Section 2004 Examination and possible objection to discharge

[catleg]

Sadly, since this is apparently not one of the 19 Too Big To Fail banks with the implicit government guarantee, and since most bankers are too afraid to loan out any money these days, it appears that they spend their time combing through their old bad loan portfolios looking for money. This is tantamount to being an unemployed person and searching your sofa and under the car seats for loose change. "Hey I found 24 cents this week, compared to 15 cents last week, the trend is higher". Hang in there, and check every Friday to see if the bank has been taken over by the FDIC.

[AbbeyA]

So I talked with our attorney yesterday about things ... he feels that the creditor will file some kind of objection - though he is not sure what angle they will be taking. He thinks that since the creditor has taken it this far, they will go with filing an objection.

Here's where I'm torn ... everyone here keeps saying they can't really file an objection without merit unless they want to risk sanctions and getting thrown out of court. They would need real, solid evidence of something that they are trying to claim, which there is nothing. That being said, why does our attorney think they will file something and risk sanctions - why wouldn't he think they will finally call it a day on this mess? He said he has absolutely no idea what they will try to file and is hoping they won't, but we'll deal with it if/when it happens.

Dh paid himself at most $90k per year from the business. Once in 4 years he took a $10k "bonus," that each member got when there was a surplus of money in the account. We were paid very sporadically, some months nothing, other months he paid himself more to make up for missed payments. He made several deposits of money into the business from our personal account to make sure payroll was covered when it was getting bad. He put in additional money into the collateral stock account toward the end when the market was down b/c the collateral on the loan was below the debt amount - as requested by the banker so he wouldn't collapse on the loan. He collapsed on the loan anyway one month later. The bank took the collateral stock account dh pledged to pay down the loan. The bank paid a business vendor out of the business account - a preferential payment not approved by dh, after they forced dh to sign over the accounts receivables to go directly to them. Another owner filed bk and it went through without a hitch, that person was discharged in the beginning of January, after the normal time frame after 341 meeting.

Now here we are, 8 1/2 months and three time extensions later and we wait until June 30th for the next deadline. WTF??? Wouldn't you think that the bank risks exposure of their shady practice by going further? Why would they even do that? There is more stuff that really puts them into a bad light - such as pulling back a health insurance payment dh made from the business account for the last month and they wouldn't refund the employees their payroll witholdings for the insurance. Any thoughts/comments?

[AbbeyA]

I know, it does feel that way. I had to go through an EUO (Examination Under Oath) which serves the same purpose as a 2004 exam, but it pertains to insurance claims instead of bankruptcy. Katrina dropped six HUGE pine trees on my house and a few days later, what little remained standing caught fire. There was no electricity going in, so the insurance company did a fraud investigation. You have never met a snake-rat-bastard-sunofa&itch until you've met an insurance fraud investigator. I was absolutely worthless for the nearly 6 months that was going on.

I just thought I hated insurance companies up until that point.

I'm sorry about your home and belongings, I'm assuming everything turned out OK in the end? BTW, I love your disclaimer

[MSbklawyer]

Sure feels like they have looked under rocks and have also performed a colonoscopy!

I know, it does feel that way. I had to go through an EUO (Examination Under Oath) which serves the same purpose as a 2004 exam, but it pertains to insurance claims instead of bankruptcy. Katrina dropped six HUGE pine trees on my house and a few days later, what little remained standing caught fire. There was no electricity going in, so the insurance company did a fraud investigation. You have never met a snake-rat-bastard-sunofa&itch until you've met an insurance fraud investigator. I was absolutely worthless for the nearly 6 months that was going on.

I just thought I hated insurance companies up until that point.

[AbbeyA]

[QUOTE=MSbklawyer;419191]Well, it's certainly an ordeal, I can understand that. But even though you've truly done nothing wrong, you have to understand that the bank does not have to take your statement that "we've done nothing wrong" at face value. They're entitled to look into it, turn over leaves and look under rocks. They have a legal duty to their shareholders to minimize any losses and to make absolutely sure that they're not being played. That's never a pleasant experience, to be under a microscope like that, but that is the adversarial system.

Sure feels like they have looked under rocks and have also performed a colonoscopy!

I understand how they have to be sure of everything and all, it's just the way this game has been played that has been so shady and difficult to digest. From the last minute filing of extensions, to the last minute 2004 exam, to the requests for more documents even though they were not on the motion to compel, to the different "theories" they have had about reasons to object ... all of it. That and the fact that they did not go after dh's business partner, his bk went through w/o a hitch. And they have another home that was pledged as collateral (a 3rd partner) and haven't done anything with it to date. That home has a significant amount of equity in it -- not that we want that family to lose their home, but we lost our stock account and are losing our home in foreclosure ... Just ready for this to end.

[MSbklawyer]

I really can't believe the amount of "legal" bs allowed in court proceedings. As one who had no experience with the law/who had absolutely zero interest in anything to do with it, I can't believe how things actually play out within the system. It is shameful. I will say it again, my dh did nothing wrong. This was a business debt which he personally guaranteed. The business was run on the up and up. The bank itself shut the business down, even thought they had never missed a payment in 4 years. They called the loan due to the collateral securing the loan being upside down (stock account that was devalued from when it was first pledged, and housing appraisals down due to the housing market) and a very poor cash flow due to a 40% drop in revenue b/c of the recession.

Well, it's certainly an ordeal, I can understand that. But even though you've truly done nothing wrong, you have to understand that the bank does not have to take your statement that "we've done nothing wrong" at face value. They're entitled to look into it, turn over leaves and look under rocks. They have a legal duty to their shareholders to minimize any losses and to make absolutely sure that they're not being played. That's never a pleasant experience, to be under a microscope like that, but that is the adversarial system.

