File, Fight, or Flight?
It’s not uncommon for potential clients to come to our office with a civil summons in their hands. They have been served with a lawsuit. Most of the time these lawsuits are in the form of a creditor that has sued for money owed on the theory of breach of contract or unfair and deceptive trade practices or something similar. For many people the thought of what to do next can be overwhelming. Some folks think they have been wrongly sued, some know they owe the plaintiff an amount of money but they dispute the amount alleged in the complaint, and still some others simply don’t know what to think or do. There are a few options. File: Sometimes the alleged debt in the lawsuit is so overwhelming and undisputed that filing a bankruptcy case immediately presents the best option. Or, perhaps the plaintiff in the suit is one of many creditors so that it makes most sense to file a bankruptcy case and seek a discharge of the indebtedness, not just of the creditor suing you, but of all your debt. The bankruptcy filing places a stay over the proceedings in the lawsuit and that stay is a great relief to many of our clients. A lawsuit hanging over someone’s head can be extremely unpleasant, and bankruptcy can be a legitimate and effective way of dealing with the debt. Fight: Sometimes the lawsuit is worth fighting in state court before considering filing for bankruptcy. This may be true if the allegations in the lawsuit lack merit, if the lawsuit represents the only debt a person is dealing with, or if a person is not a good candidate to file bankruptcy for other reasons. We have had success fighting off lawsuits through litigation. The process of answering the complaint, performing discovery, and proceeding to a trial can be lengthy; but it can pay off when the plaintiff backs down from the claims or loses outright. Flight: Typically, and as it is with many things in life, the worst course of action in this scenario is doing nothing. After being served with the civil summons the clock starts ticking. If the defendant does nothing, the plaintiff will eventually ask the court for an entry of default and a default judgment. Once the default judgment is entered, the plaintiff-creditor can start thinking about how to collect its court awarded money under state law procedures. It is difficult to have a default judgment set aside–not impossible–but difficult. All is not lost after a default judgment; there are exemptions to claim and defensive actions that can be taken. All in all, flight or doing nothing, is usually not the best option, although there are even ways of dealing with default judgments through bankruptcy. So, perhaps you, the reader, have happened upon this post because you are in front of your computer and to your right sits your coffee cup and to your left sits a civil summons and complaint in which you have been sued. You’re wondering if you should file bankruptcy? Fight it out in litigation? Run away and ignore it? — File? Fight? or Flight? We can help you understand your options and help you move forward.
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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.
