Most issues in a bankruptcy case are resolved either by communicating directly with the creditors’ attorney or through a motion and hearing in front of the bankruptcy judge. Occasionally, there will be an issue that is disputed by both sides and will require an adversary proceeding to resolve. An adversary proceeding must be filed when a party initiates a proceeding listed in Federal Bankruptcy Rule 7001. The most common proceedings are revocation of discharge, lien stripping, and determining the dischargeability of debt.

The adversary complaint is a separate civil suit that is filed by a party in a bankruptcy case. The adversary proceeding is filed with the court where the bankruptcy case is pending.

Who represents me in an adversary complaint?

Many debtors assume that since the adversary complaint that filed against them relates to their bankruptcy case, their bankruptcy attorney will represent them. It’s important to realize that the adversary complaint is a separate legal proceeding. Some attorneys exclude the service of handling an adversary proceeding in their contract or will charge additional attorney fees. An adversary might require more time and preparation than the bankruptcy case.

What can cause an adversary complaint?

If a creditor objects to a particular debt being discharged, they would file an adversary complaint on the issue. A credit card or financing company could claim that an individual obtained money by false pretenses or actual fraud. A trustee or creditor could claim that a debtor is willfully destroying property that is about to be liquidated to pay off the debt in a Chapter 7 bankruptcy.

A debtor can file an adversary complaint as well. If they find that a single creditor is ignoring the stay on collecting a debt covered under the bankruptcy case, the debtor can also file an adversary complaint. If the debtor is still receiving continuous phone calls from a credit agency hired by a creditor, they would file the complaint with the court. Another reason for the debtor to file an adversary proceeding is to eliminate the second mortgage when it is completely unsecured. After home values decreased, many home owners owe more on their first mortgage than their home is worth. That means the second mortgage is completely unsecured and can be “stripped off” through an adversary proceeding. In St. Louis, Missouri, the court even allows to file a chapter 13 stripping off a second mortgage after filing a chapter 7. Often that is called a chapter 20.

In some cases, the Trustee may object to the debtor discharging all or part of the debt. Most often such a complaint is filed by a trustee after debtors already received their discharge but then failed to cooperate with the trustee, e.g. did not turn over a tax refund or other non-exempt equity.

How long do I have to answer an adversary complaint?

Most courts will allow you between twenty eight (28) and thirty (30) days to respond to the complaint if you are the respondent. If you fail to respond to the complaint, a default judgment will be entered against you. So it is in your best interest to prepare a response to the complaint as soon as possible.

At the same time, if you are filing an adversary complaint and your creditor does not respond within the specified time, a default judgment will be entered against your creditor.

The following describes the process in the St. Louis for the Missouri side. It might be different in other districts.

The first step for a default judgment is the application for the clerk to file the “Entry of Default” with an affidavit in support of the application for entry of default.

Then, you wait until the clerk issues the “Clerk’s Default”.

The second step is to file the Motion for Default Judgment, with and affidavit as an attachment to the Motion for Default Judgment.

Step 3 is filing a separate Notice of Hearing setting the Motion for Default Judgment for hearing.

After the hearing, email your judge the order and separate judgment.

While an adversary complaint is related to a filing of bankruptcy, it is a separate legal suit, and one that will require advice from an experienced bankruptcy attorney to successfully pursue or defend against.