Should you repay a loan to a family member just before bankruptcy?

Imagine repaying a loan to assist a loved one, only to have those funds reclaimed by a bankruptcy trustee. Such a scenario not only strains familial relationships but also exacerbates financial strain.

The bankruptcy code defines an “Insider” as any individual with a close personal or business relationship with the debtor. When a debtor makes payments to an insider, such as repaying a loan to a parent or child, it raises red flags for creditors and bankruptcy trustees.

As part of my bankruptcy practice, I help people get a fresh start from debt. Most of the time, these debts involves situations outside of my clients’ direct control. DUI is different because it involves a poor choice – and because Bankruptcy offers minimal protection for damages caused by DUI for personal injury or death. These types of debts are not dischargeable in bankruptcy - even if there is no underlying charge or conviction, or if the matter is resolved through the Alternative Rehabilitative Disposition (ARD) process.

Here are a few reasons why bankruptcy continues to gain prominence over debt consolidation loans and non-attorney debt consolidation companies in this challenging economic climate.

In the realm of bankruptcy, a unique category known as Single Asset Real Estate (SARE) Chapter 11 bankruptcy is designed to address the specific needs and challenges faced by real estate owners and investors. SARE Chapter 11 bankruptcy provides a framework for individuals and entities with a single, income-generating property to restructure their debts while preserving and maximizing the value of their real estate investment. In this article, we will delve into the concept of SARE Chapter 11 bankruptcy, its advantages, and the essential aspects of the process. SARE Chapter 11 bankruptcy is primarily intended for debtors who own a single property or project that generates income, such as commercial buildings, rental properties, hotels, or large-scale residential developments. The bankruptcy process aims to facilitate the reorganization of debt by providing the debtor with protection from creditors and a framework to propose a feasible repayment plan.

Subchapter V of Chapter 11 bankruptcy, commonly known as "Sub-chapter 5," was introduced as part of the Small Business Reorganization Act of 2019. It offers a streamlined and more affordable bankruptcy process specifically designed for small businesses. There are several key aspects of Subchapter 5 that make it a beneficial option for qualifying small businesses.

Small businesses are the backbone of our economy, but they can face financial hardships that threaten their survival. To address the unique needs of struggling small businesses, the Small Business Reorganization Act (SBRA) introduced a modified version of Chapter 11 bankruptcy known as Small Business Chapter 11. This form of bankruptcy provides a streamlined and more affordable process for small businesses to reorganize their debts and regain financial stability. In this article, we will explore the advantages and procedures of Small Business Chapter 11 bankruptcy, highlighting its significance in helping small businesses navigate challenging financial circumstances.

Redemption is designed to strike a balance between the interests of debtors and creditors in Chapter 7 bankruptcy. It allows debtors to retain personal property that they may have otherwise lost through the liquidation process. By redeeming an asset, debtors can pay its fair market value in a lump sum, rather than surrendering it for sale to satisfy debts.

The automatic stay is a fundamental component of bankruptcy law designed to provide debtors with immediate relief from creditor harassment and collection activities. Upon the filing of a bankruptcy petition, the automatic stay takes effect, creating a legal barrier between the debtor and their creditors. It operates as an injunction that prohibits creditors from pursuing or continuing most legal actions against the debtor or their assets.

Chapter 13 bankruptcy offers individuals a chance to reorganize their debts and develop a manageable repayment plan. One powerful tool available in Chapter 13 is the concept of "cramdown." Cramdown allows debtors to modify certain secured debts, especially with regards to the value of the underlying assets. This article aims to provide a comprehensive understanding of how cramdown works in Chapter 13 bankruptcy, emphasizing the crucial role played by the value of the asset involved.

Bankruptcy judges play a crucial role in overseeing bankruptcy cases, ensuring the fair and efficient resolution of financial distress for individuals and businesses. While the bankruptcy judge's role is similar in both Chapter 7 and Chapter 13 bankruptcy cases, there are distinct differences in how they interact with the parties involved. This article explores the roles of the bankruptcy judge in Chapter 7 and Chapter 13 bankruptcy cases, highlighting their responsibilities, distinctions, and the separate roles of the Chapter 7 trustee and the Chapter 13 trustee.