt go. The irony is that they are my sister and her husband and they are probably at the top 1% of income earners in the US... and then there is ME...BK. Oh man....

[imbroke2]

Our parents loaned us money right after we moved to our new house and then some more later on all totalling about 6K. They know nothing about the BK and I didn't feel it necessary to include them as they are not the kind of people that ask us everytime they see us if we will pay them back. We have given them a little, but not since we filed. I wouldn't worry about it too much. If I ever start paying them back as a regular monthly bill, I would just put it under something such as household, groceries or something to that nature.

[petej]

Thanks for everyones input. It's just that my 341 is close and I just want to be honest about everything. Maybe I'm paranoid, but the law does ask that you list all "creditors." I've just been reading and reading and researching about the law and potential problems and want to have all my ducks in a row, especially since my business is involved.

You know what I am beginning to conclude? That BK is a wonderful, valuable tool for honest citizens to utilize, but there are inherent, tourtuous mechanisms of law in place to make it a very uncomfortable process?

Maybe that is good? So we learn the hard lesson and try to avoid the same mistakes again in the future.

Pete

[Flamingo]

"As long as you mentioned the situation to your attorney, I would not worry about it and send a big thank you card to your family member."


You are so right Flamingo. I big thank you card is in order!! I'm very fortunate that they would let that debt go. The irony is that they are my sister and her husband and they are probably at the top 1% of income earners in the US... and then there is ME...BK. Oh man....

Count your blessings, get through your BK, learn from it and move on...things do and will get better!