Putting a pending lawsuit in BK

[TomBrady]

[keepmine]

Your thought process is correct. The lawsuit will become the property of the estate and any settlement would go to the trustee to pay creditors less, the exemption.
Of course,if the house can't be certified, any equity is likely to be minimal.

[emoney]

I suggest from a praticial side they go see the attorney and lay the cards on the talble. He has a rght to be paid, but review your engagement letter with him to be sure.
The most inportant thing is does the contractor have any money. The attorney should file requests to produce records including bank statement and any financial statments the contractor has given in the last two years plus income tax returns. If he has any money you guys are in the drivers seat. Don't go BK unless the contracto is broke.
Your attorney and your family are in the same boat which could be sinking, but land may be in sight if everyone paddles together.
regards,
emoney

[TomBrady]

emoney,

I agree with you except for one thing, 1 they are in a hole besides that (to the tune of about 50K on CCs alone) AND the house that has been sitting on that 8% construction loan is now worth about 50K less than fair market value. The payments that they are currently making ADDS more than $600 a month onto the back end of the loan. So even if they do put the money they get from the contractor back into the home where on earth are they going to get a loan for 50K overvalue (unless there is 70K in a closet somewhere). My advice to her was to not fight the appeal and to just file BK let the trustee spend his money chasing the contractors, she is out of money. Even if she could afford to continue to fight it she would never get a loan for the home.

So I just want to make sure that I ask this clearly (I know that she should see a lawyer, but this is just an info collection mission) but if she files the money from the lawsuit becomes property of the state, if they want their money they will collect from the contractors and give her the value of the homestead exemption for our state (30K) to her? Keep the other 50K to pay creditors and she can just walk away from this hell hole. Is this right?

[keepmine]

Before she receives anything for the exemption, whomever holds the mortgage must be paid.
Honestly, I doubt she'll see anything.