An “adversary proceeding” is a civil lawsuit that is filed in relation to a bankruptcy case. A debtor, creditor, or bankruptcy trustee can file an adversarial proceeding to address certain legal issues that can’t be directly resolved by the bankruptcy court. These proceedings have their own case numbers and are treated like any other civil lawsuit.
A debtor can file an adversary proceeding to:
- Ask the court to admonish a creditor who is violating the automatic stay
- Have junior mortgage removed from their home (lien stripping)
A creditor can file an adversary proceeding to:
- Declare specific debts non-dischargeable due to fraudulence
- Deny the discharge of debts in a bankruptcy case
A bankruptcy trustee can file an adversary proceeding to:
- Request that the judge deny the discharge of debts
- Recover preferential payments made to a debtor prior to the bankruptcy filing
- Recover fraudulent transfers of property or money
- Ask the court to sever a debtor’s interests in jointly-owned property
As you can see, creditors and bankruptcy trustees file adversary proceedings if they discover evidence of fraud, hidden assets, or illegal bankruptcy violations. Unfortunately, it’s not unusual for a debtor to accidentally violate the U.S. Bankruptcy Code out of ignorance or confusion. To avoid an adversary proceeding, it’s best to retain the services of an experienced bankruptcy attorney. These civil lawsuits often go to trial, so it’s best to avoid putting yourself in a disadvantageous position.
Filing an Adversary Proceeding
The first step in initiating an adversary proceeding is to file a formal complaint with the bankruptcy court. This complaint needs to outline the issue and provide a proposed remedy to the situation. For example, creditor harassment is considered a violation of the automatic stay. You can file a complaint that incorporates a comprehensive list of how often this creditor has attempted to contact, manipulate, and otherwise pressure you into giving them money. Once the formal complaint has been filed, a court-issued summons will be served to the defendant. If the defendant fails to file a response, you may be awarded a default judgment.
Seek Qualified Legal Guidance Today
Contact Bach Law Offices if you have questions or concerns about the bankruptcy process. Our Northbrook bankruptcy lawyers can evaluate your financial situation, address your legal concerns, and guide you through each step of this legal journey. With our help, you can secure a second chance a financial stability.
Explore your legal options today. Call Bach Law Offices at (847) 448-0025 to schedule a free, no-obligation consultation.