Legal Question in Bankruptcy in North Carolina

When you say "taking you to court" I assume that you have been served with a Summons and Complaint which recites that you must "answer" within 30 days. This is standard procedure for a creditor to exhaust its remedies to collect. If you do not serve a responsive pleading, that is send an Answer or some motion (such as To Dismiss, To Quash Service, etc.) then the court will enter judgment for the requested and proven amount. The judgment order constitutes a lien on real property in that county. It can be extended to other counties and can be transferred to other states as well. The creditor can then serve a Notice of Exemptions which allows you to exempt your personal and real property from the Sheriff and his collection authority which follows the judgment. The judgment is valid for 10 years unless renewed.

Thus, from an immediate standpoint. You could defend by stating your defense in a document that shows the heading or style of the case which shows the parties, court and case number. The court will schedule a hearing for any defense. You have a right to contest all of the collection techniques and abuses if any as well as to require that they prove the amounts as correct. If they are legit and honest, they should eventually end up with a judgment if they spend the time and money to jump through the legal hoops and legal obstructions you impose.

Options:

1. Negotiate a deal. Agree to make some kind of payment, which could begin in the future. The creditor will likely want judgment and terms of settlement incorporated in the document. Do not agree to a reference to "contempt" in any settlement agreement.

2. Do nothing, allow the judgment to be recorded. A future bankruptcy will render the judgment void. You will be able to avoid the lien on property in the bankruptcy also, but it requires a motion in bankruptcy. Prior to taking this option, look at the exemptions to be sure you can exempt all of your equity in your property. (You can find them in North Carolina General Statutes 1-C-1601)

3. Look at possible defenses and serve your answer or motion on the Clerk of Courts and the lawyer who filed the complaint.

4. Remember that a judgment will go on your credit record.

5. If this is a collection agency or assignee, check to see if the suit is prosecuted in the real party's name. That is that the owner of the debt is the Plaintiff and that they are licensed to collect in NC.

6. If they are an assigned or bought the debt. They will take a cash settlement, often at a small fraction of the principal amount, say 40%.

7. All of these elements of this reply, has a lot more detail associated and may or may not be applicable to your situation. You should consult a lawyer, even if it costs $50 or $100. Many lawyers, in the bankruptcy context, will consult without fee.