Meeting Of Creditors or Rule 2004 Examination? Which Is Appropriate?

04 Aug Meeting Of Creditors or Rule 2004 Examination? Which Is Appropriate?

As a consumer bankruptcy attorney, most days are pretty exciting in the Bankruptcy Courts, and somedays bankruptcy issues can seem repetitious and boring. The other day an issue arose concerning a line of questioning that arose during a meeting of creditors. Meetings of Creditors are usually pretty mundane; however, this one almost turned into a shouting match between lawyers, when one lawyers questions appeared to get out of hand.

Every Debtor that files a Consumer Bankruptcy Petition and Schedules is required to attend a meeting of creditors. During the meeting of creditors, the U.S. Trustee, Creditors and Bankruptcy Trustee may examine the debtor. But Section 343 of the U.S. Bankruptcy Code is not specific in defining the scope of the examination.

So, the question becomes: What may be asked during the Meeting of Creditors? What is outside the scope of the Meeting of Creditors? And, is there a venue for additional questioning? In the past, several of our members have written on the topic of the meeting of creditors, you may wish to review these articles, 1, 2, 3, 4.

What if a creditor requests a Rule 2004 Examinantion? Do you have to attend? What is the scope of the 2004 Examination? A Rule 2004 examination goes beyond the meeting of creditors and allows any entity to be examined if the Judge allows, by any party in interest. Yes, even the Bankruptcy Trustee can be examined. Even further, a party can request that documents be produced at the 2004 examination.

The Scope of the Rule 2004 examination is similar to the Section 343 examination (aka Meeting of Creditors) in that the examination must relate to the acts, conduct or property and/or the financial condition of the debtor. The examination may also delve into any matter which may effect the administration of the Debtor’s Estate. Additionally, the examination may concern the debtor’s right to a discharge.

Interestingly, our Court is a little bit different. Judge Alexander L. Paskay has held on numerous occasions that a Rule 2004 examination is not a fishing expedition for creditors looking for a reason to file a dischargeability complaint. In other words, Creditors often use the Rule 2004 examination as a free (cheaper) bite at the apple. So, based upon Judge Paskay’s rulings, we review each Motion for a Rule 2004 examination very carefully to see why the request is being made, and if appropriate, we object to the improper motions and schedule them for a hearing.

Many times, the Rule 2004 examination is used to go into the debtor’s assets and entries on the schedules. For example, let’s say that an ex-spouse files bankruptcy and the other ex-spouse does not see all of the items on Schedule B that she or he purchased as gifts. They may wish to request a 2004 examination to determine where all of those items went. So, while the scope may be similar to the line of questioning at the meeting of creditors, it appears that Congress contemplated a venue where any entity could be questioned by any interested party.

Recently, we had a case where we had to use the threat of a Rule 2004 examination to make an interested party back down. The strategy worked rather nicely.

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Carmen Dellutri is a proud member of the Florida Bar, and he is a Board Certified Consumer Bankruptcy Attorney, Certified by the American Board of Certification. He practices in the areas of Consumer Bankruptcy and Plaintiff's Personal Injury. He is the principal attorney at The Dellutri Law Group, P.A. The firm supports many charitable and civic causes by donating time and much needed capital to our community. Mr. Dellutri and the other attorneys in the firm routinely speak to students of all ages about various legal and societal issues.
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