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My soon to be ex-daughter-in-law borrowed $35,000 in 2016 to start up a gymnastics business and agreed (in writing) to pay it back in 4-6 weeks when her home equity loan went through. She could not pay it back as agreed and long story short, the business failed and she filed for bankruptcy and divorce in Nov/2018. She told me that the place she moved/sold her gym to, as part of her contract, (which she has yet to provide me a copy as requested) agreed to pay her a salary plus the cost of the home equity loan and the $35,000 she owed me . Her pending divorce is a result of her new personal relationship with the owner of said gym. After many months of calls, texts and email, her last communication with me regarding the repayment of the loan was that "her lawyer advised her to finalize the divorce and bankruptcy before moving forward with this repayment." I have an agreement to repay in writing and only text messages and a couple emails of conversations after the initial loan.

What are my options and do I wait for the divorce and bankruptcy before I do anything legally? Can she throw this into the bankruptcy or force my son to partially repay as part of a divorce settlement? He fully owned the house years before he met her and her name was not on the equity loan. Is there a statue of limitations on collecting this debt? What type of lawyer should I use?

 

 

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The statute of limitations for a lawsuit in MA based on contract is 6 years. You are still within the time limit.

 

However, if she already filed bankruptcy and listed your debt then you are screwed and will never see a penny of it.

 

Set up an account on PACER:

 

https://www.pacer.gov/

 

You can look up her name to see if a bankruptcy has already been filed. If it has, you can search for the forms that she filed to see if the debt is listed.

 

If no bankruptcy has been filed you are free to sue her. Any business or contracts attorney can handle it. Be prepared to pay $300 to $400 per hour with a retainer of several thousand dollars.

 

The lawsuit is likely to precipitate the bankruptcy and chances are that you'll be kissing the money goodbye.

 

You've just learned the hard way that lending money to relatives is always a bad idea.

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I'm assuming that you loaned the money as a personal loan to your daughter-in-law (and not, say, as a loan to a corporation or other business entity that she owned).

I'm also assuming that the bankruptcy that was filed in Nov 2018 was her personal bankruptcy.

I'm also assuming that while the loan agreement was in writing, you didn't formally take a security interest in any property -- that it was just in effect a signature loan.

 

On that basis, you need to consult with a bankruptcy attorney ASAP.

You are a creditor in her bankruptcy case, and will be paid, if at all, out of the bankruptcy estate.

To that end, you need to timely file a proof of claim, and otherwise monitor the case to determine whether you'll be paid anything and, if so, how much.

 

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22 minutes ago, DonnaF said:

she filed for bankruptcy . . . in Nov/2018.

 

Has the bankruptcy court issued a discharge, or is the case still pending?  If she filed under Chapter 7, she has very likely been discharged by now unless one or more creditors objected.

 

 

22 minutes ago, DonnaF said:

What are my options and do I wait for the divorce and bankruptcy before I do anything legally?

 

As long as her bankruptcy is pending, you can't legally take any action to recover the money.  Have you filed a proof of claim in the bankruptcy?  The divorce is irrelevant.

 

 

22 minutes ago, DonnaF said:

Can she throw this into the bankruptcy or force my son to partially repay as part of a divorce settlement?

 

I'm not sure what "throw this into the bankruptcy" might mean.  Did she list the debt to you in her bankruptcy schedules?  Whether she can "force" your son to do anything is a question of fact about which we have no relevant information.  A divorce settlement would be a voluntary agreement between your son and daughter-in-law.

 

 

22 minutes ago, DonnaF said:

Is there a statue of limitations on collecting this debt?

 

Yes.

 

 

22 minutes ago, DonnaF said:

What type of lawyer should I use?

 

Until and unless the bankruptcy is dismissed (not discharged), there is no point in spending money on a lawyer.  If she receives a discharge, then the debt will not be recoverable (unless you can make an argument that it was a marital debt for which your son should be liable).

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16 minutes ago, MiddlePart said:

I'm assuming that you loaned the money as a personal loan to your daughter-in-law (and not, say, as a loan to a corporation or other business entity that she owned).

I'm also assuming that the bankruptcy that was filed in Nov 2018 was her personal bankruptcy.

I'm also assuming that while the loan agreement was in writing, you didn't formally take a security interest in any property -- that it was just in effect a signature loan.

 

On that basis, you need to consult with a bankruptcy attorney ASAP.

You are a creditor in her bankruptcy case, and will be paid, if at all, out of the bankruptcy estate.

To that end, you need to timely file a proof of claim, and otherwise monitor the case to determine whether you'll be paid anything and, if so, how much.

 

 

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She did not include my loan or the home equity loan in her original  bankruptcy filing. All the creditors were notified already. Can she add on to it later? She still owed paperwork (tax returns that she filed an extension and a w-2 or 1099 of another job she never claimed as income)

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1 hour ago, DonnaF said:

Can she add on to it later?

 

Yes.

 

If the debt owed to you was not on her schedules, then you can sue her once the bankruptcy case is over.  However, she can go back and add it, so the effect will be the same.

 

Needless to say, this subject is far more complex than can be covered completely in a message board post, so you should consult with a local attorney.

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