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Disclaimer: Most of the information on this page applies to North Carolina State Court. If you are sued in Federal Court, there are similar types of rules, i.e., deadlines, requirements to file an answer, etc. If you are sued in federal court, you should contact an attorney immediately.
How do I know if I have been sued?
If you live in North Carolina and you have received a Summons and Complaint, then you have been sued. The person who files a lawsuit is called a plaintiff. The person who has been sued is called a defendant. The defendant must defend against he allegations and charges in the lawsuit.
The lawsuit may come by regular or certified mail, or it may be delivered by the Sheriff, who will sign a certificate proving that you were served, or got a copy, of the lawsuit. If you try to avoid the service, that doesn't mean you can avoid the lawsuit. Plaintiffs may serve by other methods, some which you may not even be aware of, such as publication in a newspaper. If they can't find you or get service by mail or personal delivery, they can still serve you and get a judgment against you.
What is a complaint?
The complaint does what it sounds like it does; it complains to the court about what you have or haven't done. For example, you owe a debt and have not paid it. The summons "summons you", or calls for you, to file an answer. In our example, you can admit or deny that you owe the money to the creditor.
How do I defend myself?
You may be able to defend against the lawsuit. North Carolina and Federal statues and case law allows certain defenses. For example, if you can prove you already paid the debt, that they sued the wrong person, or one of numerous other affirmative defenses, you win the case. These defenses must also be put into your answer to the lawsuit.
Even if you have done some or all of what the Plaintiff alleges in the complaint, it may be that the Plaintiff can't prove you have done so or the Plaintiff may have violated laws which you can sue them for. It is advisable for you to talk to a lawyer about your defenses and your particular situation.
Are there any deadlines I should know about?
Usually, you must file a formal Answer, in the appropriate format, within a specific amount of time. Failure to file the Answer within the requisite time frame will result in the Plaintiff being declared the winner and obtaining a judgment against you, even if you have a defense. If you have been sued, you should discuss the lawsuit with an attorney. If you need a little time to make an appointment and speak to the attorney and don't want to worry about a looming deadline, you may be entitled to an extension of time to file an answer.
Some counties have a form you can use to request an extension of time to file the answer, called a "Motion for Extension of Time to File Answer". Normally the Court will permit a 30 day extension. You should take 3 copies of your Motion to the Clerk of Court, they will sign the Order, stamp all copies, keep the original and give you back two. You will need to send one of the two copies to the Plaintiff's attorney, or to the Plaintiff if they do not have an attorney.
If you file an answer but don't win the lawsuit, a Judgment will be entered against you. If you don't file an answer at all, a Judgment will be entered against you by default, and it will go against your property. . If you don't file an answer at all, a Judgment will be entered against you by default, and it will go against your property.
What is a Judgment?
Judgments are very serious, and may be held against you and enforced for up to ten (10) years in North Carolina and can be renewed for anther ten (10) years for a total of twenty (20) years. Judgments become liens on any real property (such as land, your house, condo, building, etc.) and may even allow the creditor to foreclose on the real property. Even if you don't own a house or land, creditors may be able to take any other property you have, including your money in banks, your cars or any other property you own.
Are any of my assets protected?
The process of enforcement of the judgment is called "Execution of Judgment". State law does protect some of your property from your creditors, including protection from judgments, with exemption laws, which allow you to clam some of your property as exempt, or protected from your creditors. Generally, the following property is exempt from execution of judgments, unless waived (note, there are exceptions for certain circumstances):
1.) Your aggregate interest in real property or personal property that you or your dependent uses as a residence, not to exceed $35,000 in value;
2.) Your aggregate interest in any property of any unused exemption amount which you are entitled under # 1, not to exceed $5,000 in value;
3.) Your interest in one motor vehicle, not to exceed $3,500 in value;
4.) Your aggregate interest in household furnishings, household goods, wearing apparel, appliances, books, animals, crops, or musical instruments, that are held primarily for you or your dependent's personal, family or household use, not to exceed $5,000 in value for you plus $1,000 for each of your dependents (not to exceed $4,000 total for dependents);
5.) Your aggregate interest in any implements, professional books, or tools of your trade or the trade of your dependent, up to $2,000 in value.
6.) Life insurance as provided in Article X, Section 5 of the Constitution of North Carolina;
7.) Professionally prescribed health aids for you and your dependent,
8.) Compensation for personal injury, including compensation from private disability policies or annuities or compensation for the death of a person upon whom you were dependent for support, but such compensation is not exempt from claims for funeral, legal, medical, dental, hospital, and health care charges related to the accident or injury giving rise to the compensation.
9.) Individual retirement plans as defined in the Internal Revenue Code and any plan treated in the same manner as an individual retirement plan under the Internal Revenue Code, including individual retirement accounts and Roth retirement accounts as described in section 408(a) and section 408A of the Internal Revenue Code, individual retirement annuities as described in section 408(b) of the Internal Revenue Code, and accounts established as part of a trust described in section 408(c) of the Internal Revenue Code;
10.) Funds in a college savings plan qualified under section 529 of the Internal Revenue Code, not to exceed a cumulative limit of $25,000, but excluding any funds placed in a college savings plan account within the preceding 12 months (except to the extent contributions were made in the ordinary course of your financial affairs and were consistent with your past pattern of contributions) and only to the extent that the funds are for your child and will actually be used for the child's college or university expenses;
11.) Retirement benefits under the retirement plans of other states and governmental units of other states, to the extent that these benefits are exempt under the laws of the state or governmental unit under which the benefit plan is established;
12.) Alimony, support, separate maintenance, and child support payments or funds that have been received or to which you are entitled, to the extent the payments or funds are reasonably necessary for you or your dependent's support.
Even if a judgment isn't showing up on your credit report, it may still be valid. Judgments will usually drop off a credit report in seven years, but they are valid for ten years and can be renewed for an additional ten years, for a total of twenty years.
If you try to sell a house with a judgment lien against it, you may have to pay the judgment off before you can sell. If you have a judgment against you, and you later want to buy a house, you may find that you have to pay off the judgment before a lender will loan you money to buy the house or land.
What do I do now?
It is a good idea to try to avoid having a judgment against you in the first place and seek legal advice from an attorney early on. Be aware that you may not be able to hire an attorney at the last minute who can prepare your answer before a judgment is entered against you so don't wait until you have an emergency to try to seek legal help.
Each situation is different so it is important that you speak to an experience litigation attorney to discuss your particular problem. Try to do this at least two weeks before your answer is due to ensure there are no problems meeting the deadline.
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