I owe money to family and friends. Can I eliminate these debts in bankruptcy?

Question:  I think it’s finally time to file bankruptcy and put an end to all this misery. I know going bankrupt is a great thing to do if you have too much debt and I know that it really gets rid of the stress of debt. But I’ll admit I’ve been fighting it. I’ll admit that it wasn’t my first choice and that I never thought I’d be looking to do it. Now I need to speak with an Alpharetta bankruptcy lawyer fast, because I'm stressed.

But I have this debt from a used car business I tried to start with a friend and I just don’t want to pay it anymore. We started a used car lot in Marietta, Georgia, and we bought some cars to sell. We bought some “muscle cars,” some exotics like a Ferrari and a Lamborghini, and some European cars that are pretty common but good, Mercedes, BMW, Jaguar.

Just after opening, my friend got arrested for dealing drugs. They got him with meth, cocaine, and marijuana. So that pretty much destroyed our business. He was the one who had the money; he was the investor. I’ve worked in the car business for over 20 years for different car dealers, everything from GMC to Volvo to Nissan.

I put up some money to start the car lot. I borrowed from friends and family. Now that I’ve closed the business, I don’t have the income to pay back everyone. Basically, I can’t pay back the loans I got from friends and family. I never thought my friends and family would be so harassing. My cousin, who I borrowed maybe $10,000 from, calls me all the time and insults me. She calls me an “idiot,” a “moron,” and a “piece of dog crap.” She was a cheerleader at Wake Forest University so I thought she’d be nice, but she’s kind of evil.

My roommate from the University of Georgia is another person who is acting pretty mean. We were good friends and we hung out all the time at UGA. He loaned me $5,000 and now, just because I haven’t paid him back, he’s threatening to sue to and show people some embarrassing pictures from college. At UGA we’d sometimes drink a whole lot of white wine and dress up like girls and take pictures of each other. It was just a joke and we’d wear make-up and ladies’ underwear; you know, just normal college stuff.

I really want my relatives and friends to stop harassing me. I want the insults to stop. I’ll pay them back sometime, but now I need breathing room. If I file bankruptcy, will this make them stop harassing, threatening, and insulting me? Can I put debts owed to family and friends in a bankruptcy?

D.B. in Alpharetta, GA

Answer:  Bankruptcy eliminates all of these debts. Money owed to friends and family members is eliminated when you file.

Just by virtue of being a relative or friend does not give them any special legal significance under the bankruptcy law. With very few exceptions, all creditors are treated the same and you can get rid of money you owe to them.

Many people have borrowed funds from relatives and friends and although they always wanted to pay them back the full amount they borrowed, sometimes they are unable to do it. They’ve tried but they just don’t have the money to pay them.

When this happens, you can include these amounts in a bankruptcy. And just like any other creditor or debt collector, the family member or friend can’t harass or abuse you, and they have to immediately stop their collection efforts when you file.

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