What Happens at a 2004 Examination in Bankruptcy?

The 2004 examination in bankruptcy is like a deposition that allows the trustee, creditor, or debtor to get more information about property, income, or possible fraud.

Most bankruptcy cases proceed without a hitch. But on occasion, an issue can arise regarding a debtor’s property or a creditor’s right to receive payment. In such cases, anyone with an interest in the bankruptcy case can find out—or “discover”—information that could help resolve the issue by setting a 2004 examination (essentially a deposition). In this article, you’ll learn more about a 2004 examination, including who can request it and how it works.

What Is a 2004 Examination?

Occasionally, the bankruptcy trustee, a creditor, or the debtor in a bankruptcy case will want to ask the debtor or another witness questions under oath. Or, a party might need documents that might be relevant to the issues in the bankruptcy case. A 2004 examination (authorized under Rule 2004 of the Federal Rules of Bankruptcy Procedure) works like a deposition. The witness is placed under oath and answers questions. A court reporter records and transcribes everything said. The witness might also be required to produce documents.

A Meeting of Creditors Can Lead to a 2004 Examination

Almost all debtors who file for bankruptcy relief must attend a hearing called the meeting of creditors (also called the 341 hearing). At the meeting of creditors, the trustee and any creditors who attend can ask the debtor questions under oath about matters that relate to the bankruptcy.

But the trustee typically conducts several 341 hearings per hour, so there isn’t a lot of time for creditors to ask questions or for the trustee to investigate matters in detail. At times, the trustee will continue the 341 meeting to another day if a creditor needs additional time to question a debtor. But, if an extra hour or so isn’t sufficient, a 2004 examination will be set to allow the investigation of the debtor’s financial affairs in more detail.

Reasons for a 2004 Examination

Most bankruptcy debtors won’t have to attend a 2004 examination. They’re rarely scheduled, and when they are, it will often be in a complicated case or one involving fraud allegations. Other reasons the trustee or your creditors might schedule a 2004 examination include:

  • locating your property
  • examining your financial transactions
  • investigating whether you lied on your bankruptcy papers, hid property, or otherwise committed bankruptcy fraud, or
  • litigating whether you should be allowed to discharge (wipe out) one or more of your debts.

Learn about red flags the trustee looks for in a bankruptcy case.

How to Request a 2004 Examination

All parties in interest (those with a stake in the bankruptcy) have a right to request a 2004 examination. In most cases, a 2004 examination will be requested by the trustee, a creditor, or the debtor.

The requesting party must file a motion with the court and explain the reasons why it needs to conduct a 2004 examination. If the court grants the motion, it will issue an order authorizing the examination. A debtor who will be examined must appear at the time and place designated on the order for the examination. But if the witness is not the debtor, the examining party must issue a subpoena to compel attendance.

Scope of the 2004 Examination

A 2004 examination can be used to examine the debtor or any other non-debtor witness who has knowledge that’s relevant to the issues in the bankruptcy. In general, the 2004 examination may cover any of the following:

  • the debtor’s acts, conduct, or property
  • the debtor’s liabilities and financial condition
  • matters that affect the administration of the debtor’s bankruptcy estate
  • matters that affect the debtor’s right to receive a discharge, and
  • the debtor’s business operations or other issues relating to his or her Chapter 13 bankruptcy and repayment plan.

Learn about objections to bankruptcy discharges.

2004 Examination Restrictions

While the 2004 examination can be used to investigate a wide variety of issues, the examining party typically can’t:

  • request a 2004 examination to abuse or harass the debtor (or another witness)
  • investigate matters outside the allowed scope of the examination
  • use the 2004 examination process if it’s a party to an adversary proceeding (or other pending litigation) that has been filed in the bankruptcy case (if an adversary proceeding has been filed, the parties usually must use the regular discovery procedures allowed under federal law), or
  • use the 2004 examination to gain an advantage in its pending litigation (outside of the bankruptcy) against the witness.

Learn about adversary proceedings in bankruptcy.

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