BK question

[MidnightSwinga]

What is the name of your state? MI

I have $45,000 in unsecured credit card debt. My wife and I met with an attorney and I am going to be filing for CH 7 individually. When I purchased my home a couple of years ago, my parents gave me $10,000. They signed a notoraized letter to the mortgage company stating it was a gift. However, we have been paying them back about $125 a month for a couple of years.

I do not want my parents to find out about the BK, I understand that I should stop paying them for probably about 6 months once I file and I can arrange this with them more than likely. Will this raise any red flags if I do not include them on the schedule of creditors.

Thanks for your help

[Ladynred]

If the loan/gift from your folks isn't reported on any credit report., and you don't have any 'official' loan papers or payment schedule, it'll be pretty hard for anyone to prove they're a creditor. Payments to 'insiders', ie. family, is looked at closely if paid 3-6 months prior to filing. The Trustee can ask that payments made to 'insiders' be returned and the money would be distributed to your other creditors. Payments to 'insiders' are seen as preferential for the most part.

You can continue to pay your folks after your discharge, but I'd leave them off the creditor list and just not say anything. If you need the expense of the $125u, pad some other things to make up the difference.

[MidnightSwinga]

Thanks for the reply. We haven't paid them anything in the last 2 months and will be talking with them prior to filing letting them know we are going to stop payments for about 6 months.

I am going to leave them off my list of creditors, but my wife did make a payment to them back in May. Is the BK court going to examine our bank account statements and ask me to identify every check written?

[Ladynred]

No. The usual rule of thumb is if you've paid ANY creditor a total of $600 or more in the 90 days prior to filing. So, at $125, it probably won't be questioned if they even ask for statements that far back.