Lent money to someone - Help minimize the consequences
***First of all, I want to say I am not proud of what I will describe below and that I learned my lesson, I'll never do this kind of thing again. But I would like this thread to stay without judgment and focused on how I can minimize the consequences of my mistake***
***I acknowledge this is not a law forum either, but every opinion or experience can help.***
So, long story short, about 6 months ago, I lent money to someone in exchange for interests. We have a contract together with all the amounts stated, all the clauses and the contract was actually reviewed by an attorney prior to signing it.
Now, what happens is the person is not reimbursing. The person actually began to reimburse small amounts, but now the person is not anymore. Up to this point, she reimbursed 15% of what she should have. She comes up with every excuse possible to not pay and I now know she is lying to me. I've already threatened her to send a formal notice prior to a small claims lawsuit. The person then threatened me with bankruptcy, which would mean I would loose everything.
I have 2 options possible :
1. Send the formal notice hoping she was bluffing and that it will encourage her to reimburse. The other side of the coin: I take the risk of bankruptcy and/or lawsuit which equals time, money and stress.
2. Continue to wait and be accommodating hoping she'll start to reimburse again. The other side of the coin: this situation creates stress in my life.
For now, I tend towards option 2. And I am not asking for opinion on what I should here. For now, I can live with the situation and I am OK with option 2. This might eventually change though.
What I want to make sure is I don't get scammed on a technicality.
For an outside point of view, is there another option the person could consider that I am not seeing? For example, is there a maximum time the contract has a value that she could hope it goes there and I loose every legal leverage? What could someone with bad intentions do in this situation hoping to take advantage of the situation as much as possible?
EDIT: I have a collateral representing around 20% of her debt.