An adversary proceeding is a lawsuit within a bankruptcy case. These occur if many situations, but the most common are where a creditor believes the debtor has concealed or disposed of property of the estate, committed fraud on a creditor when making a loan application, or when a creditor or debtor seeks an absolute determination of the dischargeability of a particular debt.
Creditors in Adversary Proceedings
Arnold and Wadsworth is fully equipped to handle an adversary proceeding for a creditor. These begin by filing an adversary proceeding (this is akin to a complaint in a normal civil lawsuit) after you are served with notice of the bankruptcy by the court or the debtor. There is a timeline when these must be filed, however, and you must be diligent. There is a filing fee and the complaint must be served.
Debtors in Adversary Proceedings
As a debtor, you must be prepared to defend yourself as if you had been sued in any other civil action. This will cost you money, but if you prevail you are entitled to a judgment for all attorney fees against the creditor that sued you. Often, creditors are just trying to get you to settle for some amount and really don’t want to pursue the action. You must file an answer to the adversary proceeding complaint and be prepared to litigate the case to its end.
Arnold & Wadsworth has handled multiple adversary proceedings for clients. We often handle cases that are referred by other bankruptcy attorneys that don’t handle adversary proceedings, because Arnold & Wadsworth handles mainly general civil litigation cases, we are well equipped to represent either creditors or debtors in these cases.