Free Consultation

Call us right now. Or let us Call You!

(317) 769-2244
Fields marked with an * are required

What is an Adversary Complaint in Bankruptcy?

What is an adversary complaint in bankruptcy?

Many times our clients ask us, “What is an adversary complaint in bankruptcy?”  An Adversary Case (in a bankruptcy proceeding) is a separate lawsuit that is filed with in the bankruptcy system as a bankruptcy is taking place.   These adversary “lawsuits” will receive a separate case number: they are completely separate to the original case.  Each adversary case is treated individually as a separate complaint and will follow normal court procedures for hearings and a trial to determine the merits of the adversary complaint.

What is the Most Common Use of Adversary Cases in Bankruptcy?

The most common use of an adversary complaint in bankruptcy is to determine if a particular debt should be dischargeable in the bankruptcy.  Although bankruptcy eliminates almost every form of debt, certain debts have been deemed to be nondischargeable in bankruptcy.  However, for many of these debt areas, an adversary complaint must be brought to properly and officially assert that the particular debt in question should be deemed nondischargeable.   If a bringer of such a nondischargeability complaint wins with the bankruptcy court, then the debtor will not receive a discharge on that particular debt only.

What are Some Examples of Other Common Adversary Suits in Bankruptcy?

Another common example of an adversary case in bankruptcy is when either the interim trustee or the United States trustee files an adversary to revoke a debtor’s discharge after the debtor filed chapter 7.   Such a complaint to revoke the discharge is usually filed either when the debtor does not comply with the rules of the bankruptcy court or commits some kind of fraud.

Other common examples of adversary cases in bankruptcy include cases to avoid wholly unsecured mortgages or other cases where the property rights of a party are being altered in the bankruptcy system.  Such cases can require an adversary complaint instead of a motion or other smaller vehicle in the original bankruptcy case. Many courts have required these adversary suits to make sure that full due process and noticing requirements are met because of the magnitude of the relief being requested.

Adversary Cases are Complex and Should Only Be Attempted Through the Aid of a Bankruptcy Attorney

Due to the complex nature of adversary proceedings in bankruptcy, it is highly advisable to seek bankruptcy counsel in preparing for such a case.  The adversary will likely require several documents and even a trial to take place in order to gain the relief requested.  Advanced adversary cases are full-blown trials that will require bankruptcy interrogatories and document production and other requirements that are not familiar to non-bankruptcy attorneys.

~Indianapolis Bankruptcy Attorney John Bymaster

Rare Chapter 7 Bankruptcy Dismissals

Rare Reasons Why a Chapter 7 Bankruptcy Case Can Be Dismissed

Image of Chapter 7 Bankruptcy Case Dismissal

Rare Chapter 7 Bankruptcy Dismissals – When it comes to dismissals and bankruptcy, the general rule is that Chapter 7 cases are rarely dismissed but Chapter 13’s are very commonly dismissed. Bankruptcies can be dismissed for various reasons -some good and some bad. Let’s discuss the dismissal of Chapter 7 bankruptcies and what types of dismissals are encountered.

Chapter 7 Bankruptcy Dismissals By The Trustee

Chapter 7 cases are rarely dismissed in the bankruptcy system. The usual outcome of a Chapter 7 is the discharge order and closing of the bankruptcy case. This is the normal desirable outcome in which all of your debts are eliminated.

However, on rare occasions the dismissal of a Chapter 7 bankruptcy can be necessary. First, a case can be dismissed by the Chapter 7 Trustee or United States Trustee due to an ineligibility for Chapter 7 or some other bad faith circumstance. The Trustee and United States Trustee are responsible for maintaining the proper application of the bankruptcy code. In rare cases when the eligibility for Chapter 7 is questionable, a motion to dismiss can be filed.

The most common motion to dismiss in a Chapter 7 is due to an interpretation by the United States Trustees Office that the debtor is not eligible for Chapter 7 according to their means testing. To put it simply, the United States Trustee believes that the debtor is making too much money to be in Chapter 7. The debtor may have sufficient income to pay back some of their creditors in a Chapter 13 case. In such a situation, the debtor will be given the choice to either dismiss their Chapter 7 case or convert their current Chapter 7 case to Chapter 13.

