Legal Question in Bankruptcy in Pennsylvania

I lent my sister a very large sum of money. She made the monthly payment to me for 2 years then filed for bankruptcy and included her debt to me.I will get about 30% of what she still owed to me from the bankruptcy court. She says that she will resume the monthly payments to me after the discharge in a few more years. She wants to again borrow just a small amount of money from me now. I want to lend it to her on the condition that she reaffirms the balance of her original debt to me. What are the chances of this being approved if I reduce the debt a little? Do I have the same chance for approval if I keep it at the original terms? Also, when would she have to start paying me if it was approved? And finally, if it was approved, would the monthly payments from the court to me stop or would they continue for the duration of the bankruptcy? I can't find any answers to these questions online and I really need to know soon Thanks in advance


Asked on 1/25/14, 4:06 am

1 Answer from Attorneys
Rachel Hunter

Courts do not like reaffirmation agreements on the whole and they are the ones who must approve. You don't have a better or worse chance of getting this approved if you reduce or don't reduce what is owed.

I would have a discussion with your sister and the bankruptcy attorney about this and make sure that the affirmation will go through before you make any other loans.

It sounds like your sister filed a chapter 13 bankruptcy. A chapter 13 is where the debtor restructures his or her debt and makes payments to bankruptcy court over a 3-5 year period. The trustee then disburses the money to the creditors as per the debtor's plan. If you are only getting 30% then you will be paid under the plan.

Assuming that a reaffirmation agreement is signed for the balance of the large loan that was included in the bankruptcy, any repayments on that would not start until your sister completed her bankruptcy plan. Plans are never more than 5 years.

You would need a separate agreement covering the new loan.

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Answered on 1/25/14, 7:52 pm


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