As an Asheville bankruptcy attorney, I speak with many potential clients soon after they get served by the sheriff with a collections lawsuit. The uncertainty surrounding a legal action is unwelcome and stressful. Although a collection lawsuit can be intimidating, many times clients can defeat the action by taking the appropriate action either in bankruptcy court or through the state court proceeding.
If you get served, you still have rights.
In North Carolina, you have 30 days to respond with an “Answer” after being served with a complaint in district or superior court. If the debt in question is owed, many clients achieve a better outcome by protecting their assets rather than contesting whether the debt exists. In that case, a person may choose not to answer the complaint, and never appear in court. The creditor would then be issued a “default judgment,” which is a court order indicating the money is owed.
The default judgment can help the creditor collect the money owed. However, wage garnishment on simple unsecured debts (mainly credit cards, medical debts, personal loans, repossessions, etc.) is not permissible in North Carolina. Seizing assets is also more difficult because consumers have a right to protect a significant amount of their property by claiming their exemptions. The creditor is required to serve you with a “Notice of Right To Claim Exemptions,” before trying to execute on any property to satisfy a default judgment.
Rights in Bankruptcy
Frequently, people become weary of avoiding creditors and having to protect their assets. Things change in life, and although you may be able to avoid collection now, you might not be able to avoid collection in the future. A bankruptcy discharge can relieve a person of the legal responsibility to pay the debt upon which they were sued, permanently.
The collection process is halted immediately with the filing of a bankruptcy case via the “automatic stay.” Most of the time, the creditor will file a voluntary dismissal when they get notice of a bankruptcy case.
Getting served with a collection lawsuit can be intimidating and annoying. It is an indication of bigger financial issues which could be addressed by the advice of a qualified bankruptcy attorney. For those of you in Western North Carolina, I would be happy to speak with you during a free initial bankruptcy consultation.
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