Can I File Bankruptcy for a Debt I Owe a Relative?

Woman checking papers

Question: I owe my cousin a substantial amount of money, close to $150,000. I borrowed the money to start a business which did not succeed and now he's threatening me with a lawsuit. I know I'll pay him back but it's just going to take some time because I need to find a job and save up some money to give him. But he keeps calling and saying that he's going to take me to court and then garnish my wages.

I am so stressed because he keeps asking me for the money. He always calls me and he even calls my sister and my mother. He tells them that I'm a dead-beat and a jerk. So I'm done with his harassment and name-calling and I want to put all of this behind me. Someday I'll pay him back with interest, but now I don't have any money.

The business didn't work out because we were in a bad location in Dunwoody and we couldn't find good employees and the parking was bad.

Tell me how to make his harassment stop and tell me how I can get rid of that huge debt. Can I include debt in a bankruptcy that I owe to a relative?

A.L. in Buckhead, GA

Answer: You can include loans to relatives in a bankruptcy petition. You can have your debt to a relative discharged just like any other debt to a credit card company, a bank or a finance company.

Many people owe money to a relative, and this debt can be included in a bankruptcy filing. It can be included in a Chapter 7 or a Chapter 13.

In fact, when many people are raising money for a business, they first try to raise it from friends and family members. So it is quite common for debts to be owed to family members, and these debts can be included when you file for bankruptcy.

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