If you are about to file for bankruptcy, you can be forgiven if you have never heard of a 2004 Examination. This special hearing is somewhat rare and is reserved for cases where the bankruptcy filer is suspected of wrongdoing. Being accused of breaking a bankruptcy rule is to be avoided at all costs, so take a look at the below information so that you fully understand the importance of following your bankruptcy attorney's advice.
Rule 2004 of the Bankruptcy Code
Just as the terms chapter 7 and chapter 13 bankruptcy comes from the Federal code, so do the Rule 2004 Examination. As the name suggests, this hearing gives interested parties the right to ask in-depth questions, under oath, of bankruptcy filers. As you might already know, the creditor's meeting is the only time most filers will face a public hearing. While it's true that the creditor's meeting does invite creditors to attend and the trustee is allowed to question filers, the 2004 Examination provides an opportunity to learn more. A 2004 Examination is dedicated to questioning a single or joint filer under a single bankruptcy case number.
What Might Prompt a 2004 Examination?
If you know what might get you into hot water in the first place, it increases the chances that you will do everything possible to avoid those things. Most bankruptcy filers make the smart move of filing with the help of an attorney, but that may not necessarily be all that is required for a filer to steer clear of further scrutiny. Below are the common reasons you might have to undergo a 2004 Examination before your bankruptcy can be fully discharged.
1. False information on the bankruptcy paperwork – You are under oath when you sign your bankruptcy forms. If the trustee or any creditor has reason to believe that you have not been truthful, they are allowed to request a 2004 Examination.
2. Verifying property – In some cases, the bankruptcy trustee can visit and inspect any property listed on the forms. If an impropriety is suspected, you might be questioned further. For example, if the inspection noted life preservers, water skis, and other evidence of boat ownership at your home and no boat was listed on the property forms, you might have some explaining to do.
3. Pre-bankruptcy transactions – You cannot sell, give away, or trade property in the time leading up to a bankruptcy filing. This is because the bankruptcy trustee wants full control of your financial dealings and they have every right to examine things before you even were sure you would file bankruptcy. Be sure to speak with your bankruptcy attorney about any property transactions that go back several months. You might need to wait a few more months to file.
The reasons above are not meant to be a complete list so be sure your bankruptcy lawyer is aware of every aspect of your use of credit cards, property, and more.