Sigh ..... I hope that on the 30th I am doing a happy dance.

I hope you are too and in all liklihood you will be.

[AbbeyA]

I really can't believe the amount of "legal" bs allowed in court proceedings. As one who had no experience with the law/who had absolutely zero interest in anything to do with it, I can't believe how things actually play out within the system. It is shameful. I will say it again, my dh did nothing wrong. This was a business debt which he personally guaranteed. The business was run on the up and up. The bank itself shut the business down, even thought they had never missed a payment in 4 years. They called the loan due to the collateral securing the loan being upside down (stock account that was devalued from when it was first pledged, and housing appraisals down due to the housing market) and a very poor cash flow due to a 40% drop in revenue b/c of the recession.

Never in a million years would we have imagined how badly this has turned out. DH held up his end of the bargain - his collateral stock account was taken to pay down the loan. Due to the housing market, the equity in our home that was "pledged" is no longer there -- the lien exists but there is nothing there for them.

Sigh ..... I hope that on the 30th I am doing a happy dance. Getting very discouraged and beaten down by all of this. We have young children to raise -- what the bank is trying to do is secure that our kids will never have anything, will never have college funds, and dh will forever be indebted to this bank due to the business failure. Again, the amount of money is very significant.

[Brazzy]

The objection itself comes with no evidence in itself. It simply will be a complaint with what they intend to prove. From there it turns into a long drawn out series of nonsense BS. None of which you cannot worry about. As for the extension of the deadlines its not uncommon. They dont want to come at you with nothing and at a glance on paper to them it probably looks fraudulent. The thing is that there is a creditor's employee who is working the account due to the BK. They originally see what could be fraud, but they need to look into it further. Since proving fraud is not easy, they need the full cooperation from other representatives of the bank, their attorney, local branches, and an ass load of other people who dont give a shit and have the "its not my job" attitude. With that said, getting the necessary information to make the balls out determination to pursue an objection to discharge takes time. The extension is VERY common and nothing to be worried about.

Your worst case scenario if you did nothing wrong is that they do file the objection and cause a long costly process to you. At which point you're attorney will eventually turn to you and say something like to the fact that you could either settle it and make it go away or roll the dice and run the X% chance in court and losing entirely. They will probably explain to you what the evidence is and how strong it is, but there is always the chance of getting the case assigned to a judge who portrays an insurmountable level of douche baggery and that there is risk.

Odds are the 2004 exam and extending the DL is just a way to buy time to find the evidence they are looking for. Them doing what they are doing means they have yet to find what they are looking for, and thats good for you.

[MSbklawyer]

OK, so as predicted, the judge granted their time extension to file an objection to June 30th. The judge did say that this is absolutely the last time extension they will receive. Ugggggggg, not over yet ...

So for those of you with a legal background -- they can't file an objection without evidence of anything, right? They can't say, we performed the Section 2004 exam but we still believe they are hiding assets - right? They can't say, there is no evidence of embezzlement of money/fraud from the business, but we believe that it happened - right? What a nightmare. I can't imagine they would bring this to an AP without anything behind it. Thoughts?

Do we have any recourse after this is over with this bank? We didn't actually talk with our attorney, he left a message as we weren't home. We'll talk to him on Monday and find out more.

They could, I suppose, file an objection without any evidence of their claims but it would likely get them or their lawyer sanctioned. But to answer your question, no. Suspicions, hunches and gut feelings alone aren't enough to support an objection to anything in any federal court. You have to have evidence. Real, objective, credible evidence. If you don't have any, you lose.

That's the way it's supposed to work, anyway.

[AbbeyA]

OK, so as predicted, the judge granted their time extension to file an objection to June 30th. The judge did say that this is absolutely the last time extension they will receive. Ugggggggg, not over yet ...

So for those of you with a legal background -- they can't file an objection without evidence of anything, right? They can't say, we performed the Section 2004 exam but we still believe they are hiding assets - right? They can't say, there is no evidence of embezzlement of money/fraud from the business, but we believe that it happened - right? What a nightmare. I can't imagine they would bring this to an AP without anything behind it. Thoughts?

Do we have any recourse after this is over with this bank? We didn't actually talk with our attorney, he left a message as we weren't home. We'll talk to him on Monday and find out more.

[Universal]

The bad chapter will close in due course. You sound like you have done everything on the up and up. You have every reason to be proud of that. The opposing counsel is probably billing by the document and by incremental time. At some point the Judge will say enough is enough. You are really an inspiration for staying the course and I bet will have some excellent advice for those who follow.

[AbbeyA]

I know, they don't have any case at all ... just tired of waiting for all of this to be over and move forward. I have a hard time really letting myself think positively and move forward with our lives when this bad chapter of our lives can't be closed yet.

[keptdigging]

If the judge grants the extension it is because he sees that, objectively, 30 days is not much difference. It DOESN'T mean they have a case. Remember that.

[ColoradoBell]

I understand your frustration and feelings of being victimized...living the same feeling for over 5 years now. You've rec'd good advice tho: try to stop thinking about it and letting it rule your life. It's unfair and unjust, but it seems that as long as someone is making money off of you (their attorney's and even your attorney)that the paper shuffle never ends.

Take a walk, make love, drink wine, cook a gourmet meal and forget about them.

[AbbeyA]

I typed up my response to their points in the motion and sent it off to our attorney. He says he's going to fight it but to expect that the judge will grant the extension since it is only 30 days. I need to figure out a way to get this out of my mind as it's consuming me. Everytime I tell myself that it will be over by xxx date, it goes on and on and on... OK, enough of the pity party - at least I know all of you are on our side! Thanks for listening to me whine over this mess of a situation, I'll keep you posted on what happens next Friday.