adversary proceeding
An adversary proceeding may refer to any case in which two opposing parties resolve a dispute through a neutral third party, however, the term is more frequently used to refer to a specific type of action in bankruptcy court .
When a party declares bankruptcy , creditors may choose to commence an adversary proceeding to prevent specific debts from discharge . Adversary proceedings are governed by Federal Rules of Bankruptcy Procedure Rule 3007 and Rules 7001-7087 .
Once an adversarial proceeding has begun, a court may refuse to discharge debts if a creditor can show that those debts are the result of the debtor’s fraud or the debtor failed to properly disclose information as per USC 27 §727 . A court can also refuse to discharge a debt acquired with the intent to cause willful and malicious injury to another/another’s property or a debt incurred due to fines or penalties imposed by the government. Furthermore, debts greater than $500 incurred from the purchases of luxury items/services are presumed to be non-dischargeable.
For a more comprehensive list of potential exceptions to bankruptcy discharge that may warrant an adversary proceeding, see USC 11 §523 .
[Last reviewed in June of 2022 by the Wex Definitions Team ]
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