Hiring an Attorney for an Adversary Proceeding in Bankruptcy

In most cases, a personal bankruptcy can be relatively straightforward. Small business bankruptcy may be more challenging. In either situation, however, someone may object to the discharge of debt. This occurs most often when a creditor is alleging that a debt should not be forgiven (or “discharged“) because of fraud, but it can also happen if a creditor thinks you are abusing the system, have not disclosed assets, or have not fairly characterized its claim.

What Is an Adversary Proceeding?

The procedure by which the court determines whether a debt should be discharged is called an “adversary proceeding.” Adversary proceedings also include actions to recover money or property (such as fraudulent or preferential transfers), to determine the validity/priority of a lien, or to ask for an injunction. An adversary proceeding is a separate lawsuit that takes place in the bankruptcy court and is tried by the bankruptcy judge. A creditor is the party objecting to the discharge. Under 11 U.S. Code §727 and related rules, a trustee or U.S. Trustee can initiate adversary proceedings. Common issues heard within an adversary proceeding include whether certain debts can be discharged, allegations of fraud, and fraudulent transfers.

How Adversary Proceedings Work

Adversary proceedings are highly specialized matters that require a lawyer who is prepared to appear in court. Because these proceedings can be legally complicated and time-consuming, be sure that the bankruptcy attorney you hire regularly handles adversary proceedings in bankruptcy court.

Initial Meeting With an Attorney

You will want to meet with any attorney you are considering hiring to see if you two can work together. Many attorneys offer free initial consultations for legal advice. For the attorney to do the best possible job on your behalf, they need  your input and cooperation.

At your first meeting with your attorney, you should be prepared to provide the following information:

INFORMATION ABOUT YOU

• Name

• Address, including County

• Length of time at that address

• Previous address(es) (for last ten years)

• Your work telephone numbers

• Your home telephone numbers

• E-mail address

• Your occupation

• Your company and contact information

• Other litigation you have been involved in

• Other adversary proceedings, or other litigation, you are currently involved in

• Bankruptcy Case File No.

• Judge assigned to the case

• Trustee assigned to the case

• Date filed

INFORMATION ABOUT THE OTHER PARTIES

• Who is making the adversary claim (your opponent)?

• Name

• Is your opponent a business?

• Opponent’s business structure (corporation, partnership, sole proprietorship, etc.)

• Principal place of business (address, including County)

• Length of time at that address

• Previous address(es) (for last ten years)

• Work telephone numbers

• Home telephone numbers

• E-mail address

• Former name(s)

• Related business(es)

• Contact person

• Other officers or officials of the business

• Any litigation the opponent is involved with

INFORMATION ABOUT THE CASE

Describe the incident that occurred that led your opponent to bring this adversary proceeding:

• How much is your opponent claiming as exemptions from discharge?

• Are there any documents that relate to any agreements you have with your opponent?

• Are you aware of any claims you may have against your opponent?

Be sure to provide the attorney with documentation for review.

Questions to Ask Before Hiring an Attorney for an Adversary Proceeding

You will be interviewing a bankruptcy lawyer much like you would interview a job applicant. You want to make sure they have the right skills and experience to handle your case. After you have given the attorney information about your bankruptcy, you will have a chance to ask them questions.

• How many adversary proceedings have you handled in the past year?

• What kinds of adversary proceedings have you handled that are similar to mine?

• What types of bankruptcy proceedings do you have experience with, Chapter 7 bankruptcy, Chapter 11 bankruptcy, Chapter 13 bankruptcy?

• How do you approach deadlines, discovery, contested matters, and possible settlements?

• What are the strengths and weaknesses of my case?

• How will you bill for court hearings, discovery, travel, and expert witnesses?

• How will you communicate updates to me–by mail, email, phone, or online portal?  How quickly can I expect a response?

Pay attention to how you feel about working with this attorney. Are their answers specific and understandable, or are they only using legal jargon? Do you feel comfortable in this client relationship? Bankruptcy is a stressful time with many deadlines and hearings, so make sure you work with someone you feel is on your side.

Getting the Legal Help You Need

Bankruptcy filings can be complicated and time-consuming, particularly when you are litigating an adversary proceeding. Speak to an experienced bankruptcy attorney today to find out more about the bankruptcy process, adversary proceedings, and how a lawyer can best represent you in bankruptcy court.