Voluntary Ch 13 Dismissal - right or wrong move?

[frontierred]

My attorney is recommending that I voluntarily dismiss my Chapter 13 filing. Im not so sure this is the best way to go. I filed my Ch 13 in Feb 2010 and the case has not yet been confirmed. I have been going through a divorce (2.8 years now) and included the property settlement from the divorce financial issues trial into the Chapter 13. My wife objected and had the divorce court set-aside the financial issues ruling so that it could be re-tried. Now I'm going back to divorce court for another financial issues trial and my attorney says the only way to put any new award that comes out of this one into my Ch 13 would be to dismiss the current filing and after the divorce, re-file the Ch 13. Does this sound right? Also, what happens to the money I have already paid to the Trustee (about $17K) since the case was not confirmed? Do I have to wait 6 months after the dismissal to re-file?

[despritfreya]

If you were going through a contentious divorce and knew there were issues as it relates to a property settlement/financial obligations, maybe you should not have filed a bk until the divorce was final. Maybe you did wait and once you filed the 13 your ex took steps to lift the stay to go back to state court for a determination that the "award/settlement" was in the nature of support.

Either way, if you stay in the 13 or dismiss and refile down the road, I tend to doubt you will get rid of anything that comes out of the divorce. You can bet that your ex will make sure that there is no question that any "award" will be "in the nature of support" and, therefore not dischargeable in any bk.

Sorry I can't be much help here but just on the brief facts you have outlined I cannot tell if staying in the 13 or letting it go matters. Chances are you will have to let it go as you will never get the Plan confirmed until the domestic relations issues are resolved.

Oh, forgot to mention: If the case is dismissed prior to confirmation, the funds held by the Trustee that were not paid out as adequate protection payments for a vehicle, will be returned to you after your attny is paid - assuming she asks for her fees.

Des.

[frontierred]

Thanks for the feedback. For information, BK was filed prior to the divorce decree because my Ex had my bank account swept clean and lodged a garnishment against my wages after the financial award in divorce court. I was in the hospital at the time recovering from colon cancer surgery. This after already giving her over $80K in funds from a retirement plan and paying support obligations of about $3K per month. I also filed because the house was already in foreclosure proceedings. Is it realistic that a divorce judge will re-classify "property" as support at a new trial?

[despritfreya]

Is it realistic that a divorce judge will re-classify "property" as support at a new trial?

Sorry to read of your circumstances. I hope all works out in the end both health wise and divorce wise.

There is no way to answer this question. If the divorce judge wants the $$ owed to be in the "nature of support" he/she will specify so. However, even an indication from the state court judge one way or the other can be revisited by the bk judge. The bk judge has the right to make an independent decision as to the "real" nature of the claim. But this could be a doubled edged sword. If it was "property settlement" which is dischargeable in a 13, the bk judge could ignore that and turn it into "in the nature of support". Had that happen in one of my cases.

Des.