According to Federal Rules of Bankruptcy Procedure Rule 2004, also known as the 2004 Examination is used by the bankruptcy trustee and is like a statement of warning. According to Los Angeles based bankruptcy law firm https://www.recoverylawgroup.com/, these are generally referred to as shipping expedition. This rule states that “[o]n motion of any party in interest, the court may order the examination of any entity” regarding “the acts, conduct, or property or…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….” The rule offers limited objections to inadequately stated questions. The aim of rule 2004 is to find out undisclosed assets, question any dubious transactions in order to ascertain whether the debtor has committed any fraud or not.
There are rarely any limitations to the types of questions that can be asked, and types of discovery used in Rule 2004. Since this is a fishing expedition, no question can be objected to, with the only exception that the question and the discovery request should be justifiable and legitimate. In a nutshell, anything and everything concerning the finances or property of the bankruptcy filer can be under scrutiny.
When do 2004 Examination take place?
Most bankruptcy cases do not require a 2004 Examination. These are included only if the bankruptcy trustee feels there is more to the debtor’s assets that have not been disclosed or the debtor is under-valuing their assets in order to protect them. Any transactions that were done prior to the bankruptcy filing, which the trustee feels are dubious can also be questioned in this case. Since this is not a regular practice, 2004 Examinations, if required take place after the 341 hearing (Meeting of Creditors).
Though you cannot object to the line of questioning in a 2004 Examination, having an attorney can be a good idea as they can help you be prepared for not just the questioning but also about the bankruptcy process. To know more about bankruptcy proceedings, you can consult experienced bankruptcy attorneys by calling 888-297-6023.