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Getting the facts on adversary proceedings

Many Tennessee residents who file for bankruptcy hope that their case proceeds without any problems or detours. However, complications can result in the bankruptcy process. Perhaps a creditor does not approve of the court discharging a debt in your Chapter 7 case, or you may have an issue with a creditor. In such scenarios, an adversary proceeding may be filed.

According to FindLaw, an adversary proceeding is a form of litigation that takes place apart from the bankruptcy process, but is still heard in a bankruptcy court by a bankruptcy judge. Adversary proceedings occur when one of the parties involved has an objection to a portion of the bankruptcy. Adversary proceedings can be filed by debtors, bankruptcy trustees, or creditors.

To take an example of an adversary proceeding, you as a debtor may want a debt discharged, but your creditor objects, believing there is no good reason you cannot pay the debt. The creditor would then file for an adversary proceeding to prevent a discharge. Creditors may also assert that you have abused the bankruptcy process, have misrepresented a creditor claim, or failed to reveal some of your assets.

Fortunately, adversary proceedings can also work for you as a debtor. According to the U.S. Courts website, if you feel a creditor has violated an automatic stay, filing for relief in an adversary proceeding is an option. You can also file if you have problems securing a discharge of one or all of your debts. Additionally, you may want to get money back that you paid a creditor just before your bankruptcy filing. This kind of payment is known as a preference payment or an avoidable preference and can be retrieved with an adversary proceeding.

Since adversary proceedings can be complicated, it is important to consult with a professional bankruptcy attorney on the matter. A failure to observe all the necessary rules of the court and the law, including the U.S. Bankruptcy Code, can result in your motion being dismissed. You might lose out on having one or more of your debts dismissed or even face sanctions. Conversely, a successful adversary proceeding can win you important debt relief.

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