TOP TEN BANKRUPTCY MISTAKES
#2
Borrowing From Friends
If you are in serious financial difficulty it ordinarily results from credit card and other non-secured debt that you can not pay. In a consumer bankruptcy, whether Chapter 7 or Chapter 13, all of the unsecured debt can ordinarily be discharged or reduced and paid off over an extended time for a fraction of the debt
Borrowing from friends or family to keep from filing a bankruptcy will usually amount to throwing “good money after bad.” If you are unable to keep up with your credit card and other debt then how can you hope to repay the family member or your friend?
The Bankruptcy Code and Bankruptcy Rules set forth a complex set of requirements for the equitable treatment of all parties in a bankruptcy. Bankruptcy Rule 1007(a)(1) requires that you list all creditors in your bankruptcy case – even family and friends. All creditors must be treated equally with respect to distributions of property, if any.
Why burden a loved one with your financial situation and possibly lose a friend or create family tension? Moreover, if a loan might help then why not seek professional help to see if the loan can be secured to protect that lender?
Only analysis of your particular situation will be able to determine a prudent course of action. However, in most instances it is better not to put in jeopardy a friend or family member pre-petition. After your other debts are discharged it would be safer for them and more helpful to you to receive a loan.
[Guy Vining, a bankruptcy attorney, in metro-Detroit, maintains his office in Taylor, Michigan where he serves the downriver communities of Monroe, South Rockwood, Gibraltar, Brownstown Township, Grosse Ile, Woodhaven, Trenton, Southgate, Riverview, Allen Park, Lincoln Park, Dearborn, Dearborn Heights, Westland, Wayne, and Ecorse. If you or a family member of friend would like a no-obligation no cost consultation/financial analysis, just call or E-mail Guy Vining of Vining Law Group, P.L.C to schedule a meeting.]