An “Adversary Proceeding” is a separate lawsuit filed within a Bankruptcy case and, like most other lawsuits, it is initiated by one party filing a “Complaint” against another party.  The Adversary Proceeding has a separate case number and the pleadings in the proceeding are maintained separately from the main Bankruptcy case.  Also like most other suits, the defendant files an “Answer” to the Complaint and then the parties conduct discovery.  Adversary Proceedings are generally governed by different procedural rules than main Bankruptcy cases and these rules are in Part 7 of the Bankruptcy Rules.  It is actually somewhat uncommon for adversary proceedings to be filed in individual cases, but here are some of the more common examples:

  • Complaints to determine the dischargeability of a debt.  A debtor may seek a a judgment that student loan debt, tax debt or domestic support obligations are discharged in their case.  Likewise, a creditor may file a proceeding to make sure their debt is not discharged.
  • Complaints to deny or revoke a debtor’s discharge.  If a party believes the debtor is not entitled to a discharge, the matter is resolved in an adversary proceeding.  These proceedings are often filed by the United States Trustee.
  • Disputes over the validity or extent of liens on the debtor’s property.  If the debtor or Chapter 7 Trustee disagrees with a secured creditor’s claim that they have a lien on property, or with the amount of secured debt, the dispute is often settled in an Adversary Proceeding.  Occasionally, a secured creditor may file a proceeding against another creditor to determine which has priority.
  • A Chapter 7 Trustee may file an adversary proceeding to recover preferential transfers, fraudulent transfers or other property of the Bankruptcy Estate.
  • A debtor may file a Complaint for damages for violations of the automatic stay, discharge injunction or employment discrimination.

These are just a few of the more common examples of adversary proceedings.  In reality, an adversary proceeding can be filed just about any time two or more parties have a dispute in a Bankruptcy case.  Adversary proceedings are complicated both procedurally and substantively, so it is important to have a good lawyer if you have been sued or you need to sue someone in a Bankruptcy case.  If you are a creditor, there are strict deadlines for filing a complaint against a debtor so it is important you contact a lawyer soon after you find out a Bankruptcy case has been filed.