Consumer Law Center of Maryland
Free Consultation 888-463-3520 11403 Seneca Forest Circle, Germantown, MD 20876

What Is an Adversary Proceeding in Bankruptcy?

Sign that reads bankruptcy

By and large, bankruptcy actions tend to run smoothly. So long as debtors provide accurate information on their debts and financial history to their attorneys, lawyers generally know what to expect will happen during a case. That said, some bankruptcies may become more complicated should a creditor file an adversary proceeding against the debtor. Offer yourself the best chance at a fast and seamless bankruptcy proceeding by contacting a seasoned Maryland bankruptcy lawyer before you file, and read on to learn more about adversary proceedings in Maryland bankruptcy cases.

What is an adversary proceeding?

Adversary proceedings are lawsuits filed under the umbrella of a bankruptcy claim. Typically, these cases are over the dischargeability of a particular debt (i.e., whether the petitioner is legally entitled to have a debt written off). Less commonly, the adversary proceeding may not involve the petitioner at all, but may be between two different creditors, or the bankruptcy trustee and another party.

When would a creditor file an adversary proceeding against a debtor?

Creditors are the most likely party to file adversary proceedings within a bankruptcy claim. The most common reason? The creditor believes that a debt shouldn’t be discharged in bankruptcy due to fraud, or when a debt was created through “willful and malicious injury” to person or property. Debts created through these means are not dischargeable in bankruptcy. One common example of a fraudulently-formed debt is where a creditor believes that a debtor accrued a debt with no intention of paying it back. The creditor might argue that, based on the fact that a debtor opened a credit card within a few months of filing for bankruptcy and made a substantial number of purchases during that window, the debtor knew they would soon file for bankruptcy without paying it back, and as a result, shouldn’t be discharged.

Missed time limits can defeat a challenge

A creditor has a strict time limit for filing an adversary proceeding against a debtor. Under federal bankruptcy law, the creditor must file a claim against the debtor within 60 days of the first meeting of the creditors, which tends to happen within a month of the bankruptcy petition being filed. If the creditor misses this deadline or does not request an extension before the deadline, they lose the right to challenge the dischargeability of the debt, regardless of the basis for the challenge.

For assistance in deciding whether or not you are a good candidate to file for bankruptcy in Maryland, contact a dedicated and seasoned Germantown bankruptcy and consumer law attorney at Haeger Law for a consultation, at 888-463-3520.