Receiving a mailing or phone call from a creditor can take most people by surprise. There is not a “one-size-fits-all” approach to resolving debt and it is very important to thoroughly investigate the assets, liabilities, and financial circumstances of a potential client before advising on a course of action. However, there are some common factors to consider when making the choice between bankruptcy and debt defense.
The goal of debt defense is to resolve a matter after a case is filed with the court. The attorney will appear on the client's behalf for hearings/conferences and work toward a favorable resolution. For a potential client with one or two cases, this may be a great choice to avoid bankruptcy and have the matter finalized. However, for a potential client on social security benefits, even a small case can be overwhelming. On the other hand, a sole proprietor with a thriving business may choose to defend a large claim and avoid bankruptcy.
Bankruptcy is often the next option when the outstanding debt cannot be addressed with debt defense. There may be many outstanding credit accounts, very high balances, or the individual simply does not have the financial means to address each case individually. Bankruptcy can erase unsecured debts (credit cards, personal loans, medical bills, etc.) and provide the potential client with a clean slate. Furthermore, bankruptcy can also address complicated secured debts (vehicle, mortgage, etc.), certain types of liens, and even certain claims brought by third parties, such as debt from a car accident.
Although both bankruptcy and debt defense are similar, there are some important differences between both courses of action. Having an attorney defend your lawsuit will not show up on your credit report, however a bankruptcy will stay on your credit report for a seven- or ten-year period (depending on the type of case filed). For many prospective clients, this may be an important factor to consider.
Another key difference is how bankruptcy can handle a wide range of debts. There are some differences on how debts are treated in Chapter 7 and Chapter 13 bankruptcy, but the important takeaway is that bankruptcy can often address your outstanding debt, in its entirety. Debt defense is often used on a case-by-case basis while bankruptcy takes your entire financial situation into account. Depending on the quantity of debt or the total amount of creditors you have, bankruptcy may be the better option to address everything at once. As mentioned earlier, a prospective client's financial situation is unique to them and requires a thorough consultation to determine what course of action is best.
The attorneys at Holland Law Group have handled many debt defense matters and bankruptcy cases. Our experience allows us to place our clients in the best position for financial relief. Although each case is different, and your circumstances are unique to you, we can help you navigate toward financial freedom and determine the best course of action for your situation. If you are considering bankruptcy or have a pending lawsuit from a creditor, do not hesitate to call the attorneys at Holland Law Group for a free consultation.