When filing a Chapter 7 or Chapter 13 bankruptcy petition three groups of people outside the bankruptcy court become involved: creditors, trustees, and the debtor. All three of these entities have the ability to file an adversary proceeding, or lawsuit, related to the bankruptcy case.
Adversary Proceeding and Creditors: Why Do Creditors File Adversary Proceedings in a Centennial Bankruptcy?
Creditors generally file adversary proceedings to argue that a debt should not be discharged. It is basically a way for them to object to the bankruptcy. The creditor must have evidence that or specific reasoning as to why the debt should not be discharged. Often, creditors will claim that the debtor borrowed the money with no intention of paying it back – a type of fraud in Centennial and Denver. For example, if a person maxed out their credit card right before filing a Chapter 7 bankruptcy, it could be seen as fraud. However, if a person maxed out their credit card because they lost their job and their inability to make payments is what lead them to file for a Chapter 7 bankruptcy, then that would likely not be seen as fraud.
When a Trustee Files an Adversary Proceeding in a Denver or Littleton Bankruptcy
A trustee is a person appointed to oversee your Denver or Littleton bankruptcy case. Trustees can file adversary proceedings if they feel a certain debt should not be discharged or if they want to obtain property they feel was transferred fraudulently. This would include giving away property to a relative or friend just before filing a Chapter 13 bankruptcy. The trustee can also file an adversary proceeding to revoke a discharge if they learn false information has been provided, like a failure to list all assets and property in their petition.
Adversary Proceedings Filed by the Debtor: Why Would the Debtor File This Lawsuit?
Debtors can file adversary proceedings to see if a certain debt is dischargeable or to protect their discharge from a creditor that is harassing them. Often, debtors will file an adversary proceeding to determine if their student loans are dischargeable. For a student loan debt discharge, a debtor must prove a physical or mental health issue that would prevent them from paying the debt back. For the harassing creditors, the adversary proceeding can stop a creditor who has sent a debt to collections after a bankruptcy discharge was entered.
If you are interested in filing for bankruptcy, or looking to file or fight an adversary proceeding, contact expert bankruptcy attorney Barry Arrington at 303-205-7870 to begin your journey toward financial freedom.