Legal Question in Bankruptcy in Virginia

Re: Insider rights when Bankruptcy is flied

LawGuru.com just got this sent out to the attorneys on its list, and I note that the April 13 date has passed. I hope you saw a real live lawyer before then - seeking help on the internet can be useful, but it is no substitute for an in-person consultation with a lawyer who can find out all the facts from you and advise you accordingly.

In any event, my response to your query is that, unfortunately, unless they committed fraud (and you filed an adversary proceeding in the bankruptcy court in time), there is probably nothing you can do. They borrowed from you and filed bankruptcy, and the effect of a bankruptcy stay and discharge is the same whether or not you are a financial institution, business, or otherwise. You cannot sue them (other than filing a timely dischargeability case in the bankruptcy court), and you cannot demand repayment or take other steps to collect. If your loan was secured (by a mortgage on their property, for example), you can still proceed against the property, but not against them personally.

Perhaps out of the goodness of their hearts, or out of some sort of sense of familial obligation, they will voluntarily repay you, but you cannot demand or request this.