Suffolk County Law Firm, Markotsis & Lieberman Esq., Generally Explain Adversary Proceedings in Bankruptcy Cases

HICKSVILLE, N.Y., May 7, 2019 /PRNewswire/ -- Filing for bankruptcy is not an ideal situation. It is important to understand the options available to those involved in bankruptcy cases and learn how to position yourself to succeed should additional disputes and lawsuits occur. Suffolk County law firm, Markotsis & Lieberman Esq., explain adversary proceedings in bankruptcy cases.

What is an adversary proceeding?
An adversary proceeding in bankruptcy is a separate lawsuit filed within an ongoing bankruptcy case. Typically, an adversary proceeding is filed after a dispute arises concerning a debt that was included in the initial bankruptcy filing. Those who file an adversary proceeding are looking to achieve a particular purpose such as having a debt declared non-dischargeable, recovering fraudulently transferred property or seeking redress for bankruptcy law violations.

What are the different types of adversary proceedings?
There is a non-exhaustive list of disputes that must be filed as adversary proceedings as stated in Rule 7001 of the Federal Rules of Bankruptcy Procedure. The list includes, but is not limited to an action to recover money or property, an action to determine the validity, priority, or other interest in the debtor's property, or action seeking an injunction or similar equitable relief. Oftentimes, adversary proceedings may also be filed as actions to determine the dischargeability of a debt or as an objection to the discharge of a debt or an action to revoke the discharge of a debt.

Who can file an adversary proceeding?
Adversary proceedings may be filed by either a creditor, bankruptcy trustee, or the debtor in a bankruptcy case, each with their own reasoning for doing so. Typically, when a creditor files an adversary proceeding it is to ensure that a debt is not discharged. If a debt is discharged, the creditor will not receive their payment. Similarly, this is also a common reason bankruptcy trustees will file adversary proceedings. Trustees can seek court assistance and ask to deny a bankruptcy discharge if assets were hidden, lies were found in bankruptcy paperwork, or other abuses to the bankruptcy system were proven true. Lastly, the debtor can file an adversary proceeding in their own bankruptcy case if they feel it is called for. This usually happens when a debtor is looking to seek redress against their creditors for violating the automatic stay.

Can adversary complaints be used to challenge the dischargeability of a debt?
In short, the answer is yes. Typically, adversary complaints are filed to challenge if debts should be discharged through bankruptcy cases. A creditor can contest the discharge of a debt based on fraud or if they believe the debt was caused by a willful and malicious injury. However, the adversary proceeding must be filled within 60 days after the first meeting of creditors to ensure it holds in court.

Be sure to communicate with an experienced attorney at Markotsis & Lieberman, P.C. if a debtor of yours files for bankruptcy to see what options you may have.

About Markotsis & Lieberman, Esq.: Markotsis & Lieberman, P.C. Long Island Real Estate Law Firms is a general practice law firm. Practice areas include real estate, litigation (commercial and civil), business formations, agreements and transactions, and wills, trusts and estates. Our team of seasoned attorneys are here to guide you through every step of the legal process providing personalized attention to every client. When you're facing a complicated legal situation, our team of legal experts is there to fight for your rights.

SOURCE Markotsis & Lieberman, Esq.