Facing a debt lawsuit? Bankruptcy may help
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When you choose Wilmington bankruptcy to address your financial problems, you'll see many benefits. The most obvious is debt relief, but another important benefit is the stay on debt collections and end to many types of lawsuits. There’s an injunction that comes into force, on most legal actions by creditors, as soon as your North Carolina bankruptcy lawyer files your case.
For instance, if a credit card company filed a lawsuit against you, it would end because of your bankruptcy case unless the creditor can convince the judge to lift the stay and allow the suit to proceed. This outcome would be rare. However, the stay doesn’t stop all lawsuits. The following are five types of lawsuits that the automatic bankruptcy stay will not usually affect.
1 - Domestic Actions
Bankruptcy and the automatic stay will not stop a lawsuit in family law court. If you’re facing a suit related to divorce, child custody, alimony, and child support, you typically won’t see any relief from the bankruptcy court.
While the family court’s order for child support could affect your assets and in turn, the bankruptcy case, any debts that you owe for child support cannot be discharged or diminished in North Carolina bankruptcy.
However, if you’re behind on alimony or child support, a Chapter 13 bankruptcy case might help you catch up by wrapping up those debts into your repayment plan. Chapter 7 bankruptcy may help by lessening other debts so that you can better afford your family court-ordered payments.
2 - Code Enforcement and Nuisance Actions
Another type of lawsuit not ordinarily stopped by the stay are lawsuits against you by the county. If New Hanover County filed a suit against you for violating building or construction codes or a nuisance like an abandoned house, you wouldn’t be able to stop it by filing bankruptcy.
The bankruptcy court almost always allows actions related to the state or local government’s duty to safeguard the health and welfare of citizens. If the case results in fines against you, these will usually stand and will not be discharged in bankruptcy, but Chapter 13 might help you repay them over time.
3 - Evictions
North Carolina eviction lawsuits and bankruptcy are a very complex area of law. If you file for bankruptcy before the landlord obtains a writ of possession to evict you, the action may be stopped. If there is a stay, the landlord can request the court to lift it so they can proceed.
If the writ of possession was granted before you filed your bankruptcy petition, the automatic stay will usually not apply. If you’re facing foreclosure on a home you own, rather than eviction from leased property, the bankruptcy stay should apply as long as you file before the foreclosure auction.
4 - Criminal Actions
If you’re facing a criminal suit for a law you broke, don’t look to the bankruptcy court to stop this. However, if you’re being pursued over an unpaid highway toll, the government may be treated like any other creditor and the stay may help. If you've been ordered to pay criminal restitution, bankruptcy generally won't help.
5 - Beneficial lawsuits
There are some lawsuits that you will want to pursue during and after your bankruptcy case. For instance, if you filed a lawsuit for personal injury, the compensation you may be awarded in the case could be considered an asset in your bankruptcy case. Any lawsuit that benefits you might also benefit your creditors and should be allowed to continue despite your bankruptcy case.
If you’re deep in debt and unsure how to get back on solid financial footing, bankruptcy might be the best solution for you. Bankruptcy stops debt collectors and creditor lawsuits in their tracks and restores your peace of mind while offering a fresh financial start.
To find out more about the benefits of North Carolina bankruptcy, contact the Law Offices of John T. Orcutt. Read client reviews then call +1-919-646-2654 to schedule a free Wilmington bankruptcy consultation at one of our locations in Raleigh, Durham, Fayetteville, Wilson, Greensboro, Garner or Wilmington.