How to Prepare for an Adversary Proceeding

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In order to prepare for an adversary proceeding, an individual debtor must understand the nature of the adversary proceeding they face or intend to file. Furthermore, an individual debtor must also take the time to confirm his or her current bankruptcy lawyer, or locate another willing bankruptcy lawyer, will represent the debtor in an adversary proceeding. Not all bankruptcy lawyers are obligated or willing to handle adversary claims that arise during a bankruptcy filing, due to the relative complexity of the proceedings and the time required to prepare and represent a debtor in a single adversary proceeding.

Determine the Nature of the Adversary Proceeding

In most cases, an adversary proceeding is initiated against a debtor, by either a bankruptcy trustee or a creditor. In essence, creditors may use adversary proceedings to prevent discharge of debts by a debtor based on one or more grounds. Bankruptcy trustees, on the other hand, will file an adversary claim against a debtor in a number of cases, including when the trustee believes a debtor action was taken in bad faith, with intent to prevent liquidation of assets, or in any other case of fraud or misrepresentation. In essence, the trustee files adversary proceedings to force a debtor to comply with the terms of a bankruptcy proceeding upon the order of a judge.

Understand the Implications of an Adversary Proceeding

In adversary proceedings, any numbers of outcomes are possible and depend on the specific action requested by the party filing an adversary proceeding against the debtor. It should be noted that the final decision on any adversary proceeding comes from a bankruptcy judge. In cases of filings by creditors, a debtor may lose their ability to discharge certain debts, or to take certain actions to prevent property or assets from being part of liquidation to pay creditors. In cases of filings by a trustee, a debtor may face outcomes that include moving their Chapter 7 case to Chapter 13, prevention of transfer of property, and any number of other actions or injunctions requested by the trustee.

Getting Legal Help with Adversary Proceedings in Bankruptcy

In short, a debtor will need legal counsel to represent their interests in an adversary proceeding. Not only during the actual proceeding held before a judge, but also, in the time prior to a proceeding when a debtor must develop and build credible arguments against an adversary proceeding. Consult with a bankruptcy lawyer before making any decisions or attempts to deal with an adversary proceeding filed by creditors or a trustee, or making any attempts to file an adversary proceeding on one's own behalf.