Chapter 7 Bankruptcy | Restrictions During Bankruptcy (Pt. 1)
Chapter 7 Bankruptcy | Bankruptcy can be a big disruption to your life. One of the hardest things to face is the restrictions that you might face when you are in the process of repayment or debt settlement. It can be hard to know if you’re allowed to accept a financial gift from a friend, or if it’s okay for a family member to purchase a plane ticket for you to travel. Before you do anything like accept a financial gift or loan, make sure you speak with your bankruptcy attorney. They will be able to advise you on what will or won’t effect your bankruptcy.
Borrowing from Friends and Family
When seeking financial aid, it’s natural for people to turn to friends and family before they turn to a bank. But if financial difficulties lead to filing for bankruptcy protection, you’ll want to make sure that the friends and family you borrowed from are going to be protected.
The first question you’ll get is if you signed a promissory note. This is a written and signed promise to pay a stated sum to a specific person at either a specified date or on demand. The note must include information that identifies the borrower and the lender, and should also specify the amount that was borrowed, the terms of repayment, and the consequences for not paying the loan.
If you signed a promissory note, the money you received from your friend or family member will be formally treated as a loan. If there is no note, then the money can be treated as a gift. It’s important to remember that gifts are assets.
For example, if your rich aunt gives you $1 million house and puts the title in your name, it is an asset, and therefore will be considered when you file for bankruptcy as such.
If the money you received from your friend or family member has a promissory note, and is thus considered a loan, you will need to list this lender as a creditor in your bankruptcy. They will be entitled to repayment in the exact way that any other creditor is.
Types of Bankruptcy
Before you file for bankruptcy, it’s important to know what bankruptcy options exist for you.
Chapter 13 bankruptcy is designed to allow you to keep all of your property, but is also determined by your property. The amount of your nonexempt property affects how much unsecured creditors get paid during your bankruptcy process. And to avoid foreclosure or repossession, you still need to keep up with the payments you make for your secured debt, such as mortgages or car loans.
When you file a Chapter 7 bankruptcy, almost all of your assets and property are liquidated and thus become property of the bankruptcy estate that is sold to allow you to repay your debts. There are some exceptions to this though.
During your Chapter 7 bankruptcy, a bankruptcy trustee is appointed and given the authority to sell your assets so that you are able to pay your creditors. Just because your assets are being sold, that does not mean that all of your property needs to be sold. – Simon Resnik
Specializing in bankruptcy and foreclosure law for over 20 years. Call attorney David Pinkston for a free consultation today: (904) 389-5880. #FloridaBankruptcyAttorney #FloridaBankruptcy
If you are thinking about #bankruptcy or #foreclosure in the Jacksonville, Florida area, you should call attorney David Pinkston. David is very experienced with all aspects of bankruptcy law yet very personable and easy to talk to. Call Us Today! (904) 389-5880