Voluntary Motions to Dismiss Brought By The Debtor in Chapter 7 Bankruptcy

Sometimes there are good, acceptable reasons for a Chapter 7 debtor to dismiss their case. For instance, a Chapter 7 case can be voluntarily dismissed by the debtor in order to address new large unexpected debts such as medical bills from a heart attack or stroke. In such a situation, the new medical bill would have to have occurred almost immediately after the bankruptcy case was filed. The Bankruptcy Trustee would likely not have an objection to such a motion to dismiss as long as the debtor still turns over any non-exempt assets into the bankruptcy estate.

Keep in mind, however, that not all voluntary motions to dismiss in Chapter 7 will be granted. The Trustee has a duty to administer an estate with assets in order to protect the creditors. If a Chapter 7 debtor plans to file bankruptcy, he cannot rely 100% upon any ability to get out of the Chapter 7 process after it has started. The attitude of “let’s do this and see what happens” is not the proper attitude to have when you file for Chapter 7 Bankruptcy. Chapter 7 should be thought of more like a potentially irreversible process that can have consequence that include losing certain types of assets.

Conclusion: Chapter 7 Rarely Produces Dismissal of Your Case

Chapter 7’s are rarely denied and are very infrequently dismissed. If you need to get relief from your debts, Chapter 7 is a relatively simple process that can eliminate your debts in a short time. Although dismissals do occur in Chapter 7 bankruptcy, they are very rare and do not affect most cases.

– Indianapolis Chapter 7 Bankruptcy Attorney John Bymaster

Pre-Bankruptcy Credit Counseling – The Top Five Things to Know

e_learning_0

Pre-Bankruptcy Credit Counseling – Every debtor is now required to take a bankruptcy credit counseling course before they file a Chapter 7 or Chapter 13 bankruptcy case. This pre-bankruptcy credit counseling course can be taken through several different course providers. This article is about the top five things to know about this course.

Number One: The pre-bankruptcy credit counseling course is usually very affordable. The pre-bankruptcy credit counseling course is usually only a cost of $10 to $20 at this time for an affordable and reliable course provider. When the original requirement for the pre-bankruptcy course was put into effect in October 2005, courses usually ranged anywhere from $50-$75. Over time as the course became more clear and more providers got involved, the cost gradually declined until now when the approximate cost is usually $10-$20 per bankruptcy per course provider. If you are paying more than $10-$20 for this pre-bankruptcy course now, you may be paying too much and could possibly find more affordable options.

In certain situations, the pre-bankruptcy credit counseling course can even be obtained for free or reduced charge. This is because the bankruptcy code requires all providers to provide the course either free or at a reduced charge to people who do not have the means financially to take the course.

Number Two: The pre-bankruptcy credit counseling course usually only takes one hour to complete. Unlike other more intensive courses provided for various legal settings, the pre-bankruptcy credit counseling course only takes one hour to complete. You may spend more than one hour working on the course if you choose, but you are required by the federal law to spend at least one hour in completing the course.

Number Three: The pre-bankruptcy credit counseling course goes over alternative options to bankruptcy such as repaying your debts. The content of the pre-bankruptcy credit counseling course is a repayment plan or other method that may be available to repay your debts. This repayment plan (or other viable information that can help you avoid bankruptcy) is not very useful to many people who already thoughtfully have considered whether they should file for bankruptcy. However, in some situations it may be an advantage to the debtor to know that it is their best option to file bankruptcy.

Number Four: The pre-bankruptcy credit counseling course can be taken easily either through the Internet or on the phone.  Because of opposition in Congress, the requirements for taking the pre-bankruptcy credit counseling course are not very difficult. Congress decided that it is necessary to allow people to take the class quickly either through the Internet or through the phone to make it less of a burden for those seeking to file bankruptcy. Therefore, if necessary, it can be very easy to obtain the pre-bankruptcy credit counseling course certificate either by contacting an institution that will do it right away over the phone or by doing it immediately through the Internet.

