When one files for bankruptcy, his or her assets are placed into a bankruptcy estate and a trustee is appointed to analyze the estate. The trustee is court-appointed and represents the interests of the creditors to the estate. Normally, in a personal Chapter 7 bankruptcy, the trustee will review paperwork, ask the debtor a few questions and  then recommends to the Bankruptcy Court Judge to discharge the debts. In one instance reported by the New York Law Journal, however, the bankruptcy was not so simple.

An adversary proceeding is a challenge to the bankruptcy. For example, a creditor can challenge the automatic stay placed on debts or someone can challenge the trustee’s decisions. In this bankruptcy case, there was an adversary proceeding regarding conveyances, or transferring of properties, that were allegedly “fraudulent.” The debtor’s son’s lawyer made the allegation.

After the adversary proceeding, the bankruptcy court fined the lawyer $15,000 in 2013. He had brought forth counterclaims against the trustee. He alleged that the trustee did not investigate property and tried to “intimidate and injure” his client’s father’s family. The bankruptcy court disagreed with him and said he did not have a basis to sue. The lawyer was suing because the trustee was being malicious, was acting in “bad faith,” and was not directly stating that the trustee was trying to “deprive” the petitioner of property. This case law technicality was one reason that the district court upheld the decision when the lawyer appealed the decision.

If you are facing financial difficulties, then you may wish to consider bankruptcy. A Chapter 7 bankruptcy, also known as a “liquidation bankruptcy,” can wipe out most of your debts. This enables you to get a fresh financial start. To set up a free, initial, confidential, in person consultation with bankruptcy lawyer Jayson Lutzky, call 718-514-6619. Mr. Lutzky has been representing clients for the past 31 years and can offer advice based on your situation in a consultation. Visit www.MyNewYorkCityLawyer.com to learn more about your options.