What Can Be Taken in an Adversary Proceeding

An adversary proceeding occurs when one party within a bankruptcy proceeding brings a lawsuit against another claiming that party acted illegally in the process. In particular, this proceeding does not allow for the ruling of what type of property will change hands but rather outlines the specific charges. The debtor may bring proceedings against creditors if he or she feels the creditor abused rights such as the automatic stay. The bankruptcy trustee and the creditor can also bring charges. It is in these two situations where the debtor's property may be lost.

When Adversary Proceedings Affect The Debtor

The bankruptcy trustee may bring adversary proceedings against the debtor if he or she finds that the debtor did not fill out bankruptcy documents properly or made fraudulent entries on those documents. The trustee may also use this proceeding to take money back from a creditor who received the property inappropriately. For example, if the debtor paid a personal loan back to a creditor in a sum higher than $600 in the 90 days leading up to the bankruptcy filing, the bankruptcy can confiscate those funds to use to repay all creditors, rather than just one. In this situation, any type of debt repayment may be taken back from the courts to repay all creditors, but generally includes monetary exchanges.

Also, the creditor can file adversary proceedings against a debtor. Here, the creditor is not looking to reclaim property specifically, but rather is disputing whether the debt owed to the creditor should be discharged in bankruptcy. This may occur if the debt falls within one of several exemptions of discharge of such debt. This includes:

• The debt was obtained through fraud.
• The debt was obtained through malicious injury
• The debt was obtained by a personal injury that was caused by driving while intoxicated.

These types of debts may not be discharged in bankruptcy. The burden of proving that the debt falls into one of these categories is on the creditor. The bankruptcy trustee will then determine if the debt should be discharged or remain owed by the debtor.

Hire An Attorney

If you are facing adversary proceedings, or even if you wish to file such proceedings against a creditor, contact an attorney first. The attorney will work through the process with you and help you to pinpoint the specific circumstances where your rights were violated or help you to avoid the dismissal of your bankruptcy case. In some situations, the bankruptcy trustee can charge you with fraud for mistakes on documentation.