Can I include in my bankruptcy a loan from my mother-in-law from her line of equity for a failed business? would she owe balance

Asked about 3 years ago - Canton, GA

My husband started a company and was lent the start-up monies from my mother-in-law's line of equity from her home. The company has since closed and we have struggled to make her payments for the past 6 years with the balance not going down at all (interest only loan), We are currently filing bankruptcy and are wondering if we include this debt in the bankruptcy would she be left with the burden of this debt? We have made all payments, and claimed on our taxes for the past 6 years. However, it is in her name as it is own her houses line of equity. We are paying big $$$$ and it is killing us! Even with the bankrupty, we will have bills like rent, utilities.... this large payment is like having 2 morgages! Any suggestions?

Attorney answers (3)

  1. Glen Edward Ashman

    Pro

    Contributor Level 20

    1

    Lawyer agrees

    Answered . The failure to list every debt, every asset and every transaction is a felony that can land you in federal prison and result in denial of your discharge.

    Get a good bankruptcy lawyer (feel free to call me) to determine how to best deal with the debt.

    In answering questions on AVVO, the law office of Glen Ashman is not undertaking to represent you, and you should... more
  2. Stephen Clark Harkess

    Contributor Level 20

    1

    Lawyer agrees

    Answered . You can list the debt you owe to your mother-in-law in your bankruptcy. However, this will only discharge your legal obligation to her. It will not discharge her debt to the bank or prevent the foreclosure of her home.

    You can reach Harkess & Salter LLC at (303) 531-5380 or info@Harkess-Salter.com. Stephen Harkess is an attorney... more
  3. Dorothy G Bunce

    Pro

    Contributor Level 20

    1

    Lawyer agrees

    Answered . Bankruptcy law requires you to list all of your debts. The fact that there may be a repercussion to someone else as a result is immaterial to you obeying the law.

    Get yourselves the best bankruptcy attorney you can find and follow his/her advice!

    Hope this perspective helps!

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