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Learn the Basics of a Bankruptcy Adversary Proceeding and How an Attorney Can Help You

The vast majority of personal bankruptcy proceedings are rather simple affairs. This is particularly true in Chapter 7 bankruptcy, in which all unsecured obligations are wiped and creditors are not paid. However, if you file Chapter 13, which involves a repayment plan and allows some creditors to recover a percentage of the money owing to them, things might get a little more difficult. You may be subjected to a bankruptcy adversary procedure, albeit this is unlikely.

What is a bankruptcy adversary proceeding?

If creditors and debtors or the bankruptcy trustee have competing claims, a bankruptcy adversary process may be initiated. In essence, the procedure is a lawsuit filed under bankruptcy when a creditor is dissatisfied with how a debt is being handled. They may believe it is unjust that the debt be erased in bankruptcy, or they may believe they are entitled to a higher payback, or they may accuse the debtor of making illegal transfers prior to bankruptcy to hide assets from creditors.

There are many potential causes for the proceeding

The following are the most prevalent causes for an adversary proceeding:

  • To get money or property back
  • To find out if a lien is legal or how big it is
  • To raise an objection to a discharge or to rescind it
  • To cancel a confirmation order for a repayment plan

Adversary procedures in bankruptcy are handled in civil court, and you may usually have your bankruptcy attorney represent you. After all, your bankruptcy lawyer will be aware with the specifics of your case and ready to advocate your best interests in the adversary procedures.

You will get a summons from the court clerk advising you of the complaint if a creditor launches an adversarial process against you. The adversarial action can be settled by discussions between the debtor and the creditor, or it can be litigated in court and decided by a judge.

Now is the time to choose a bankruptcy lawyer.

Even if your bankruptcy is uncontested, the process might be difficult. Before filing for bankruptcy, it is always in your best interests to consult with an experienced bankruptcy attorney to ensure that you meet all of the requirements for the type of bankruptcy you are considering, that you file your paperwork correctly and once, and that you get the most debt relief possible. Please call The Law Offices of Paul Y. Lee at 951-755-1000 to speak with a skilled attorney about your bankruptcy.