Do this if you don't want to give up your playing time
Load up the game and as you are playing with your main character, do a soft reset (or A, B, X, Y, and Start at the same time) Now start a new game with a new name and race. Your guy will have as much EXP as the last guy, except you will have to kill one Armada ship for each level you had. The only downside is you will lose all your credits, and lose your ultra techs.
Press Start on controller two immediately after your last ship explodes to continue game play. Then, have player two quit the game and player one will be able to continue.
Do this at the title screen:-
Hold Start On controller C.
Press A, B, A, B, UP on controller D.