Rule 2004

[Vicoli77]

I filed for chapter 7 and the trustee questioned my tax return as I was getting past due child support that counted as interest on my taxes so it threw a flag. Got that settled and creators meeting went well. Well now the US trustee is calling for a rule 2004, I paid for a surgery in cash before filing because my insurance would not cover and had money to live on as I would be out of work for several weeks. This was before my filing date. So now he is asking for everything under the sun. I own a home and even though it went threw one trustee I am so worried about this trustee. He seems to be wanting to murder me. Is this normal. He wants life insurance declarations, all of my EOB from health insurance for the past year, everything. How much equity can u have in your home before they sell. I have the 15k exemption but don't they also have to pay a realtor. Fees, trustees cut. How do u do the math on that. My nerves are just shot. I have a attorney but he just keeps saying it will be fine and does not offer much help for my nerves. Thanks!

[justbroke]

Welcome to BKForum.

First let's clarify the job of the trustees in a bankruptcy case. The Chapter 7 panel Trustee is an ordinary attorney (or CPA) that is appointed to oversee the case. They, the panel trustee, actually works for and is appointed for office by the United States Trustee (UST). The UST is responsible for and oversees the entire bankruptcy program. The Chapter 7 Panel Trustee is the person that is responsible for liquidating and managing the bankruptcy estate. The court acts as a referee and, in some instances, to make sure the law is followed. Other than that, I like to think of the UST as the super-trustee.

Next, a Rule 2004 examination is done to truly scrutinize what is happening with a debtor. This allow the trustee, creditor, or the UST to see if there any conduct-related issues prior to filing. This doesn't necessarily mean that the case is going to be dismissed, but rather that the UST (or other party in interest) needs a much more detailed explanation and a more thorough hearing than the 341 Meeting.

Next, the UST isn't concerned about your equity. The UST is concerned about whether you qualify for a Chapter 7 or they will push you towards (but can't force you into) a voluntary Chapter 13 reorganization.

Finally, since your attorney is saying that it will be fine, then this seems to be nothing but due diligence. Remember, the UST is responsible for the entire program and to examine cases that appear to be an abuse of Chapter 7. Your income exceeded the threshold for a Chapter 7, but your attorney likely argued that there were some one-time events. Also I think that there seems to be an issue with both the panel (case) trustee and the UST. Remember, the panel trustee looks at your assets and tries to sell them if they are not exempt. The UST looks at the overall case to determine if you qualify for a Chapter 7.

TL/DR: your attorney says not to worry and I know that's easier said than done. This may be a routine examination given the facts of your case. Provide all requested documentation and participate freely.