We are taking the threat of COVID-19 very seriously. Learn More
If you are looking for information regarding bankruptcy specific to these uncertain times, visit this page .
Skip to content
   

Eastern District of North Carolina Bankruptcy Court Opinion on Criminal Prosecution

Published June 26, 2014 by Sasser Law Firm

A recent opinion issued on June 6, 2014 from the Bankruptcy Court for the Eastern District of North Carolina found that a creditor had not violated the bankruptcy code based on the following facts:

  1. In March 2008 a creditor realized he would not be repaid $50,000.00 on a loan and began to investigate the matter.
  2. On August 9, 2011 the creditor’s attorney sent a letter to the District Attorney requesting a meeting to review evidence of a criminal case against the principal of the borrower.
  3. On October 24, 2011 the principal of the borrower filed for bankruptcy.

The Bankruptcy Court’s opinion observed that enjoining a criminal prosecution is not necessary to carry out the provisions of the Bankruptcy Code especially in light of the plan and clear language of section 362(b)(1) of the Bankruptcy Code which declares that the commencement or continuation of a criminal action or proceeding is not stayed and that in this case the creditor’s principal motivation was not to obtain payment of a debt but rather as part of a public duty to pro-event further frauds being perpetrated on the public, and to see that justice was done, full well knowing that recovery of any amount from the debtor was most likely impossible.

Unlike the scenario referenced in the May 29, 2014 blog post, the debtor’s timing was off because the matter had already been referred prior to the bankruptcy filing and the creditor’s motivation for the referral was proper. Although a properly timed and noticed bankruptcy filing may prove useful to prevent certain prosecutions (i.e. NSF checks and failure to pay a casino marker) in general, a bankruptcy filing is not a useful way to deal with criminal law problems.

Associations & Awards

  • 2019 Business North Carolina Legal Elite Badge
  • North Carolina Bar Association | Sasser Law Firm
  • super lawyers logo
  • Attorney at Law Magazine, Local Authority Award
  • Martindale-Hubbell award for high professional achievement at Sasser Law Firm
  • NC Bar Association Legal Specialization | Sasser Law Firm
  • client champion logo
  • Top Bankruptcy Attorney | Sasser Law Firm
  • American Bankruptcy Institute | Sasser Law Firm
  • National Association of Consumer Bankruptcy Attorneys | Sasser Law Firm
  • American Board of Certification | Sasser Law Firm
Free Consultation (919) 319-7400

Visit our cary office today

Cary, NC Office