Submitted by KevinT on Wed, 10/13/2010 - 08:31
Posted in
Last year I loaned $2,000 to my nephew so he could cover some bills. He signed a promissory note and has been making sporadic payments. Now he says he needs to file bankruptcy and he doesn't know if he can pay the money back. Is there some exception under bankruptcy law so that people can't wipe out debts to family members? Thanks.
Loan in bankruptcy
Sorry, but no. If your nephew files Chapter 7 bankruptcy and includes your loan in his petition, you will be out of luck. If he files Chapter 13 and you are included as an unsecured creditor, you might get some of the money back, depending on the plan and his financial situation. Follow this link for more informtion about the difference between Chapter 13 and Chapter 7 bankruptcy. Of course, I assume you know that once the dust has settled from the bankruptcy, your nephew can still pay you back the money he owes you. Just because he no longer has a legal obligation, that does not prevent him from doing the right thing. Good luck.