Too late to change my mind?

[treadingwater]

Due to a large lawsuit being filed against my husband's former business, him and myself, we rushed and filed Ch 13 together two weeks ago. I'm wondering if I can remove myself and just let him move forward with the Ch13 alone? We both had to file Ch 7 almost 8 years ago and our house, that we still live in, was included. We are about 8 months behind due to the failure of his business (thus the lawsuit, which is claiming fraud, btw) and I'm just wondering if it would be smarter to hire a lawyer to get me removed from the lawsuit (which should be no problem since I didn't have anything to do with it) and keep me out of the BK. The paralegal at the office says it's already on my credit - as of the filing date - but if they are able to just dismiss me, wouldn't there be some change to the credit since it's not even confirmed yet? I'm just really struggling with the idea of facing 5 years of garnishment and pain when I just worked hard for 8 years to rebuild my life and re-establish my credit. We do want to keep our home and our mortgage was recently bought by morgan stanley, who promptly denied a modification. But the paralegal says the BK, even if just on my husband, would stop foreclosure. Also, I'm a plaintiff in a medical lawsuit that I'm hoping may bring a long awaited settlement in the next two years, and I think that would have to go to the trustee? Any advice is appreciated, I want to make the best and most strategic decision. My marriage is not in a great place and I'm just not sure I want five years of this...

[justbroke]

Your credit is toast and for most credit reporting agencies (CRAs), they report a dismissed Chapter 13 for 10 years (the same they do for any Chapter 7). A discharged bankruptcy is the cleanest way to come out from bankruptcy.

I don't know what you wish to achieve at the end. If you had anything to do with that former business, even as a partner or in any other capacity, you will probably want to do what your attorney tells you to help eliminate the personal liability. Your decision will require legal consideration of which I can't provide.

As far as medical lawsuits, it really depends on how the proceeds (settlement or judgment) are classified. if it's for pain and suffering, generally the bankruptcy court is not entitled to use those proceeds for the creditors. If it's classified as something else or a general award without specificity then the Trustee will want a taste. I can tell you that "taste" means that they want a percentage of the award, but I can't tell you how much or at what percentage that would be. It would be up to your bankruptcy attorney to negotiate with the Trustee... or fight the Trustee in a trial before the judge.

No one wants five years of a Chapter 13. No one. Having wrote that, the purpose of the Chapter 13 is to save property or to pay something "meaningful" to the unsecured creditors for that bankruptcy protection. Unless all that debt is in your husband's name and/or you're in a community property State, then you really need to think about what leaving the Chapter 13 would do to you financially/personally and the other impacts.

To me, and this is just reading a few paragraphs on the Internet written by a person that I don't know... you are more worried about your credit than your financial health... you are worried about the Trustee taking a potential award in a medical lawsuit... and you are very worried about your marriage. Being worried about money, being in bankruptcy AND being in a marriage is almost certainly the recipe for disaster. You will need to look deep inside yourself to figure out where you want to be in .... yes... 5 years.

[treadingwater]

Thanks. I am concerned about my credit, but more concerned about my home and marriage/family. I just wondered if it may be more strategic for him to file alone, since it might have the same impact on the mortgage situation. Assuming I can be removed from the lawsuit. But, the other issue is most of the unsecured debt is in my name, it's not a lot, but enough that we are burdened. The main rush to file was because of the lawsuit and in hopes of keeping our home and sort of "forcing" a modification. The attorney also feels confident we can strip the 2nd. I just got the packet today explaining how a 13 really works and I got very scared and overwhelmed. It's so different than a ch. 7 and I just worry about the dynamics of family and money over the next five years. The lawsuit is for a defective medical device and pain/suffering. I really appreciate your insight. I realize it's now too late to change my mind and I might as well commit. Maybe in September - when it's been 8 years since my Ch 7 - I can convert to a 7. Just curious about how to fit all these pieces together and make the best decision. My oldest child will be 18 when this is all over and I feel guilty and worried about the gloomy outlook for his final years at home

[justbroke]

You will not be able to convert to a Chapter 7. The rules, which measure the 8 year period in which you receive a discharge in another Chapter 7, measure this from when you filed the case. Converting your Chapter 13 case would not change the date of filing. You may be able to voluntarily dismiss your Chapter 13 and then refile a Chapter 7, but those are strategy questions that you need to work with your lawyer. There are many questions with such a strategy including the need to modify the existing Chapter 13 (which I assume your husband would stay in that).

I wouldn't look at this as gloom. I was in Chapter 13 and married and the children never noticed a thing. The only thing I could say one could notice is if you spent every weekend on the water for 8 hours in 2 jet skis ($$$$). That won't be likely. But it doesn't change doing quality things with children and family. Bike rides on the bike trail. Long nature walks. "Movie night" at home (with popcorn of course)! So many things.

If you are used to budgeting and keeping on a budget, the Chapter 13 will not feel any different. The only difference is that your "disposable income" will be no more. You'll have to keep and maintain a budget. If you can't or refuse to keep and maintain a budget then you are in fact doomed to fail. (And I hate to use the word "doomed" but it's the word that fits.)

If you always had problems with frivolous spending, then a Chapter 13 may cure that problem. Again, if you can't or refuse to maintain a budget then it won't work. Your Chapter 13 attorney will (should) make sure you have a budget that reflects your true costs. There should be some cushion in there as well. With the cushion you should be able to save money during your Chapter 13!

I am not saying it will be easy, because it won't be "easy". It should, however, be manageable. it is all about living on a fixed income and managing your expenses.

[treadingwater]

Thank you. I am really good with budgeting and I do look forward to getting back to the simple things with the kids, camping, biking and movies.