Criminal Prosecutions for NSF Checks and Bankruptcy
Generally speaking, a bankruptcy filing will not stay a criminal prosecution. However, there is case law in the Eastern District of North Carolina that provides as follows:
Bankruptcy proceedings have built-in protections for creditors who are owed monies. Therefore, creditors must work within the confines of the bankruptcy system if they believe they have been wronged by the debtor.
Once a debtor files a petition for bankruptcy, a disgruntled creditor may not then approach a governmental prosecutorial entity in order to prompt a criminal action to recover debt. If the creditor already has complained to authorities by the time a petition is filed, those authorities may commence or continue a criminal prosecution … as they see fit. But if the debtor files for bankruptcy before a creditor complains to prosecuting authorities, that complaint … may constitute a violation of the automatic stay or discharge injunction.
The most common fact pattern where this is applicable is with NSF checks. To the extent that a debtor in the Eastern District of North Carolina owes on an NSF check and it has not been reported to a prosecutorial entity at the time of the bankruptcy filing it is likely prudent to provide notice of the bankruptcy filing as quickly as possible to the creditor.
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For more than 20 years, the Sasser Law Firm has been helping individuals and business owners sort through financial hardships to see the light at the end of the tunnel. Our North Carolina bankruptcy attorneys are all board-certified specialists, which means we have passed a complex exam, undergone a thorough peer review, and continue to earn legal education credits in this ever-evolving area of law.