Bankruptcy Court Adversary Proceedings
An adversary proceeding is a lawsuit filed within a bankruptcy case. It is an action commenced by a plaintiff filing a complaint against one or more defendants. An adversary proceeding resembles a typical civil case from state court. The plaintiff is the person, partnership or corporation initiating the lawsuit. The defendant is the person, partnership or corporation being sued.
Two of the most common adversary proceedings are (1) a complaint to determine the dischargeability of a debt under 11 U.S.C. § 523[c], and (2) a complaint to deny the Debtor a discharge under 11 U.S.C. § 727.
A complaint to determine the dischargeability of a debt is generally filed for one of two reasons; (1) the debt is based on fraud or false representations, see 11 U.S.C. § 523(a)(2), or the debt is based on willful or malicious injury to another, see 11 U.S.C. § 523(a)(2).
The deadline to file a complaint to determine the dischargeability of a debt under 11 U.S.C. § 523[c] is no later then sixty (60) days after the date first set for the meeting of creditors. See Fed. R. Bankr. P. 4007[c]. If the complaint is not timely filed it is barred unless a request for extension of time is granted by the bankruptcy court before the deadline.
A complaint to deny the Debtor a discharge is less common as it requests that the bankruptcy court deny the Debtor a discharge, if the request is granted the Debtor is denied a discharge and all of the debts listed on the bankruptcy petition are then declared non-dischargeable. This complaint is generally used when a creditor cannot file a complaint to determine the dischargeability of a debt because the debt is not based on any of the reasons specified in 11 U.S.C. § 523.
The deadline to file a complaint to deny the Debtor a discharge under 11 U.S.C. § 727 is also no later then sixty (60) days after the date first set for the meeting of creditors. See Fed. R. Bankr. P. 4004[a]. If the complaint is not timely filed it is barred unless a request for extension of time is granted by the bankruptcy court before the deadline.
Once the summons and complaint are filed they must be served on the defendant within 120 days from the date the complaint was filed or the case will be subject to dismissal. See Fed. R. Civ. P. 4(m).
The defendant must answer the complaint within thirty (30) days after issuance of the summons unless a different date is specified by the court. See Fed. R. Bankr. P. 7012[a].
If the defendant does not answer the complaint by the date set forth in the summons they are in default. The Plaintiff can then obtain a default judgment for the relief requested in the complaint.
If the defendant does answer the complaint then discovery is permitted pursuant to the Federal Rules of Civil Procedure.
The author of this article, Stan Burman, is a freelance paralegal with extensive experience in adversary proceedings in bankruptcy court. Mr. Burman may be contacted by e-mail at DivParalgl@yahoo.com for more information.
