Adversary Proceeding (AP)

The adversary proceeding (AP) is a lawsuit arising in or related to a bankruptcy case that is commenced by filing a complaint with the court. Acting as an adversary, a bankruptcy trustee, creditor, or debtor may file the formal complaint in a bankruptcy court. Creditors who file an adversary proceeding can do so for a variety of reasons, but the most common reason is to object to the discharge of debt owed by a debtor. A bankruptcy trustee can file an adversary proceeding when they suspect abuse or fraud from a debtor.

Since the passing of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, most bankruptcy trustee's file an adversary proceeding based on presumptive abuse. Presumption of abuse does not necessarily mean the debtor is attempting to "work the system" only that the court believes they have sufficient funds to pay creditors some of the debts they owe and should not be allowed to file Chapter 7 bankruptcy and have their debts discharged.

A debtor may also file an adversary proceeding for a variety of reasons, but the most common reason is for a violation of the automatic stay by a creditor. A violation occurs if the creditor knew the debtor had filed bankruptcy but continued to willfully collect the debt. Willful collection occurs if the automatic stay was in force but it was violated, and the collector knew about the case and either ignored the court's order or failed to immediately correct their action. Additionally, the collector must have acted intentionally. Talk to a bankruptcy lawyer if you have questions about an automatic stay and whether or not it has been violated.