Bankruptcy Rule 2004 Examination: When the 341 Meeting of Creditors Wasn't Enough
Any Party In Interest May Request
A bankruptcy Rule 2004 examination (otherwise known as a "2004 exam") is an additional question-and-answer session permitted by Rule 2004 of the Bankruptcy Rules of Procedure and allowing any party in interest to a bankruptcy proceeding to "request" within a Chapter 7 or Chapter 13 bankruptcy process in order to gain more information from a filing debtor. In other words, if one of your creditors or co-debtors or a Chapter 7 or Chapter 13 Trustee or the US Trustee would like to talk more to you than they were able to at the usual 341 Meeting of Creditors hearing that occurs within every bankruptcy case, the 2004 exam is the means by which they are permitted to do it, short of actually filing an adversary proceeding lawsuit against you and engaging in discovery.
What The Heck Is It?
The 2004 exam may be scheduled "upon motion" of any party in interest. This means that, generally, the party in interest must file a motion or obtain a stipulation for entry of an order allowing the 2004 examination from you and your bankruptcy attorney. Some creditors attempt to simply side-step this requirement and verbally demand a 2004 examination, but this is what you hire a bankruptcy lawyer to deal with and one reason why you should not attempt to file a bankruptcy without competent legal representation. That said, the motion requirement can be viewed as somewhat perfunctory as bankruptcy courts have given wide latitude to creditors and other parties in interest to demand 2004 exams. The path of least resistance is generally not to resist the 2004 exam, although anything that looks like a frivolous fishing expedition can be objected to and litigated on the particular facts.
Are There Limits to What Can Be Demanded?
Rule 2004 limits in a Chapter 7 bankruptcy case the scope of the examination to "the acts, conduct, or property or to the liabilities and financial condition of the debtor, or to any matter which may affect the administration of the debtor's estate, or to the debtor's right to a discharge." In a Chapter 13 bankruptcy, the exam may also "may also relate to the operation of any business and the desirability of its continuance, the source of any money or property acquired or to be acquired by the debtor for purposes of consummating a plan and the consideration given or offered therefor, and any other matter relevant to the case or to the formulation of a plan." While this is a fairly wide subject-matter scope, the exam clearly cannot involve questions or documentation related to matters outside the general scope of what the Chapter 7 or Chapter 13 bankruptcy process is concerned with. It is not, for example, an opportunity for a bitter ex-spouse to re-litigate all of the points of concern of a prior divorce proceeding. Such questions would constitute the "fishing expedition" mentioned above. Otherwise, a creditor or other party in interest can, with a court reporter present and after placing the filing debtor being examined under oath with penalty of perjury, any question within the permitted scope of inquiry. The creditor or other party in interest may also (and often do) request that the debtor appear for the 2004 examination with certain documentation. An attorney representing the creditor has the authority as a representative of the court under Rule 2004 to issue a subpoena requiring the production of documentation. Documentary production requests for 2004 examinations are nearly always, when issued by an experienced creditors' attorney, over-broad and requiring items that may be difficult or impossible or at least very expensive for the filing debtor under examination to come up with within the tight period of time required. Again, another reason to have retained an experienced counsel to assist you with your Chapter 7 or 13 bankruptcy. A good bankruptcy lawyer will know how to respond to such requests.
The Bankruptcy Rule 2004 Examination: The Bottom-Line
Bankruptcy, especially Chapter 7, may seem like a process consisting only of form-filling—until you run into a recalcitrant and litigious creditor. Would you know how to respond to a demand that you drive 100 miles in the middle of a work-day with 10 years' worth of tax returns, pay-stubs, bank statements, and volley of other documentation without an experienced bankruptcy lawyer advising you? Or if you paid a few hundred bucks to a non-attorney "bankruptcy petition preparer" to fill in the blanks (usually incorrectly) for you and then left you on your own? Probably not. When it comes to any face-to-face contact with a creditor arising from the bankruptcy process, you need experienced guidance through the process. If you are a Michigan resident and would like to explore your options for a Chapter 7 or Chapter 13 bankruptcy with an experienced Michigan bankruptcy attorney, please contact us at (866) 674-2317 or click the button below to schedule a free, initial consultation.
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