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Adversary Proceedings

An adversary proceeding is a separate lawsuit filed inside of and during a bankruptcy case. Adversary proceedings are filed in some, but not all, of bankruptcy proceedings, and may be filed by any party to the bankruptcy: you, a creditor, or the bankruptcy trustee.

Like many civil actions, an adversary proceeding begins with a complaint alleging some damage and seeking some relief from the court. This complaint will be filed with the bankruptcy court. Although it will remain under the umbrella of your bankruptcy proceeding, it will be its own case with its own hearings that may even require representation by a separate attorney depending on the specifics.

Common types of adversary proceedings may include:

  • Fraudulent transfers – if a bankruptcy trustee can show that a transfer of money or property you made within two years of the bankruptcy was actually a fraudulent transaction meant to hide the property from liquidation, he or she may file an adversary proceeding to attempt to retain the property.
  • Preferential transfers – A bankruptcy trustee can file this type of adversary complaint if it appears you gave preferential treatment to a creditor by paying them back, while insolvent, more than they would have received in a Chapter 7 bankruptcy.
  • Lien stripping – Someone filing Chapter 13 bankruptcy can file to strip junior mortgages from their property if the mortgaged property is worth less than the remaining balance of the senior mortgage.
  • Dischargeability of Debt – Although many forms of debt may be discharged in bankruptcy, they cannot be if they were incurred fraudulently. A creditor can file an adversary proceeding protesting the discharge of their debt by claiming and showing fraud.
  • Sale of property jointly owned by the debtor – If you have nonexempt property that you co-own with someone else, a bankruptcy trustee may file to sever your interests and force the sale of the property in order to complete your asset liquidation.
  • Objection to Discharge – If you’ve committed fraud or failed to comply with court orders, your creditors, the bankruptcy trustee, or the Office of the United States trustee can file to deny all of your discharged debts.
  • Bankruptcy proceedings can be complicated, involving multiple parties and lawsuits, and spanning years. If you want to simplify your bankruptcy from the beginning, it’s important to contact an experienced bankruptcy attorney. A bankruptcy lawyer can tell you how to handle your case and your finances, during and before your bankruptcy, to streamline the process and get you on the road to rebuilding your life and credit.

    Call the Cleveland Bankruptcy litigation attorneys at Luftman, Heck and Associates today to discuss your options at (216) 586-6600 or email us at advice@clevelandbankruptcyattorney.com.