The IP wiill need to see proof of funds from the family member before proceeding the case, ie the loan would have to be taken out before the F&F proposal is submitted.
The family member does not have to declare how them came about the money, if I was you I would inform IP that a family member has had a windfall (make it up be it lottery/bet/inheritance).
The IP will then want to contact the family member, make sure there story is in line with yours and there should be no problems.
Are you planning on paying the whole amount or making them an offer to end it early as a matter of interest?
