Question regarding bankruptcy and personal loans

[skitz]

I wasn't sure if I should post this under bankruptcy, debt collection, or business contracts as it has a bit of all 3. A friend wants me to loan him $3500 and said he will sign a legally binding contract. The problem is that I just looked up information that says that if he were to file for bankruptcy the "legally binding contract" would become worthless. Is this true? If I were to add a clause to the contract stating that the borrower agrees to waive any rights to discharge the loan in any future bankruptcy scenario, would that protect me from not being repaid? I'm in Nevada.

 

[LdiJ]

I wasn't sure if I should post this under bankruptcy, debt collection, or business contracts as it has a bit of all 3. A friend wants me to loan him $3500 and said he will sign a legally binding contract. The problem is that I just looked up information that says that if he were to file for bankruptcy the "legally binding contract" would become worthless. Is this true? If I were to add a clause to the contract stating that the borrower agrees to waive any rights to discharge the loan in any future bankruptcy scenario, would that protect me from not being repaid? I'm in Nevada.

I don't believe that he can make that kind of waiver, legally. I could be wrong but I don't think it's possible. However, bankruptcy is a big step with serious long term effects on a person, so it's not something that someone would enter into lightly.

What kind of credit does your friend have? Is your friend generally financially responsible? If you are contemplating making this loan at all you have to consider those kinds of things. If your friend is not generally financially responsible and has bad credit that isn't due to something catastrophic (like serious and unexpected medical bills) then this is probably something that you should not do.

 

[skitz]

Yeah. You're probably right. Bankruptcy is a joke. My mother in law had revolving credit cards where she paid the payments of one card with another, and another, and so on. This can go on for years but it eventually catches up as it did with her. She claimed bankruptcy and less than 6 months later she is already being extended credit again. You can run up a bunch of credit cards, then claim bankruptcy screwing all the creditors, then go ahead and just do it all over again? No jail? No debt? People who think a legally binding contract is any good these days are in for a big surprise. How can anybody even conduct business these days with bankruptcy being so inconsequential?

 

[LdiJ]

Yeah. You're probably right. Bankruptcy is a joke. My mother in law had revolving credit cards where she paid the payments of one card with another, and another, and so on. This can go on for years but it eventually catches up as it did with her. She claimed bankruptcy and less than 6 months later she is already being extended credit again. You can run up a bunch of credit cards, then claim bankruptcy screwing all the creditors, then go ahead and just do it all over again? No jail? No debt? People who think a legally binding contract is any good these days are in for a big surprise. How can anybody even conduct business these days with bankruptcy being so inconsequential?

Its honestly not inconsequential. Yes, creditors generally will issue very small amounts of credit to people right shortly after a bankruptcy but it takes many years before they can do things like get financed for major purposes.

 

[skitz]

What if I add this clause: In the event that the borrower files for bankruptcy, under any chapter, the borrower waives any and all rights under said bankruptcy concerning this contract, which, at such a time, would remain legal and binding.

 

[despritfreya]

1. One cannot "waive" a discharge outside the context of the actual bankruptcy. A waiver in a bankruptcy is done either through an approved reaffirmation agreement or a separate stipulation or judgment under Section 523 or 727 of the bankruptcy code. One can, however, voluntarily repay any discharged debt.

2. Pre bankruptcy waivers in a contract ARE NOT enforceable without a specific bk order under 523 or 727 or an approved reaffirmation agreement.

3. You are not a bank. If you give your friend money, consider it a gift if he fails to pay it back. You are not going to sue this friend for collections - assuming you want to keep this person as a friend.

Des.

 

[NeilTheCop]

I wasn't sure if I should post this under bankruptcy, debt collection, or business contracts as it has a bit of all 3. A friend wants me to loan him $3500 and said he will sign a legally binding contract. The problem is that I just looked up information that says that if he were to file for bankruptcy the "legally binding contract" would become worthless. Is this true? If I were to add a clause to the contract stating that the borrower agrees to waive any rights to discharge the loan in any future bankruptcy scenario, would that protect me from not being repaid? I'm in Nevada.

The only way to guarantee repayment is to not loan him the money in the first place.
From past experience; mine and others, you will be chasing him forever to get the money back.

 

[Dandy Don]

Can you afford to and are you willing to consider this money a total loss if you lend it?

Does he have anything of value to put up as collateral?