If you are thinking about bankruptcy, you have to include all of your debts. This includes loans to family members, unpaid bills to family doctors, and other sensitive debts. It isn’t hard to imagine that your relationship with these people could go south fast the moment they get notice of your filing.
The good news is that even if you discharge these loans or debts, you can still pay these people back after you file. Under the Bankruptcy Code, nothing prevents you from repaying a debt that has been discharged. If you need to list a sensitive debt, you should consider talking to the lender before you file so that they won’t be surprised by your filing and understand that you intend to repay them after you file and get your finances in order. The other thing to remember is that even if you voluntarily repay these debts, you aren’t required to. If you stop making voluntary payments, your family member can not sue you for any unpaid amount.
If you haven’t filed bankruptcy yet, be careful of paying the loan back before you file. The Code requires you to include in your petition all loan amounts you repaid to any family member for the year before you filed. The trustee could force the family member to cough up any loan amounts. You could pay the trustee this money yourself, but the practical effect is having to pay the loan twice.
