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