BANKRUPTCY LAW OVERVIEW
We often receive calls from people who have been served with, or need to file, an 'Adversary Proceeding' in a California bankruptcy case and are unsure what it means. This page answers the most common questions we hear, and explains why these proceedings should be taken seriously.
An adversary proceeding is essentially a lawsuit filed within a bankruptcy case. It is commenced by filing a complaint in the bankruptcy court and is heard by the bankruptcy judge assigned to the underlying bankruptcy. The process generally follows the same path as a state-court lawsuit: a complaint is filed, the defendant is served, and the parties litigate the dispute according to the Federal Rules of Bankruptcy Procedure and the local rules of the court.
Adversary proceedings can arise in Chapter 7, Chapter 13, or Chapter 11 bankruptcy cases. They are separate from the ordinary bankruptcy administration, and they can affect the discharge, the property of the estate, or the rights of creditors. If you are involved in one — whether as the person who must file it or the person who must respond — timing and procedure matter.
A creditor may bring this type of proceeding to argue that a particular debt should survive the bankruptcy. Common grounds include fraud, false pretenses, material misrepresentation, or certain debts described in 11 U.S.C. § 523. If the creditor prevails, the debtor remains personally liable for that debt after the bankruptcy ends.
This is a broader attack on the debtor's right to receive a discharge at all. Rather than targeting a single debt, the plaintiff — often a creditor or the trustee — seeks to deny the debtor any bankruptcy discharge. Objections may be based on allegations of fraud, concealment of assets, destruction of records, or failure to cooperate with the trustee.
These proceedings are brought to undo transfers of property made before the bankruptcy case was filed. A transfer may be avoided if it was made for less than reasonably equivalent value, or if it was made with the intent to hinder, delay, or defraud creditors. The trustee often pursues these claims to bring property back into the bankruptcy estate.
Debtors may also file adversary proceedings. A common example is a proceeding under 11 U.S.C. § 522(f) to avoid certain liens that impair exemptions. In some cases, a debtor may also file an adversary proceeding to recover property that was transferred improperly before the bankruptcy.
If you believe you need to file an adversary proceeding, act quickly. Bankruptcy courts apply strict deadlines, and the right to bring a claim may be lost if the complaint is not filed in time. The complaint must meet the requirements of the Federal Rules of Bankruptcy Procedure, and the defendant must be properly served. Because these are contested proceedings with formal rules, consulting an attorney early is strongly recommended.
For a free consultation to discuss your situation, call us at (310) 444-9444.
If you have been served with an adversary complaint, do not ignore it. The consequences of losing can be severe: a debt may be deemed non-dischargeable, your entire bankruptcy discharge may be denied, or a judgment may be entered against you. You must respond within the time set by the court's rules, and failure to do so can result in a default judgment.
An experienced bankruptcy attorney can help you evaluate the claims, prepare defenses, and protect your rights. Call (310) 444-9444 to discuss your case and your options.
Call (310) 444-9444 or use the consultation form below. We can review your situation, explain the timeline, and help you decide the next step.
Los Angeles litigation firm focused on lemon law, personal injury, and creditor-side bankruptcy matters. Every matter is reviewed personally by the attorney whose name is on the building.
