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The sheriff just served me with a “Summons and Complaint,” what do I do now?

The goal of the plaintiff / creditor that filed the lawsuit is to obtain a judgment against you, and in turn seek collection of that judgment through the post-judgment collection process.   A judgment is basically a finding by a court of law that you are legally obligated to repay the debt which will accrue interest at the legal rate (currently 8% for North Carolina judgments). 

You may already know you owe the creditor money, however, the judgment has some negative consequences you may be unaware of.  First, once a debt is reduced to a judgment it becomes a lien on any real estate you own in the county where the judgment is obtained (or where it is subsequently transcribed – which is done if you own real estate in a different county or state).  Second, the creditor can seek to have the sheriff  “execute,” or seize any non-exempt personal property you may own, including vehicles and bank accounts.  Third, once entered the judgment remains valid for 10 years, and can be renewed for an additional 10 year period – for a total of 20 years.  Finally, the judgment will be noted on your credit report.  With a judgment against you it will not be possible to purchase a home or sell an existing home (if the judgment lien has attached to the home) until the judgment is satisfied.  Thus importance of preventing a judgment from being entered against is hard to overstate. 

North Carolina law gives you 30 days to “answer” or defend against the complaint, so you must act quickly to prevent a judgment from being entered.   You should take note of the date the lawsuit was served upon you so that you do not miss the 30 day deadline.   If additional time is needed you may seek an extension of time to answer or respond to the complaint.  You “answer” the complaint by responding to each of the paragraphs contained in the complaint and presenting any valid defense you may have.  You or your attorney mail a copy of the answer to the plaintiff or the plaintiff’s attorney and timely file the original answer with the clerk of the court in which the lawsuit is pending.  After the answer is filed, unless something else takes place, the lawsuit will proceed to trial.  However, the creditor often seeks to avoid the expense of litigation by filing various motions, including filing a motion for summary judgement or for judgment on the pleadings.  The purpose of these motions will be to have the court enter a judgment without the necessity of a trial.

If the lawsuit is your only financial trouble, you should consider hiring an attorney to assist you.  This especially true if you have a defense to owing the money.  Defending a lawsuit, however, often costs significantly more than filing a bankruptcy as a means of stopping the lawsuit and discharging the underlying debt.

As a practical matter many people know they owe the creditor money and do not defend against the lawsuit and allow the judgment to be entered against them by default.  This could be a mistake. 

Often filing bankruptcy would be a better solution.  This is especially true if you do not have the money to pay the amount sought in the lawsuit or if you have other debts that could be discharged though bankruptcy.  The filing of bankruptcy will stop the lawsuit through operation of the automatic stay, and prevent it from becoming a judgment.   It is best and often cheaper to file bankruptcy before the judgment is entered; however, even if a judgment has already been entered against you, bankruptcy can allow you to avoid any judicial lien against your real estate, and stop the seizure of your property by the sheriff. 

Please feel free to contact us for a free consultation to determine if bankruptcy is your best option.  Even if you do not believe you want to file bankruptcy, the consultation is free, so you have nothing to loose.  Call today (919) 875-8773, or click here to request a free consultation.

See Related Articles: The sheriff just served me with a “Notice of Right to Have Exemptions Designated,” what do I do now?  North Carolina Exemptions

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