ARE LOANS OWING TO RELATIVES GIVEN SPECIAL TREATMENT IN BANKRUPTCY?
It is not uncommon for you to owe money to a relative. As discussed in other answers to questions, you must list every debt. This includes debts you owe to your family members. The bankruptcy court looks closely at loan transactions between family members. As we all know, if we owe money to several creditors and one of them is a family member, we will probably be inclined to pay the family member first. In a bankruptcy context, this often means that family members have been paid while the other creditors have not been paid. One of the main ideas behind filing bankruptcy is that all creditors share your misfortune equally. One of the questions asked in the bankruptcy petition is whether you have repaid any loans from relatives within the past year. If you have, you are required to disclose the amount. If the amount is large enough, the bankruptcy trustee has the power to get the money back from the relative and spread it out equally among all the creditors. While there is no set rule as
