While facing bankruptcy, you will inevitably be forced to address various creditors who are involved with the accumulated debt. One of the more difficult and frustrating kinds of loans to assess will be debt from family. Debt with family members is the same as any other unsecured debt and must be included.
There is an assortment of ways to resolve family settlements, but declaring bankruptcy further complicates many situations. In order to make sure all sides are protected, it is crucial to understand what kind of regulations there are on family debt when declaring bankruptcy. Before the bankruptcy, talk to your trustee, get information you need to know how your family will be affected.
Establishing Relationships for Settlements
In order for a family member to know what kind of payment to expect if their loan is included in the bankruptcy, the first thing that needs to be established is the relationship between the two parties. The settlement will depend on how the two parties are connected, giving a better idea if they are entitled to any collection.
Have Proper Documentation
One reason why a family loan can be more complicated than most business transactions is because of how informally it might be done. Remember that once a bankruptcy is filed, there must be proper documentation for everything. Regarding family settlements, the date is crucial. Without appropriate documentation of when the loan was given, it may not be possible to get the family settlement you would otherwise be entitled to.
When dealing with bankruptcy, proper documentation is equally as important for family debt as it is for any other kind of interaction. Under the bankruptcy and insolvency act, all family loans and debt are to be included when declaring for bankruptcy. Theoretically, any family loan should be able to lead to a family settlement. The issues will only arise when there is no way of confirming the transaction on a document.
Keep Your Family Informed
When considering family debt while declaring bankruptcy, it’s important to keep any family members involved as informed as possible. While they may be entitled to a family settlement because of the bankruptcy, the valuation of the payouts will often be complicated. The reality is that the creditors who are owed money when bankruptcy is filed do not get the full value in a settlement.
It’s important to make sure you have the information needed to include family debt in bankruptcy properly, but the resulting family settlements will not completely resolve the debt. When another family member has to sacrifice earnings as a result of the settlement, it’s imperative to make sure they know what to expect when the process is complete. If a family member is left in the dark, there can be further complications that will end up harming both parties.
By communicating with your family, you can establish all the information needed to include family debt in bankruptcy properly. Additionally, all parties will be on the same page with what to expect, and no one will be left sacrificing more than they realize. Thus, it is important to make sure both parties know what a family settlement will entail.
Stay Prepared Ahead of Time
If you ever find yourself in the difficult position of considering bankruptcy, make sure you get all the information needed before the process begins. Family debt can be the most difficult aspect of declaring bankruptcy, and there is no reason for you to go into the process without knowing exactly where you stand with any debts.
In order to make sure you know exactly where you stand with all family members involved with bankruptcy, call Kevin Thatcher & Associates at 1-888-329-5198 to book your free consultation. For any additional information, or to book a consultation online, visit www.billfixer.com, where you can expect to get all the help you may need while looking into family settlements when filing for bankruptcy.