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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

Can Your Discharge of Debt Be Revoked in Bankruptcy?

Can your discharge of debt be revoked in bankruptcy?

Many of our clients ask, “Can your discharge of Debt Be Revoked in Bankruptcy?”  If you do not comply with the rules of the bankruptcy court, your discharge could be revoked in bankruptcy.  This means that your bankruptcy will be reversed.  It would be as if you never filed bankruptcy at all.  Let’s discuss when your discharge could be revoked and what you need to do to make that not happen in your case.

Why Would My Bankruptcy Discharge Be Revoked?

The discharge in a Chapter 7 bankruptcy case is usually revoked approximately one year after filing if the debtor does not follow the requirements of the trustee or bankruptcy court.   This usually involves not turning over money or assets owed to the bankruptcy estate.  Refusing to turn over tax refund amounts is the most common cause for a discharge being revoked in Indiana bankruptcy.   In more rare situations, the debtor simply refuses to provide documentation requested by the trustee.  

What Do You Need to do to Make Sure That Your Discharge Cannot be Revoked on your Case?

To prevent the revoking of your discharge, it is extremely important to follow all of the guidance and requests of both your bankruptcy attorney in the trustee.   You can only have your discharge in bankruptcy if you were not obeying the “bankruptcy rules.”

Avoid the Common Mistake: Thinking Your Bankruptcy is Over Because You Have Already Received Your Discharge.

Just because you have already received your bankruptcy discharged in the mail does not mean that your bankruptcy is “over.”   You AUTOMATICALLY receive your discharge whether you are obeying the bankruptcy rules for your case or not.  

For example, a common mistake is to receive the discharge and then later receive your tax refund and spend it.  You did not follow the instructions of the trustee or the general instructions of your attorney.  You were supposed to provide the tax return and refund information to the trustee.  You now would owe money that you can no longer pay because it is not in your possession. In cases like this, the bankruptcy discharge can be revoked if repayment of the tax refund cannot be made.

Conclusion: Obey the Rules of the Bankruptcy Trustee and Court

If you are carefully obeying the rules of the bankruptcy trustee and court, it is very unlikely that you will have your discharge revoked in your bankruptcy.   Be sure to read the entirety of the literature your bankruptcy attorney gives you and ask questions about any process of the bankruptcy that you do not understand.

~Indianapolis Bankruptcy Attorney John Bymaster