How to sign a loan that is exempt of bankruptcy?
I want to sign a loan agreement with someone but want to protect myself in the unlikely event that the person declares bankruptcy. How can i word the contract so that the peron cannot void the loan if they declare bankruptcy.
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you cant
However a person cant just declare themselves bankrupt they have to apply for bankrupcy and go to court and have ALL their finances examined.
The court decides whether they are bankrupt or not AND what to do with ANY assets they have
Once they have applied for bankrupcy their finances are out of their control
You really can’t write a loan that circumvents federal law and protections. If you could, every creditor in the world would word their loan agreements that way. There are only certain debts that are not bankrupt-able and you really can’t make any of them.
You cannot do it yourself.
The first step is to have the Congress of the United States of America change the law.
Under current law, the only type of unsecured loan that can be totally exempt from bankruptcy is a student loan. (There are some other types of debts that are also exempt, but are not loans, such as child support.)
If you do word the contract to say that the person cannot void the loan by declaring bankruptcy, then that provision of the contract will be void, and the person will still be able to void the loan by declaring bankruptcy. Additionally, simply such blatantly illegal wording in the contract might void the entire contract, meaning that the person could void the loan even without declaring bankruptcy.
youll have to be the IRS, a govt or a student loan provider covered under Federal law. there is no other way.
You can’t simply “word a contract so a person cannot void the loan”. If you could, then EVERY contract would ALWAYS be worded that way and there would never be bankruptcy.
However, you could take a security interest in property. In the event that the person does not pay, you will be able to repossess the property to pay off the debt owed to you. A bankruptcy would eliminate the person’s personal liability to you, but generally a bankruptcy does not eliminate liens.