You likely have more options than you even know!
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Secured vs. Unsecured Debt
Secured Debt is more difficult to deal with because a secured creditor has the right and power to repossess the asset (state dependent). For example, a bank will foreclose on a home and a car title lender will repossess the vehicle. Moreover, a secured creditor could take an additional step and sue a debtor for breach of contract to collect the unpaid balance of the promissory note. Secured creditors are typically less likely to negotiate a workout on the secured debt.
Unlike a Secured Debt, an Unsecured Debt is more willing to negotiate a workout. An unsecured creditor may only sue on the underlying promissory note in hopes of collecting any monies. If a debtor were to threaten to file or file for bankruptcy, the unsecured debt(s) would be erased/discharged; however, a debtor must keep in mind that a bankruptcy imposes a limitation on unsecured debts and a fraud claim may be raised to make the unsecured non-dischargeable. Therefore, an unsecured creditor is more open to negotiating and resolving an unsecured debt in fear of the unsecured debtor filing for bankruptcy.
If you are unsure whether your debts are secured or unsecured, our firm will perform a complimentary audit of your outstanding debt(s) to help you make a determination.
If you are unsure what is medical debt entail, click on this link.
Types of Medical Debt
- Visits to the emergency room or urgent care
- Visits to the doctor or hospital for annual check-ups
- Assisted Living / Hospice / Nursing Home
- Medical credit cards
- Car accident
Because most Americans do not have healthcare insurance or purchase low-tier healthcare insurance, he/she ends up with a substantial bill after a medical visit. If you feel that a medical debt is unjust due to the amount being charged, please call our office for a free consultation.
Credit Card Debt
Ex: a family friend of Mr. Phan was charged with $500,000 in bodily injury damages that he personally had to pay because his car insurance policy was only $50,000 for bodily injury coverage.
Most Americans do not know that his/her driver’s license may be suspended for non-payment of damages arising from a car accident. Therefore, if you have an unsecured debt which arose from a car accident, contact our office for a free consultation.
Please contact our office if you would like assistance with your personal loan debt.
Ex: if a business is purchased equipment for the business, the lender will require the equipment be pledged as collateral and file a UCC-1/UCC-3 against the equipment, so the lender may lawfully retrieve the equipment if the business fails to repay the loan.
If no collateral was pledged or security instrument was filed, then the business loan is unsecured. An unsecured business loan is treated like any unsecured debt, so a workout can be negotiated or be discharged through bankruptcy.
Please contact our office if you would like assistance with your business loan debt.
If you are going to be in default or already in default with your equipment lease, contact our office today for a free consultation.
If you have a judgement or about to receive a judgment against you, please immediately contact our office for a free consultation.
Bankruptcy is a reset button for many individuals and businesses. Many individuals and businesses encounter financial difficulties, economic recession, or unforeseen circumstances, which leads an individual or business to seek bankruptcy to stop the bleeding.
Ex: an individual has $35,000 in credit card debts and can no longer make minimum payments because he just got laid off.
Ex: a restaurant owner can no longer afford rent and keep her business open because the Coronavirus quarantine has essentially stopped sales.
Bankruptcy is not an option to take lightly; however, if you are considering bankruptcy for relief, please contact our office for a free consultation.
Chapter 7 Bankruptcy
Chapter 13 Bankruptcy
Chapter 11 Bankruptcy
(i) do not want to liquidate his/her/its assets, or (ii) secured debts and/or unsecured debts exceed Chapter 13 limits. Furthermore, unlike a Chapter 13 where a trustee is appointed to manage the finances of the bankruptcy, a petitioner in Chapter 11 becomes a “debtor-in-possession” and manages the finances of the bankruptcy. The major advantage to a Chapter 11 is for an individual or business to (i) reduce the interest rate, (ii) reduce the principal balance of a loan to the market value of the asset, and (iii) extend the payment length of promissory notes.
Non-Dischargeable Debts in Bankruptcy
If you are worried about a potential non-dischargeability claim, you may contact our office for a free consultation.
Misrepresentation vs. Fraud
Ex: a car salesperson tells a customer that the car qualifies for extended warranty and the customer could purchase it within 30-days from the purchase date. However, when the customer comes back to purchase the extended warranty, the dealership denies an extended warranty. This is a misrepresentation made by the car salesperson.
Ex: a realtor informs a customer that the customer’s children will qualify to attend a specific school if he purchases this home and knows the home is not within the school district. When customer tries to enroll his children in the school, he is rejected because the home is not within the school’s district. This is fraud because the realtor knew that the home was not within the school district and still made the representation to customer.
A judgment or damages arising from misrepresentation or fraud is non-dischargeable.
Debt Settlement vs. Debt Consolidation
Ex: a debtor has a balance of $2,000 on their credit card and negotiates to pay $1,400 as full and final settlement for the $2,000 credit card debt as payment in full.
Debt Consolidation is a process where a debtor combines all of his/her/its debts into a single amount and makes monthly payment that is allocated and distributed to each creditor until paid off.
Ex: a debtor owes $4,000 to credit card A, $1,000 to credit card B, and $3,000 to credit card C. The debtor’s minimum monthly payment is $800 each month for all three credit cards. Debtor does a consolidation where he agrees to pay $8,000 in credit cards debt at $500 monthly at a lower fixed interest rate.