An adversary proceeding is a lawsuit within a bankruptcy case. It can be filed by a trustee, a creditor, or the debtor. In an adversary proceeding, a judge will decide whether or not to grant the relief sought by the plaintiff, which can affect the ultimate outcome of your case. If you are struggling with your financial situation, the bankruptcy lawyers at Anidjar & Levine can effectively represent your interests in an adversary proceeding near Fort Lauderdale or elsewhere in Florida.What Happens in Adversary Proceedings
Adversary proceedings are lawsuits in an ongoing bankruptcy case. As in any legal dispute, the party who seeks relief must file a complaint in court and properly serve the defendant. The defendant has a limited amount of time to respond to the allegations in the complaint. Otherwise, a bankruptcy court will enter a default judgment in favor of the plaintiff.
The trustee, creditor, or debtor may file an adversary proceeding for a number of reasons, including:
- Fraudulent or preferential transfers
- Revocation of a Chapter 13 repayment plan confirmation
- Dischargeability of a debt
- Priority of a lien in property
Adversary proceedings are contentious by nature. No matter your situation, however, an experienced bankruptcy attorney can help protect your rights and interests in this stressful time.The Role of the Bankruptcy Trustee
The trustee appointed to handle your bankruptcy case may initiate an adversary proceeding for a variety of reasons, including fraudulent transfers. By filing an adversary proceeding, a trustee can recover property that it believes was transferred in an attempt to keep it from creditors. The trustee must prove actual or constructive fraud in order to get the transferred property back.
A trustee can also file an adversary proceeding for a preferential transfer. If you repaid a debt within 90 days from filing for bankruptcy, and the value of the transferred property was more than $600, the trustee can ask for its return. It has to prove that you were insolvent when you made the transfer, and that the creditor received more than it would have received in Chapter 7 bankruptcy.
If you have jointly owned property, the trustee may initiate an adversary proceeding to sever your interest in the property. If it succeeds, the property will be sold and the proceeds distributed between the estate and the co-owner.Creditors and Dischargeable Debt
Adversary proceedings are primarily used by creditors to block the discharge of a debt. When you successfully complete bankruptcy, a court will release you from any personal liability for dischargeable debts, such as medical debt. A creditor may initiate an adversary proceeding to object to the discharge of its particular debt. A creditor can argue that its debt is non-dischargeable if, for example, you incurred the debt by fraud or because you intentionally injured someone else. If a creditor successfully proves its case, the court will make the debt non-dischargeable. This means that you will still be personally liable for the debt even after you receive a bankruptcy discharge.Debtor-Initiated Adversary Proceeding
You can also initiate an adversary proceeding. A creditor may continue to harass you for payment of a debt even after you file for bankruptcy. You can initiate an adversary proceeding if a creditor fails to respect the automatic stay.
You can also file an adversary proceeding to strip junior liens from your property. For example, if you have more than one mortgage, and your house is worth less than the outstanding balance of the first mortgage, you may be able to strip the liens from your second or third mortgage. This would turn the second or third mortgage into unsecured debt, which can be discharged after you complete bankruptcy.Protecting the Rights of Debtors in Hollywood Bankruptcies
Adversary proceedings can create obstacles to successfully completing bankruptcy, but they can also be used to protect your rights and to possibly reduce your secured debt. At Anidjar & Levine, we have helped numerous Hollywood residents shield their interests in adversary proceedings. Our bankruptcy attorneys can build a strong case to support your position. We can effectively conduct discovery and litigate issues that may arise in court. For a free and confidential consultation, call us at (800) 747-FREE or contact us via our online form.