Help! I am being Sued in Bankruptcy Court!” Understanding the Adversary Proceeding
Julianne Frank, Board-certified Bankruptcy Attorney
All Rights Reserved 2019
You can sue or be sued in a bankruptcy court just like in any other court system. The lawsuit brought in the bankruptcy system has to involve issues that relate to bankruptcy law or have a direct impact on a bankruptcy proceeding.
Lawsuits in a bankruptcy court are known as “adversary proceedings”. If you are being sued in an adversary proceeding, it is almost always a bad decision to try to defend yourself. While bankruptcy courts may be willing to allow some latitude to lay parties, most bankruptcy judges are very strict about procedural rules. If you are not represented by counsel, you can easily lose your case on procedural grounds and never have an opportunity to have your case decided on its merits.
What are some of the types of lawsuits that can arise in a bankruptcy setting? Bankruptcy trustees can bring actions to recover transfers of money. Creditors can file suits seeking to deny a debtor his or her discharge from debts. Sometimes vendors or suppliers sued to recover what are known as “preference payments”– payments from their customer that they received within a specified period prior to the filing of the bankruptcy.
There are many lawyers who file bankruptcy proceedings but have very limited or no experience in defending adversary proceedings. If you are thinking of filing bankruptcy, you should inquire of your lawyer as to his or her experience in adversarial proceedings. How many have they brought or defended? How many times have they actually gone to trial? What is their success rate? Almost all bankruptcy court decisions are published or are publicly available for review. Ask your lawyer to provide you with the court rulings in the last three adversary proceedings that he or she was involved in.
Let’s say you had a broken leg. What if your surgeon said to you: “I can open you up and start fixing your leg, but if something goes bad I have to call in a different doctor because I can’t handle your case if there is a complication”? Would you want to hire this doctor? The answer is of course you would not. You would expect that if something goes wrong you have a doctor who has the experience and skill to resolve the unexpected.
Why would you settle for less in your bankruptcy lawyer?