What is an Adversary Complaint?

What is an Adversary Complaint?

Federal laws protect an individual from creditor harassment during a bankruptcy case. Sometimes disputes arise during the case and a creditor, the trustee, or the bankruptcy debtor needs the issue tried by a court. In these cases the matter can be heard as an adversary proceeding before the bankruptcy judge.

An adversary proceeding is a separate court case, but is heard by the bankruptcy court when it has jurisdiction over the matter. The jurisdiction of bankruptcy court judges is limited to core proceedings or matters "related to" the bankruptcy. Matters that are not directly related to the bankruptcy case are outside the court's jurisdiction. For instance, many family law matters, like modifying child support or granting a divorce, cannot be heard as adversary proceedings. Common disputes that are adversary proceedings are:

  • Cases involving the return of money or property;
  • A case to determine the validity, priority or extent of a lien;
  • An objection to discharge or an action to revoke discharge;
  • The attempt to revoke an order of confirmation of a Chapter 13 bankruptcy plan;
  • A case to decide whether a debt is eligible for discharge; or
  • A request for an injunction.

Not all disputed matters related to the bankruptcy case are filed as adversary proceedings. The bankruptcy rules distinguish adversary proceedings from "contested matters." A note to the Federal Rules of Bankruptcy Procedure states, "Whenever there is an actual dispute, other than an adversary proceeding, before the bankruptcy court, the litigation to resolve that dispute is a contested matter." An objection to a proof of claim is an example of a contested matter that is not an adversary proceeding.

To commence an adversary proceeding, a party must file an adversary complaint with the bankruptcy court. In cases alleging fraud or debts caused by willful and malicious injury, the bankruptcy law requires that the complaint must be filed within 60 days after the first Meeting of Creditors. The court will issue a summons and schedule a trial date. The trial is held with testimony and exhibits offered as evidence.

An adversary proceeding does not postpone the debtor's discharge. However, discharge of the debt at issue is delayed until the adversary proceeding is resolved.

If you need to restructure your debts in bankruptcy, but also need a court to decide a matter concerning one of your debts, an adversary proceeding in bankruptcy may be beneficial. Adversary proceedings are conducted quickly and efficiently, so the matter will be fairly tried by a federal judge without a lengthy delay. Speak with an experienced bankruptcy attorney about your financial situation and learn how an adversary proceeding can help.