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What is the Rule 2004 examination in bankruptcy?

Most bankruptcies in New York go smoothly. If your trustee or one of your creditors has questions or concerns, then they are generally raised and resolved during the meeting of creditors. In some rare cases, a party seeking additional information will file a motion for a Rule 2004 examination.

The Rule 2004 examination explained

Debtors must submit a lot of information when they file for bankruptcy, but sometimes a creditor or the trustee needs more details before taking a particular action. Most requests for additional information are informal: for example, your trustee calls your bankruptcy attorney to ask for a tax return or bank statement. A minority of queries are more formal: this is where Rule 2004 takes effect.

Under Rule 2004, practically anyone with knowledge of your finances, property, or solvency can be examined. An examination is usually called when an interested party suspects bankruptcy fraud or, at the very least, financial mismanagement or abuse. Creditors often use it to obtain information on assets that aren’t listed in the bankruptcy paperwork or to sustain an adversary proceeding regarding the debt’s discharge.

Creditors might use a Rule 2004 exam to seek out information on assets that were not listed or for evidence to support an adversary proceeding to determine that a debt is not dischargeable.

Interested parties include but may not be limited to:

  • The debtor
  • The spouse of the debtor
  • Creditors
  • The bankruptcy trustee
  • Anyone directly affected by the bankruptcy

Those who could have knowledge about your financial situation and, therefore, be questioned during a Rule 2004 exam include:

  • Spouses and former spouses
  • Your attorney
  • Your accountant
  • Officers of the banks where you hold an account
  • Your employer
  • Your employees
  • Vendors who did business with your company

The court can subpoena them and order them to bring documents relevant to your bankruptcy. The examination is similar to a deposition or court action in that it is done under oath and in the presence of a court reporter. Also similar to a deposition, the information uncovered during the examination can be used as evidence in a future court action.

During a Rule 2004 exam, those under subpoena may only be asked questions related to your liabilities, financial situation, and other matters that could affect the administration of your estate or your discharge. This includes your conduct, specific acts, or any property that may or may not have been listed on the bankruptcy documents. If you own a business that may be continued under a Chapter 11 or 12, questions may also address business operations.

If the examination reveals that you have hidden assets, destroyed records, or lied under oath, your discharge could be denied. This is one of the many reasons why it is imperative that you remain truthful and accurate on all of your bankruptcy paperwork and work with a New York bankruptcy attorney who can help you avoid potentially detrimental mistakes

Jayson Lutzky is a Bronx, New York personal bankruptcy lawyer. He has helped many clients get a fresh financial start through Chapter 7 bankruptcy filings. If you are in debt that you cannot pay back, then set up a free in-office initial consultation with Mr. Lutzky. Call 718-329-9500 for an appointment. Convenient Saturday hours are available.

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