An adversary proceeding during bankruptcy is when someone brings an issue or problem before a judge in an effort to collect damages or have the judge take an action against someone else.
Who Can Bring an Adversary Proceeding Before a Bankruptcy Judge?
There are only 3 parties who can bring an adversary proceeding before a bankruptcy judge:
- the creditor
- the bankruptcy trustee
- the debtor
When the Creditor Files
Usually when a creditor files an adversary proceeding with the bankruptcy court it is usually because they are claiming that a debt should not be discharged because the debtor created the debt through fraud, personal injury or some other reason that would prevent a discharge.
When the Bankruptcy Trustee Files
When a bankruptcy trustee files an adversary proceeding with the bankruptcy court, it is sometimes because something was done incorrectly or fraudulently on the part of the creditor or debtor. For example, the bankruptcy trustee may file an adversary proceeding to retrieve money from a creditor that was received improperly from the debtor.
When the Debtor Files
Finally when a debtor files an adversary proceeding against a creditor he/she is usually taking action because the creditor has violated a bankruptcy law such as, ignoring an automatic stay
or collecting on a debt that was discharged in bankruptcy.