Bankruptcy is not necessarily the best option for resolving debt issues. In fact, we usually take the position the Bankruptcy should be the option of last resort. Accordingly, unlike many bankruptcy law firms, we also offer alternatives to bankruptcy. When we evaluate your case, we explain all options available to resolve your financial issues, both bankruptcy and non-bankruptcy. The following are some of the options that we offer as alternatives to Bankruptcy.
1. Debt Collection and Lawsuit Defense
- Often times, clients come to us having been sued or having been sent a demand letter in a collection attempt. Other than this lawsuit or demand, they have no need to file a bankruptcy and they have a defense to the collection attempt. Unlike the bankruptcy mill law firms, we offer to defend these collections through letter writing asserting the defenses and by filing defenses to the lawsuits. As an example, clients have suits threatened or filed based upon a deficiency arising after a repossessed vehicle is sold. Under most state laws, the creditor is required to send proper notice to the Debtor prior to selling the asset giving the date, time and place of proposed sale. This gives the Debtor the opportunity to redeem the asset prior to sale. If the Creditor fails to give this notice, the Debtor can raise this failure to give notice as a defense against the claim.
2. Payment Negotiations/Work outs
- Another alternative to filing for Bankruptcy is negotiating with the creditors for a settlement for less than the amount owed. Whether a creditor will enter into such an agreement depends upon the creditors chances of winning a lawsuit, the chances of collecting the debt if a judgment is obtained, and the amount that is being offered to settle.
- It is possible in some circumstances, especially in some business relationships, to propose a budget that leaves a certain amount to pay to unsecured creditors that will be paid out to all unsecured creditors in proportion to the amount of debt owed to that creditor. This is called a work out.
3. Asset Protection
- If bankruptcy is not a viable option and the Debtor holds substantial assets that would otherwise be at risk if a judgment is obtained, the Debtor may wish to arrange its assets in a manner that makes collection against that asset and encumbrance against the use of the assets difficult for the creditor. We offer services along these lines, but we must caution you that the Debtor must be very careful in preparing and executing such a plan so as not to make fraudulent conveyances. We discourage any transfers of assets by Debtors without first developing a plan and considering the risks and benefits. The last thing a Debtor would want to do is make a transfer and then decide it would be best to file a bankruptcy. Transfers of assets prior to a Bankruptcy are often disastrous.