If I loaned a family member$ 5,000 and he is taking out bankruptcy, do I have any way to get some back or can I write it off as a bad loan on my taxes?

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If I loaned a family member$ 5,000 and he is taking out bankruptcy, do I have any way to get some back or can I write it off as a bad loan on my taxes?

Asked on September 24, 2014 under Bankruptcy Law, Nevada

Answers:

Greg Wiley / Law Office of Greg Wiley PLLC

Answered 6 years ago | Contributor

I don't see where you can deduct it as a bad loan.  You are likely not in a line of business that oaning money is a regular part of business.  As Dave Ramsey says "Never loand friends or family money."  Make it a gift because in the end, that is what it is likely to be.

I doubt there will be a non-dischargeability action you could bring.


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