Number Five: The pre-bankruptcy credit counseling course must be taken before the bankruptcy case is filed. There are absolutely no exceptions except for some very limited situations. It is extremely important to note that all debtors must take the pre-bankruptcy credit counseling course before they file for bankruptcy. Any person who is an individual (such as a person, not a business) must take the course before the bankruptcy case is filed or their case will be shortly dismissed thereafter.

There are only very limited exceptions to those who are not required to take the pre-bankruptcy credit counseling course. The first exception is for incapacity: a person who does not have the mental capacity to take or understand the course. You will be required to provide detailed medical information and file a motion to have the credit counseling requirement waived for incapacity.

A second less common exception is for those in active military service who do not have the ability to take the course. It is advisable that even people on active military duty should still take the course but may be able to avoid if taking the course is absolutely impossible.

Take the pre-bankruptcy credit counseling course. It will not be a burden to you. If you are seriously considering filing bankruptcy, do not let the pre-bankruptcy credit counseling course deter you from filing bankruptcy. The pre-bankruptcy credit counseling course is very easy to complete and very affordable: if you need help taking the course you can contact our office and we will send you to a provider who is reliable and affordable so that you can prepare to file Chapter 7 or Chapter 13 bankruptcy.

-Indianapolis Bankruptcy Attorney John F. Bymaster

BANKRUPTCY JUDGES & FEDERAL POWER

BANKRUPTCY JUDGES: THE “FEDERAL” JUDGES WHO ARE NOT “FEDERAL” JUDGES.

BANKRUPTCY JUDGES & FEDERAL POWER

BANKRUPTCY JUDGES & FEDERAL POWER:  The domain of bankruptcy was allotted to the federal government by the constitution itself where it says, “The Congress shall have Power To…establish…uniform Laws on the subject of Bankruptcies throughout the United States…. .”   This clause eventually led to the creation of the current federal bankruptcy system in 1978.   Federal bankruptcy judges were appointed to the bench in every District throughout the United States.  These federal judges, however, were not given the same power as full “Article III” judges (or the power of a regular federal judge to hear all federal and state matters-at least within the confines of their jurisdiction).

Certainly, a bankruptcy judge can hear ALL matters that pertain to bankruptcy, correct?  The answer to that question would surprisingly be NO at least according to the ruling of the famous Stern v. Marshall bankruptcy case which involved the famous (now deceased) Anna Nicole Smith.  This ruling greatly limited (and confused) federal judges’ ability to try cases that involved any State Court matters.  The jurisdiction of federal bankruptcy judges was limited to any dispute that “stems from the bankruptcy itself.”

Therefore, even if a matter is fully relevant, related, and essential to proper administration of a bankruptcy case, a federal bankruptcy judge may have no jurisdiction or authority over the matter.   If a state or federal court matter exists and it “does not stem from the bankruptcy itself,” the federal bankruptcy judge may have no power to decide on such matters.    Even a consent to jurisdiction for such a matter may not give the bankruptcy judge sufficient authority to decide such a matter.   Well, at least until very recently.

In Wellness International Network vs.  Sharif, the Supreme Court of the United States recently has given bankruptcy judges new authority to make final judgments on bankruptcy disputes that contain state issues.  If the parties consent to the jurisdiction, this new ruling appears to give federal bankruptcy courts full jurisdiction over such matters.   Federal Bankruptcy court can now serve as a useful and all-inclusive venue for deciding complex bankruptcy-related matters in one place.

Although Bankruptcy Judges are still not full “Article III” Federal Judges, the Supreme Court’s new holding greatly increases bankruptcy judges’ power to take care of bankruptcy disputes.   Most parties would naturally assume (or at least prefer) that all disputes related to bankruptcy can be determined in one place: bankruptcy court.   Now, with the consent of parties, it appears that all bankruptcy-related matters can be determined in one place: by the Federal Bankruptcy Judge.

~Indianapolis Bankruptcy Attorney John F. Bymaster