Adversarial Proceedings in Bankruptcy

If there is a dispute about a debt in your bankruptcy, you, the creditor, or the trustee can file an adversary proceeding.

Updated by , Attorney · University of the Pacific McGeorge School of Law

Sometimes, a dispute arises concerning a bankruptcy debt after you file for bankruptcy. If this happens, you, the creditor, the trustee, or some other interested party must object to the issue by motion, or file a separate case in the bankruptcy court, called an "adversary proceeding." This article explains what types of disputes must be filed as adversary proceedings, when a dispute is not an adversary proceeding, how to file an adversary proceeding, and more.

Common Types of Adversary Proceedings in Bankruptcy Cases

Rule 7001 of the Federal Rules of Bankruptcy Procedure has a non-exhaustive list of disputes that must be filed as adversary proceedings. Those include:

  • an action to recover money or property (not a proceeding to compel the debtor to deliver property to the bankruptcy trustee)
  • an action to determine the validity, priority, or extent of a lien or other interest in the debtor's property
  • an objection to the discharge of a debt or an action to revoke the discharge of a debt
  • an action to revoke the court's order that a Chapter 13 plan be confirmed (not simply an objection to the plan confirmation)
  • an action to determine the dischargeability of a debt, and
  • an action seeking an injunction or similar equitable relief.

Adversary Proceedings, Contested Matters, and Other Lawsuits

Not every lawsuit is filed as an adversary proceeding. Bankruptcy judges can only rule on issues related to bankruptcy, which are called "core proceedings." For example, a bankruptcy judge cannot grant a divorce to a married couple, even when the couple has debts and assets that are part of the bankruptcy case.

Likewise, not all disputes within the bankruptcy are filed as adversary proceedings. Disputes called "contested matters" are not filed as separate lawsuits. An objection to a proof of claim and an objection to a claim of exemption are examples of contested matters that are not adversary proceedings.

Adversary Complaints to Challenge the Dischargeability of Debts

Debtors are most likely to face an adversary complaint if a creditor wants to challenge the dischargeability of a debt. If a creditor contests the discharge of a debt based on fraud or because it believes a willful and malicious injury caused the debt, it must file an adversary proceeding within 60 days after the first meeting of creditors.

Read Debts That Cannot Be Discharged in Bankruptcy to learn more about nondischargeable debts.

What Happens If the Bankruptcy Trustee Files an Objection to Your Discharge?

Under certain circumstances, the bankruptcy trustee appointed to administer your case may challenge your right to receive a bankruptcy discharge. If the trustee believes you should not be entitled to a discharge, they will file an objection with the court and ask the judge to deny your discharge. Read on to learn more about what happens if the trustee files an objection to your bankruptcy discharge.

What Is an Objection to Discharge?

A bankruptcy discharge eliminates your personal liability and obligation to pay back most types of debt. However, the bankruptcy trustee, the U.S. Trustee, and your creditors have the right to challenge your discharge if they believe you should not be allowed to wipe out some or all of your debts in bankruptcy.

A trustee who wants to challenge your discharge must file a written complaint with the court and explain to the judge why you should not receive a bankruptcy discharge.

Reasons the Bankruptcy Trustee Might Object to Your Discharge

To receive a discharge, you must be honest with the court and cooperate with the trustee throughout the bankruptcy process. The trustee will typically file an objection to your discharge if you:

  • lie on your bankruptcy papers or during your meeting of creditors (also called the 341 hearing)
  • hide, transfer, or destroy your property to defraud your creditors
  • conceal, destroy, falsify, or fail to keep records of your financial activities
  • fail to obey a lawful court order, or
  • commit bankruptcy fraud.

In addition, you can expect the trustee to file an objection if you are not legally entitled to a bankruptcy discharge. Bankruptcy laws limit how often you can file for bankruptcy and receive a discharge. If you recently filed for bankruptcy and received a discharge, you may not be eligible for another discharge for several years.

What Happens If the Trustee Objects to Your Discharge?

If the trustee wants to object to your discharge, they must file an adversary proceeding (a lawsuit) in your bankruptcy case explaining why you should not be allowed to receive a discharge. (11 U.S.C. § 704(a)(6); 28 U.S.C. § 586.)

After the trustee files the objection, you can respond to the complaint and explain why you deserve a discharge to the court. The court will then hold a trial and allow each party to present its case before deciding whether to grant or deny your discharge.

Adversary Case Procedures

Specific rules apply to adversary proceedings to ensure that issues are tried quickly and fairly. To start an adversary procedure, the creditor or debtor must file an adversary complaint and pay a filing fee (the fee is waived if filed by the debtor). The bankruptcy court clerk assigns a separate case number to the adversary proceeding and issues the summons, which must be served within 120 days of filing the complaint.

In the adversary proceeding, the defendant can respond to the complaint by filing an answer or a motion (for example, a motion to dismiss the complaint). If the defendant does not file a responsive pleading, the bankruptcy court can enter a default judgment against the defendant. If an answer is filed, the court will hold a trial with testimony and exhibits offered as evidence.

Navigating Your Bankruptcy Case

Bankruptcy is essentially a qualification process. The laws provide instructions for completing a 50- to 60-page bankruptcy petition, and because the rules apply to every case, you can't skip a step. We want to help.

Below is the bankruptcy form for this topic and other resources we think you'll enjoy. For more easy-to-understand articles, go to TheBankruptcySite.

Additional Bankruptcy Resources

Bankruptcy Forms

Downloadable Bankruptcy Forms

Chapters 7 and 13 Bankruptcy Form List

Bankruptcy Document Checklist

Related Information

Should I Ignore a Debt Collector's Calls and Letters?

Keeping a Credit Card in Chapter 7 Bankruptcy

Can I Keep My House If I File for Chapter 7 Bankruptcy?

What Happens in Bankruptcy If I Am on the Deed to Someone Else's Home?

How to File Bankruptcy Without Losing a Car

What Happens to Your Property in Bankruptcy?

We wholeheartedly encourage research and learning, but online articles can't address all bankruptcy issues or the facts of your case. The best way to protect your assets in bankruptcy is by consulting with a local bankruptcy lawyer.

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