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So, the defendant defaulted on the Adversary Complaint, but if a default judgment enters, does the Chap. 7 case dissolve?
The debtor did not show up for the AP?
No answer was filed
That is not enough to dismiss a Bankruptcy case.
The creditor filed the AP?
Yes it is for an Adversary Complaint, the court has defaulted the defendant/petitioner
Of course the creditor did
Yes - it is possible that not showing up for a trustee's AP would result in dismissal, but not if the creditor filed the AP.
You don't seem to be familiar with this topic
A Bankruptcy debtor has the right to - but is not required to - defend himself in an adversary proceeding.
As I said, the Court entered a default and is requesting a Proposed Judgment
If not answering the AP could result in dismissal, the case would have been dismissed - no default judgment would have been issued.
I really don't think you have experience with this, I'm sorry.
I will opt out of this question so that someone else can help you further.