Adversary Proceedings

An adversary proceedings is equivalent to a lawsuit which is filed in the Bankruptcy forum. The filing of a petition under the bankruptcy code opens the forum to potential lawsuits. Althoughbankruptcy stops most lawsuits from proceeding against the Debtor, there are some lawsuit however that may survive a bankruptcy filing. Below are the most common type of lawsuits that can be filed either by the bankruptcy Trustee or any creditor.

Fraudulent transfers. The bankruptcy trustee or a creditor can file a fraudulent transfer adversary complaint if you transfer any money or property to another within four years before filing your bankruptcy, if the trustee can prove either actual fraud or constructive fraud.

Preferential transfers. The bankruptcy trustee can file a preferential transfer adversary complaint, also known as a preference adversary, if you repaid any of your creditors more than $600 within 90 days before you filed bankruptcy (or one year if you paid back a relative). The trustee must also prove that you were insolvent at the time of the transfer, that you did not receive anything in return and that the transfer gave the creditor more than it would have received in a Chapter 7.

Lien stripping. If you file a Chapter 13 bankruptcy and you have more than one mortgage on your house, you can file an adversary proceeding to strip the junior mortgages from your property and treat them as unsecured claims as long as your house is worth less than the balance due on the first mortgage.

Dischargeability of debt. A creditor can file an adversary complaint requesting that the court not discharge your debt because it alleges that you incurred the debt fraudulently, either by actual fraud or constructive fraud.

Objection to discharge. Your creditors, the trustee, or the Office of the United States Trustee can file an adversary complaint to deny your entire discharge by alleging that you have committed fraud or that you have failed to comply with court orders.

When facing an Adversary Proceeding it is important to speak with an attorney regarding your rights. Reganyan Law represents Debtor’s and Creditors in Adversary Proceedings. If you are dealing with a potential Adversary Proceeding you can call me for a free consultation and get an assessment of the merits of your case.