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What are adversary proceedings?

On Behalf of | Jul 20, 2023 | BANKRUPTCY LAW - Business & Commercial Bankruptcy

People and businesses could have varying reasons for filing bankruptcy. Doing so could help repay outstanding financial obligations or debt, allowing them to refocus resources on their primary needs. However, not all bankruptcy cases are the same. Sometimes, they could include different legal proceedings based on the parties involved.

When filing Chapter 7 and 13 bankruptcies, they could start litigation to determine details of the debt, including their owners, amount, value and possibilities of discharging. This type of action is an adversary proceeding. Although they might only be relevant to specific bankruptcy cases. The following actions could be adversary proceedings:

  • Recovering money or property
  • Determining an interest’s validity, priority or extent
  • Acquiring approval for the interest’s sale
  • Objecting to discharges
  • Revoking confirmation orders
  • Establishing a debt’s capacity for discharge
  • Gaining injunctions or other types of equitable relief
  • Subordinating claims or interests
  • Receiving declaratory judgments
  • Settling a claim or cause of action

However, the need for adversary proceedings could depend on the circumstances of the bankruptcy case. This type of action could work like civil case litigation, following a specific order of steps. These proceedings could be complex, making it difficult and overwhelming to manage alone.

Discharging debts during adversary proceedings

Bankruptcy procedures comply with stringent regulations when determining discharge of debts. Adversary proceedings could also discuss and address these concerns. However, not all debts could qualify.

In this type of lawsuit, the judge reviews financial obligations and determines which ones to discharge. They could also deny discharges based on certain circumstances involving the creditors. The process could become complicated and confusing, depending on the circumstances. Fortunately, seeking legal advice could help navigate the process and address any issues that might arise along the way.