What is an adversary proceeding?

An adversary proceeding is a lawsuit within a bankruptcy case. It is a separate action from the underlying bankruptcy case and involves a dispute between two or more parties. In California, an adversary proceeding is filed in the bankruptcy court where the underlying case is pending. In an adversary proceeding, both parties present evidence and each party has an opportunity to make legal arguments. For example, a creditor may file an adversary proceeding against the debtor if the creditor believes that the debtor is not entitled to receive a discharge of debt from the court. In such a case, the creditor must prove that the debt is not eligible to be discharged due to fraud or other legal reasons. The creditor must also prove that the debtor intended to deceive the creditor or acted in a reckless or negligent way. The court will hear both sides’ arguments and make a decision. If the court finds that the debt is not eligible to be discharged, then the creditor can enforce their rights by collecting the unpaid debt directly from the debtor. An adversary proceeding may also involve other disputes, such as disputes between creditors or disputes between a debtor and a trustee.

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