What is a Rule 2004 examination in bankruptcy?

Every debtor that files bankruptcy must make one court appearance where they attend their meeting of creditors, also called a 341 meeting. At the meeting, you will meet the trustee assigned to your case. The trustee will ask you required questions and may ask additional questions to understand the big picture of your financial situation.  

For most people, the paperwork and information supplied at the 341 meeting are enough for the case to move forward to confirmation. If the trustee or a creditor requires more information to understand your overall finances, they may request a Rule 2004 examination.  

When the 341 Meeting Isn’t Enough- the Rule 2004 Examination

Rule 2004 examinations are more formal than 341 meetings and are relatively rare requests. Typical reasons for 2004 exam requests are to find out if the debtor is hiding assets, why the debtor transferred property out of their name before filing bankruptcy, or suspicious financial transactions were found when reviewing the debtors case. 

A 2004 examination is conducted like a deposition.  There is a court reporter, and you are sworn in to give testimony.  Your attorney can object to the questions, but you still must answer them unless instructed otherwise.  It is normally held at your attorney’s office of the office of the opposing party.  There is no judge present, so any objections are ruled on at a later date. 

During a 2004 examination, the trustee or creditor can examine anyone that might have knowledge of the debtor’s finances and request the debtor or a third party to produce documents for review. Rule 2004 exams are often referred to as “fishing expeditions” because the scope of questioning allowed at a 2004 exam is very broad. Questions can cover topics such as your debts, assets, financial conditions, and your actions before you filed the bankruptcy petition.  

When the Circumstances Might Call for a 2004 Examination

2004 examinations are most often requested when there is a complex financial situation or financial activity before a bankruptcy that raises red flags for bankruptcy fraud, such as large monetary gifts or the sale or transfer of large assets for less than their value. Most ordinary individual debtors need not worry about creditors requesting 2004 examinations unless the creditor suspects fraud.  

While a 2004 exam is very broad, a creditor or trustee cannot use the exam to harass the debtor or to gain an advantage in litigation outside of the bankruptcy. If you are required to attend a 2004 exam, your attorney will prepare you for the hearing and go over potential questions you might be asked. As long as you make a good faith effort to list all your assets and debts, it’s unlikely that you will need to worry about a 2004 exam.  

For more information about Rule 2004 or to speak to someone about filing for bankruptcy contact our office.  Our bankruptcy attorneys will be happy to go over your circumstances with you and help you determine the best course of action.  We have bankruptcy offices in Wichita, Topeka, Lawrence, and Overland Park.   

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