A Brief Overview of the Adversary Proceeding
A lawsuit filed within a bankruptcy is referred to as an adversary proceeding. The lawsuit could be filed by you, the bankruptcy trustee, or a creditor. An adversary proceeding is a part of your bankruptcy case, but it gets a separate case number. Some bankruptcies are completed without any adversary proceedings, but it’s useful to have a general understanding of the process in case it happens in your case!
Why do adversary proceedings occur?
Adversary proceedings can occur for a number of reasons. We’ve outlined a few below.
Fraudulent and preferential transfers: The bankruptcy trustee can file a complaint of a fraudulent transfer if they believe you transferred money or property to another person in the two years before filing your bankruptcy. They can file a complaint of preferential transfer if you repaid any of your creditors in the 90 days before filing for bankruptcy.
Objection to discharge: Anyone involved in the case can file a complaint to deny your discharge if you have failed to comply with court orders or if you have committed fraud.
Selling property you own jointly: If you own property jointly with someone else, the trustee may file an adversary complaint to force your co-owner into selling the property. This is because nonexempt property must be sold, and the money must go towards paying your creditors.
What happens if there is an adversary proceeding in my bankruptcy case?
For an adversary proceeding to begin, someone — you, the trustee, the creditor — must file a complaint with the bankruptcy court. Then, the court issues a summons. The plaintiff must serve the defendant with the summons and a copy of the complaint. The defendant is required to file an answer to the complaint.
How the adversary proceeding continues from there depends on the type of complaint. For instance, if you were accused of a fraudulent transfer the trustee may be able to regain the property you sold before the bankruptcy.
Who can help me with my bankruptcy and adversary proceedings?
If you are filing for bankruptcy, it is important to have an attorney by your side, whether or not you anticipate any adversary proceedings. An experienced bankruptcy attorney from Maxwell Dunn PLC can guide you through the process with integrity and professionalism. Call us at (248) 220-7671 to learn more about how we can help.See all videos