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What is an Adversary Proceeding?
An adversary proceeding is a lawsuit that may arise during a bankruptcy case. The adversary proceeding begins by filing what is known as a pleading document that is called a complaint. The adversary proceeding is similar to a civil case from a state court. The party filing for the adversary proceeding is called the plaintiff and the party that the adversary proceeding is filed against is called the defendant. An adversary proceeding may be initiated for a number of reasons. One of the more common reasons is a creditor that is disputing a debt discharged during the bankruptcy court process. For example, when a debt is discharged in bankruptcy proceedings the debtor (in this case the defendant) is no longer personally liable for its payment and the creditor (in this case the plaintiff) may file a complaint with the court to review the issues related to the discharge. Although this is not the only reason for an adversary proceeding, it is a common one. The adversary proceeding may also be filed by a debtor who believes that there has been a violation the of automatic stay that is granted when a bankruptcy petition is filed. The automatic stay stops actions by creditors. For example, in this case the debtor may file an adversary proceeding if they believe the creditor has taken action to obtain the debtor’s property after the debtor had filed for bankruptcy. In addition to the debtor and the creditor, adversary proceedings may also be filed by trustees or other individuals with a liability or interest in the discharge. In bankruptcy proceedings there may be multiple adversary proceedings or none at all. The description above is not a comprehensive legal definition but rather an informal description of the term and how it may be used in a case involving bankruptcy.
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