First, let’s discuss what a judgment is. It is important to understand the lawsuit process in order to understand a judgment. When a creditor wants to pursue legal action against you for a debt, they will file a lawsuit against you by filing a “Complaint” or “Civil Summons” against you. In North Carolina, you generally have 30 calendar days to respond the lawsuit, either by filing an “Answer” with the civil court where the lawsuit was filed or by filing a bankruptcy.
If you do not file an Answer or a bankruptcy within the 30 calendar days, the creditor will go to the court and automatically obtain a judgment against you. This means that the creditor has won the lawsuit and has the authority to send the sheriff out to execute the judgment. This means that the sheriff can take any assets or property that you have that has any value to it – anything that the creditor can sell to try to pay off what you owe them.
The thought of being sued and having a judgment filed against you is scary, but the good news is that by filing bankruptcy, you can take care of the lawsuit, the judgment, and the debt owed. The bankruptcy automatic stay will stop the judgment creditor from trying to collect a debt from you. In a Chapter 7 bankruptcy, the debt is eliminated completely. In Chapter 13 bankruptcy cases, you are paying a portion of that debt back through the bankruptcy.
If you own a home, there is a good chance that the judgment has attached a lien to the home. This means that if you ever want to sell your house, you will have to pay off the judgment amount in full before you can sell the house. If you have a judgment lien against your house and you file bankruptcy, a separate motion will need to be filed with the Bankruptcy Court to remove the attachment of the lien to your home.
As you can see, the lawsuit and judgment process is complicated, but the good news is that bankruptcy can help you get out from under the debt. Contact us today to see how we can help you wipe out a judgment through bankruptcy or possibly remove a judicial lien from your property.