What about a loan from my brother?

Am I suppose to include family loans as one of my debts if I file for chapter 13 bankruptcy ? This was a loan from my brother that I used to buy my car. I pay him $150 every month in cash to help pay it back. If I transfer the car to his name, will I still be able to keep it ? – New York

One Comment

  1. You must list all your creditors including family members. If you transfer the vehicle without consideration (nothing in return), then trustee could undo the transaction as a preference. So never want to transfer property to relatives within a year of the bankruptcy filing unless it is a legitimate arms length transaction. It is interesting how many people think that they can just “give away” property without any legal ramifications. But don’t do that. The chapter 13 trustee will pay your brother the same as all of your other unsecured creditors. You could try to put your brother on the title as a secured creditor. Then the trustee would have to pay him the full amount plus interest at the current prime rate. Putting him on the title can be somewhat tricky. Need a security agreement and title instrument with his name on it. Need legal direction on that. Possible to argue “purchase money security” if he loaned you the full amount to purchase. But again, this needs legal direction before you file your bankruptcy case.

Leave a Reply