Dear Bankruptcy Adviser,
Our house is being foreclosed on. We have filed for Chapter 7 bankruptcy while we try to have the home loan modified. My wife only has $5,000 of debt in her name, not including the house, and I’m thinking that if we get a mortgage modification, it doesn’t make sense for her to file. We just filed last week. Can we have her taken off the filing before we go to the hearing next month?
— Mike

Dear Mike,
I don’t want to make this sound sarcastic, but there are usually no “do-overs” when you submit a bankruptcy petition. Once the case has been filed, all creditors receive notification. Soon after, the credit bureaus also will be notified that you have sought bankruptcy protection.

A colleague of mine once had a client that hired him to file his bankruptcy petition. He completed the entire petition, filed it with the court and was awaiting the administrative hearing. A few days before, the client decided that he wanted to pay back all his creditors and did not want to proceed with the bankruptcy.

The attorney informed him that he was really close to receiving a fresh start and tried to convince him that any money he had to pay back creditors could be used to re-establish credit and build a positive life after bankruptcy. It was all for naught as the client decided he did not want to proceed.

The attorney had to make sure that the client understood that the bankruptcy filing would stay on his credit report for the next 10 years. There was no way to legally remove the filing of the case from his report.

Furthermore, the client had to understand that while he could pay back his debt and pay all creditors in full, all potential negative credit reporting would have to be resolved. He would have to pay back his creditors, have the creditors remove any notations that the accounts were included in a bankruptcy and confirm that once the creditors were paid, the account showed “paid in as agreed.” This endeavor could be impossible because some creditors would still show that the account was included in a bankruptcy filing.

These are all significant hurdles to overcome when someone has “filing remorse.” No matter what you attempt to do at this point, the filing will still stain your credit report. While some creditors might see you in a more favorable light because your wife removed herself from the case and paid back her creditors, most will not be so sophisticated. She will have the bankruptcy mark on her report for the next 10 years, regardless of whether her creditors are made whole.

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