Understanding the Adversary Proceeding

During your bankruptcy process, there may be times when you, your bankruptcy trustee, a certain creditor, or other parties intimately involved in your filing may need to file a formal complaint with the bankruptcy court called an adversary proceeding (sometimes referred to as an adversary hearing). 

The adversary proceeding is separate and distinct from the bankruptcy filing, but generally, a bankruptcy is not fully resolved until all adversary motions are settled. 

How to File an Adversary Motion

An adversary proceeding begins like any other lawsuit, with a formal motion filed with the court and served to the defendant.

The motion should contain all relevant facts and will ask the court to enter a judgment.

The defendant has a limited time to answer the suit, and if he or she does not in the allotted time, the court will enter a default judgment in favor of the suitor. 

Common Reasons for Filing an Adversary Motion

Although uncommon, debtors occasionally have reason to file for an adversary proceeding during the course of their bankruptcy.

One reason a debtor might ask for one is to get rid of student loan debt, but this is only granted in rare occasions (student loans are generally not dischargeable). Another reason individual debtors file for an adversary proceeding is to strip liens from piece of real property so it can be considered an unsecured debt.

This is only for Chapter 13 Bankruptcy filers, though, and requires certain conditions to be met. 

Still, it is more common for debtors to be defendants in adversary proceedings due to the following situations: 

  • Creditors might use an adversary proceeding to object to a debt being discharged because the debtor incurred a large amount of debt to one specific creditor shortly before filing and the debtor had no intentions of resolving the debt outside of bankruptcy. 
  • The trustee could file for an adversary hearing because he or she believes the filer lied on the filing forms by hiding assets or some other form of fraud
  • Filers could be filed suit against if they abuse the automatic stay, which is intended to provide immediate relief from most collection efforts when a bankruptcy is initiated. 

Final Thoughts

An adversary proceeding that has been filed against you while navigating Chapter 7 or Chapter 13 bankruptcy is an extra obstacle to your receiving a clean financial slate.

This obstacle requires the services of an experienced bankruptcy attorney who will get to know you and your situation well and fight for you in court.

Please get in touch with our firm today for a no-obligation consultation into your situation.