When you file a bankruptcy petition, you are required to list all your debts and creditors. This includes informal, personal loans like loans from family members or friends that may not be documented in a formal written loan agreement. Depending on the chapter you file these types of loans are handled differently. For of the time, these types of personal loans may be eligible for discharge or inclusion of a repayment plan schedule such as in Chapter 13 bankruptcy.
One thing you must remember is that just before filing for bankruptcy, you should avoid making any more payments to your creditors, including personal loan creditors. The reason for this is so that your repayment is not viewed as showing favoritism to any particular creditor (in this case your family member or friend who gave you the loan), neither can it be misconstrued as bankruptcy fraud.
Due to the personal and informal nature of such loans, there is often a possibility of conflict when you are not able to repay the loan. For this reason, you should work out a reaffirmation agreement instead that includes talking to your family member or friend about a payment arrangement. If that is not practical or possible, then filing for bankruptcy will give you other options.
Depending on which type of bankruptcy you opt for, your personal loan can either be fully or partially forgiven or repaid over a period of time. If you file for Chapter 7 bankruptcy, your personal loan will be paid for through liquidation of assets. If your asset sales are not enough to repay your personal loan in full, then the balance of the loan may be discharged (if unsecured). If you file for Chapter 13 bankruptcy, your personal loan may be included in the repayment plan, with part, if not all of the debt being repaid based on disposable income and secured debt obligations.