How does bankruptcy treat loans I have from my parents or good friends?
Debts owed to your parents, any family member, or even a good friend, are debts that must be reported in your bankruptcy. There is "special" treatment of debts owed to family or friends in the sense that they are considered "suspect."
These debts are "suspect" because of an underlying presumption that loans from close relatives are more akin to "gifts" than actual loans due to the strong likelihood that a family member is probably not going to sue you should default on the loan.
Having debt of this type and payments made on such debt for up to 4 years prior to filing a petition in bankruptcy will be closely scrutinized.
