Lester and Associates: Adversary Proceedings, New York

Having a creditor file an adversary proceeding against you in the middle of your bankruptcy can be upsetting, to say the least. If the adversary proceeding is successful, the associated debt won’t be discharged; you’ll still owe it. Although rare, this tool is used with increasing frequency by aggressive creditors. If it happens to you, you’ll need the help of an experienced bankruptcy attorney with a history of successfully defending against these types of claims.

What Is an Adversary Proceeding?

An adversary proceeding is a lawsuit filed by a creditor against a debtor as part of an existing bankruptcy case. Creditors generally file complaints alleging that the debtor committed fraud, such as by charging on a credit card with no intention of repaying the debt. Bankruptcy law only allows the discharge of credit card debts for those who use the cards in good faith.

Why Do Creditors File Adversary Proceedings?

A credit card company can’t know for sure whether you intended to repay the debt when you used your credit card. Some may file adversary proceedings anyway because many debtors – particularly those who don’t have competent bankruptcy counsel – won’t fight these lawsuits. As a result, the debtor is forced to pay back all or part or the debt regardless of filing for bankruptcy.

Why It’s Important to Hire a Lawyer to Represent You

Extravagant or luxury purchases made shortly before you file for bankruptcy will likely be viewed as evidence of fraudulent intent. The court will look at many factors when determining whether you used your card without intending to pay the balance, including:

  • The amount of time that passed between the date when the charges were made and the date the bankruptcy petition was filed

  • Whether a bankruptcy attorney was consulted before the charges were made

  • How many charges were made and the amount that was charged

  • Your financial condition and employment status at the time the charges were made

  • The financial sophistication of the debtor

  • Whether the purchases were made for luxuries or necessities

When Can an Adversary Proceeding Prevent Discharge of a Debt?

The creditor must prove that you used credit cards or some other form of credit without intending to repay the debt. The creditor would have to establish to the court’s satisfaction that:

  • You made a false representation

  • You knew the representation was false at the time you made it

  • You made the representation with the intention of deceiving the creditor

  • The creditor sustained losses or damages because of the false, material misrepresentation you made

Call Lester & Associates P.C. Today

It’s best to seek legal advice before filing for bankruptcy in the first place. Your lawyer can review your situation with you in advance and help you to take the appropriate actions to avoid an adversary proceeding. If you’ve already filed for bankruptcy and have been served with an adversary proceeding, contact experienced Long Island bankruptcy lawyers to fight for your rights. The four attorneys at Lester & Associates will aggressively defend you, even filing a counterclaim against the creditor for costs and attorney fees where appropriate. Call us at (516) 357-9191 now for a free consultation or fill out a contact form. We have many success stories from defending clients against these proceedings and we’re standing by ready to help.

Lester & Associates, P.C.

600 Old Country Road, Suite 229,

Garden City, NY 11530

PHONE: (516) 357-9191

FAX: (516) 357-9281

EMAIL: rlester@rlesterlaw.com