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Adversary Litigation

Information About Litigation in Bankruptcy Court

Bankruptcy cases are frequently complicated by a variety of "adversary proceedings" that may be commenced by creditors, or other interested parties.  The most common type is a Motion for Relief From Automatic Stay.

  • The moment your bankruptcy case is filed there is an automatic stay against any and all collection efforts against the debtor.  Creditors who have a lien or mortgage that will survive bankruptcy must come to court and apply for permission to carry on with action against the debtor, e.g. foreclosure.  
     
  • The complaining creditor must demonstrate that the value of its security is impaired so permitting the automatic stay to remain in force is causing the creditor undue harm. Debtors who want to keep property secured by a lien must provide "adequate protection" to the creditor. This is measured by things like the ongoing payments made by the debtor to the creditor after the bankruptcy is filed and assessing the value of the property in relation to the amount owed.

Other examples are "Objections to Discharge" or "Complaint to Determine Dischargeability" which may be brought by any creditor with a strong conviction that the debtor has behaved in some way that should deprive him of his right to a bankruptcy discharge, or at least as to a particular debt.

  • A creditor or the Trustee may initiate a proceeding to challenge a debtor's claim that he is not precluded by the Means Test from qualifying for Chapter 7.

You should be aware at the beginning of your case that attorneys commonly limit the scope of their responsibility to represent debtor-clients in adversary matters via a document entitled "Declaration Re: Limited Scope of Appearance".  It is important to anticipate what types of additional litigation (the foregoing is NOT a complete list) might be expected and whether you will need your attorney's help.

By: California attorney Michael Worthington dba Interactive Law Center ©2009  [Disclaimer]