When to file???

[Happy5]

I finally registered after reading the forum for months and here goes my question.

My husband and I are in MAJOR debt and will be filing a personal ch.7, my concern is that our business(no longer active) has a pending lawsuit against a developer who owes us in excess of a million dollars before any interest or attorney fees, we filed the lawsuit in 03/2007 and our court date is in Feb./2010. The developer has properties in his name (we don't know of any cash on hand he might have) and our attorney finally took our case on a contingency basis he gets 40% we get 60% if we get a judgement against him.
The lawsuit is filed under our company not personal so any monies would be paid to our company first and then what ever was left over would go to personal. Will the trustee wait pending the outcome or just abandon the suit?
Will he still put a claim against the judgement and will that delay the discharge if it takes years to recover any of the monies won?
Our attorney for the lawsuit tells us to wait until the lawsuit is done so we can be the captain of our own ship should we get any award, my concern is that if we wait and do get a reward we will have assets and not be able to file a ch.7?
If we file now we have the chance of the trustee abandoning the suit and we get to keep any awarded judgement without having any personal debt, just business debt and if he choses not to abandon then all our debt will be paid off and we will basically just punish the developer and screw with his assets like he's done with ours!
Am I in left field?

[DeadManCrawling]

With a possible reward that large, I would wait. Your attorney, in my opinion, is correct. You will then have options, depending on your state and exemptions. You could also wait longer and spend down that money on legitimate or legally exempt things. You will really need to go over this with your BK attorney with a finetooth comb.

In general, though, I don't believe a trustee would ever abandon their interest in an award that could reach a million dollars. Even if the company receives most of it, there are other issues. If you own this company, as it appears you stated, then the company is YOUR asset and is subject to being taken in BK proceedings, espeecially if it has value, such as a possible legal judgment owed. Any trustee would be willing to wait quite a while to collect on such a large sum, I think.

[Happy5]

The issue we have is that my husband and I have not had an income since aug/09 and we have 2 judgements against us that are quite large about $200,000 combined (personal guarantees on business credit)and IF we seek employment our wages would be garnished immediately, these would be wiped out if we file now.
Also, our business has about $300,000 in debt and don't forget the attorney would get his share of 40%, so how we see it, we're not walking away with any money either way (whether we file now or later) only we would be able to start over with a clean slate, find employment without worrying about garnishments and not let this drag out many more years.
We have already held out since about summer 2007 and are pretty fed up living at a status quo and want to get on with our lives.

[DeadManCrawling]

Thanks for the clarification.

If you are willing to risk losing anything you might win personally, I can see filing to restore sanity and remove stress.

However, I would expect the trustee to hold your case open until the lawsuit is resolved, even if youu stand to gain a relatively small amount of 10k or less. The reason is, it doesn't really cost anything to hold the case open, but the trustee, personally, can receive up to 25% (if I recall right), of any assets he recovers. Cash awards are at the top of their all-time favorite list, since they are, well, cash.

Have you asked about the possibility of exempting some or all of the award money? Certain money from lawsuits is exempt, depending on the type of suit.

I would definitely get your BK attorney and company attorney on the phone together and let them discuss with you in a conference call. Only then are you likely to see all the finer points and be able to make a truly informed decision.

[DeadManCrawling]

Also, note that filing BK will remove your obligation for personally guaranteed debt, but te business, even if inactive, is still in debt and will have to pay out the money received from the lawsuit to business creditors.

It is the excess of that amount which the trustee will be interested in. Additionally, since the business is an asset, and will have (after an award) its own assets (cash from the suit), things could get very complicated. It all depends on the nature of the business debts (secured, unsecured, priority, etc.). I wouldn't do a thing until you have a thorough chat with both attorneys at the same time.

good luck, yours is a complex case, and I can empathize with your stress level and emotional roller coaster.

Best wishes,

-dmc