• An adversary proceeding is a lawsuit within a bankruptcy case.Justice image by MVit from Fotolia.com
  
  When a debtor files for bankruptcy in Tennessee, he surrenders his non-exempt property to be sold to raise money to pay his creditors. There may be times when a creditor does not accept this approach. The creditor may want to challenge the ability of a debt to be discharged or not. If this is the case, the creditor may pursue an adversary proceeding.
  
  

Grounds for Adversary Proceeding

• A party may file an adversary proceeding to handle disputes that arise during the course of a bankruptcy case. According to the Federal Judicial Center, "It is literally a lawsuit within a case and is generally initiated by a complaint and requires a filing fee." In Tennessee, a party may file an adversary proceeding to recover money or property; to determine the validity, priority or extent of a lien or other interest in property; to obtain approval for the sale of both the interest of the estate and of a co-owner in property; to object to or revoke a discharge; to revoke an order of the confirmation of a Chapter 11, Chapter 12 or Chapter 13 debt repayment plan; to determine whether a debt may or may not be discharged; to obtain an injunction or equitable relief; to subordinate any allowed claim or interest; to obtain a declaratory judgment; or to determine a claim or cause of action removed.
  
  

Notifying Defendant

• To pursue an adversary proceeding in Tennessee, the plaintiff must file a complaint with the Tennessee bankruptcy court handling the case. In the complaint, the plaintiff must allege one or more of the above causes of action. The plaintiff must also notify the defendant an adversary proceeding has been filed against him by presenting him with a summons. The summons must name the parties; be directed at the defendant; state the name and address of the plaintiff's attorney; state the time within which the defendant must appear and defend; and notify the defendant that a failure to appear and defend will result in a default judgment against the defendant for the relief demanded in the complaint. The summons must also be signed by the clerk and bear the court's seal.
  
  

Adjudication

• The defendant should receive the summons by service of process. After the defendant has been served, the defendant must answer the complaint within 30 days after the issuance of the summons. The defendant has the opportunity to answer the allegations the plaintiff set out in the complaint. The case will play itself out in a Tennessee bankruptcy court. The bankruptcy judge will issue an order regarding the issue in the case. For example, a credit card company has filed an adversary proceeding to challenge the discharge of the debtor's credit card debt. If the judge rules in favor of the credit card company, he will issue an order to prevent the debtor from discharging the credit card debt. The debtor's bankruptcy case will continue, but the credit card debt will remain after his other debts have been discharged.