When facing financial difficulties, the idea of borrowing money from family or friends can seem like an attractive option. It may appear as an easy solution to keep afloat without resorting to drastic measures like filing for bankruptcy. However, this approach can have serious consequences.

Before deciding to take this route, it’s crucial to consider several important factors. Read on to learn what a foreclosure attorney in Victorville, CA advises and contact Winterbotham Parham Teeple, a PC at 800.400.9000 for a legal consultation.

Borrowing May Worsen Your Financial Strain

Before you decide to borrow money, you need a solid plan for repayment. Borrowing $1,000 to cover a past-due mortgage payment this month might seem like a good idea if you’re certain you’ll get a raise next month. However, if your financial future is uncertain, taking on additional debt could worsen your financial problems and increase the likelihood of needing a foreclosure attorney in Victorville, CA. Without a clear repayment strategy, you risk deepening your financial woes, leading to more severe consequences.

Impact on Your Family and Friends’ Finances

When you borrow from family or friends, you risk putting their finances in jeopardy as well. If they are not financially stable, helping you could strain their resources, leading to a difficult situation for them. It’s essential to consider the impact of your borrowing on their financial well-being.

Bankruptcy: A Potential Permanent Debt Relief Solution

If you’re struggling to manage overwhelming monthly bills, filing for bankruptcy might be a more sustainable solution than borrowing. Bankruptcy can provide a permanent resolution to your debt problems, unlike temporary relief from a loan. However, it’s important to understand how bankruptcy affects debts owed to family and friends.

Restrictions on Repaying Family and Friends Before Bankruptcy

One significant restriction is that you cannot repay friends and family immediately before filing for bankruptcy. If you make payments or transfers to them within a year of filing, the bankruptcy court might view it as a “preferential transfer.” This means the court could require the recipient to return the money so it can be distributed among all creditors. In some cases, you could even face charges of bankruptcy fraud for making such transfers.

Differences Between Chapter 13 and Chapter 7 Bankruptcy

Loans from family and friends are treated differently under Chapter 13 and Chapter 7 bankruptcy. In Chapter 13 bankruptcy, documented loans can be included in your repayment plan, allowing friends and family to recover part of their money. However, under Chapter 7, all your unsecured debts, including personal loans from family and friends, are discharged, and they receive nothing.

Seeking Professional Guidance from a Foreclosure Attorney in Victorville, CA

Navigating financial difficulties and considering bankruptcy can be overwhelming. If you need assistance, don’t hesitate to seek professional advice. Contact Winterbotham Parham Teeple, a PC at 800.400.9000 to consult with a foreclosure attorney in Victorville, CA. We can provide you with the necessary guidance and help you understand your options.