What is an Adversary Proceeding in Bankruptcy?
An adversary proceeding is related to your bankruptcy but is a lawsuit filed separately in relation to your bankruptcy...
An adversary proceeding is related to your bankruptcy but is a lawsuit filed separately in relation to your bankruptcy. It usually starts with a written complaint which is filed against the debtor saying the debt is dischargeable. It can be filed by a creditor, a Chapter 7 bankruptcy trustee, or a US trustee. The party that files the lawsuit suspects fraud in most cases. For example, a creditor might suspect false information was provided by the debtor when filling out financials for his bankruptcy case.
Once the lawsuit is filed, both the debtor and the party that files the adversary proceeding will exchange evidence and a judge will schedule a trial. You may settle the proceeding before going to trial But, if you go to trial, each party will present their case, providing evidence. The judge will either rule in favor of the debtor and the debt will be discharged, or he will rule in favor of the party that filed the lawsuit and the debtor will be required to pay his debt.
Each adversary proceeding is unique to the lawsuit filed and could be a difficult part of your bankruptcy case. For this reason, you should always consult with your bankruptcy attorney for more information.