An adversary proceeding is a lawsuit that can be filed by a creditor, a trustee, or you (as debtor) during a bankruptcy court case. In each of the three instances the bankruptcy judge will make a decision about the matters presented to the court.

A creditor usually files an adversary proceeding because the creditor believes that the debt owed to them should not be discharged in the bankruptcy case. This may be so for a variety of reasons. One reason might be that the debt falls within one of the exceptions to a discharge, such as a debt created through fraud, willful or malicious injury, or a personal injury caused by driving while drunk. Another reason might be that the creditor contends that the filing of the bankruptcy case was done in bad faith. This type of adversary proceeding is not seen too often.

There are several reasons for a trustee to file an adversary proceeding. The more common motivation for a trustee to file an adversary proceeding is because they believe that the schedules were not filled out accurately and were intentionally fraudulent. If your paperwork is not filed on time, or is improperly filed, or if you miss a court date without a good reason then a trustee may file to have your case dismissed. Another reason a trustee may file an adversary proceeding is to try to collect money back from a creditor who received funds or property from you. A trustee may also file an adversary proceeding to undo a transfer of real property. Also the United States Trustee may file an adversarial proceeding to force you to change from a Chapter 7 bankruptcy to a Chapter 13 bankruptcy if the U.S. Trustee believes that the filing of the bankruptcy petition was done in bad faith.

Finally, you, as a debtor, may file an adversary proceeding against a creditor. You may do so to recover damages for a creditor’s actions taken in violation of the U.S. Bankruptcy Code, in violation of the automatic stay or the discharge injunction.

If you live in Denver, Aurora, Arvada, Brighton, Broomfield, Commerce City, Englewood, Highlands Ranch, Lakewood, Lafayette, Littleton, Northglenn, Westminster, Wheat Ridge, or Golden, Colorado, and have any questions please feel free to contact me. Kevin D. Heupel, Colorado Bankruptcy attorney, 303-955-7570, COBankruptcyHelpEmail, free-consultation form.