Section 2004 Examination and possible objection to discharge

[justbroke]

If presented correctly, no judge should grant yet another extension. I have seen debtor attorneys stipulate to an extension, which is dumb I think. Fight the extension.

[AbbeyA]

Do you think the judge will grant the time extension? Now that I have read the motion, the basis for the time extension is that they say they still need more time to examine our finances -- there is nothing about fraud in the loan documents. We submitted tax returns that were part of the motion to compel -- dh had a business but was not an "employee" of the business. B/c of the business, his salary was submitted on a K-1 statement and not a regular 1040. The bank asked for tax return statements -- dh forwarded what he got from the accountant to our attorney, who sent it to that bank's attorneys. The tax returns did not have the k-1 statements attached so they are saying that they need to scrutinize our finances more since our tax returns don't reflect dh's income. You would think that attorneys representing banks who make loans to businesses would have some knowledge of how business owners file their taxes, but they really had no clue and were hinting that dh evaded federal taxes for those years he had the business. This bank held the business bank account, so they know exactly what dh paid himself over the years. AND the accountant that filed the business taxes and personal taxes was the accountant that the bank required him to use. Grrrrrrr, this whole thing pisses me off. Thoughts? The motion for the time extension is to be heard on June 4th.

[keptdigging]

Sounds like a classic case of harassment and bad faith to me. Hopefully the judge will see it that way.

[justbroke]

Your attorney(s) needs to be more aggressive in fighting any new motion to extend. The motion to extend is only to allow a creditor or Trustee time to investigate a particular claim. That the creditor is now pursuing another "theory" that there is fraud, should be used in any objection or opposition to the motion to extend. I would think two extensions totaling over 135 days, is more than enough time, when you include the additional 60 days from the 341 meeting (that makes it over 6 months or 180 days).

Hopefully your attorney is aggressive enough and mentions the 2 extensions and plenty of time for the creditor to have exhausted their need to review.

[AbbeyA]

Very much in need of advice here!!! So our creditor filed ANOTHER motion to extend the time to object to discharge!!! They did not file a motion to object, just a time extension. They want until June 30th. Here's what they've done so far ... they first said we were hiding assets -- proven to be incorrect. Then they sniffed around to see if dh embezzled money out of the company -- again proven to be incorrect. Now they are basing their time extension on trying to investigate if there was any kind of fraud on the initial business loan documents. This is the biggest bunch of bs I have ever heard! They are trying to find something/anything to make the debt non-dischargeable. I am so pissed I don't know what to do with myself.

They had a 90 day time extension the first time and got the 2004 exam. They got their order to compel us to turn over documents -- which we did. They got an additional time extension of 45 days. We had the section 2004 exam/deposition with the lawyers, which was 4 days before the last day to file an objection. At that meeting, they asked for more stuff, which was NOT in the motion to compel. We gave it to them as there is nothing to hide. They have nothing. Now they file another time extension!!!

If the judge grants their time extension I don't know what I am going to do. Any advice here? Our lawyer will fight the time extension, but he said it is only to June 30th and the judges usually grant them, but for a 3rd time??? Our attorney is, still is not concerned about discharging the debt, blah blah blah ... we are bankrupt, we don't just have thousands of dollars laying around to keep paying our lawyers. I know this is going to cost a lot of $.

Any moderators here that can comment on this? When this is over, I want to sue this bank for harassment.

[AbbeyA]

So the 2004 examination meeting was today. They asked lots of questions about the business financials -- asking specific questions about checks to vendors, what they were for, how dh paid himself etc... Basically it was a fishing expedition to see if he took unauthorized money out of the business, which did not happen. They asked minimal questions about our personal finances as everything is clearly accounted for and there are no hidden assets. There is nothing improper about this. What I found funny is that the attorney looked stupid b/c she kept asking about checks dh would pay to the company from our personal account -- it was always for payroll when cash flow started to become a problem and she asked if he ever paid himself back ... ummm, NO! It is quite apparent that he did his best to keep the company going by putting in more personal money when is was at the end.

Our attorney thinks they are absolutely fishing and haven't found anything (there is nothing to find), but thinks they are trying to trip him up and get a technicality to stick him with the debt. He does believe they are going to file an objection to discharge -- not sure what they are going to base it on though. There was no bombshell evidence, there was nothing dh couldn't account for accurately and efficiently.

Attorney will file an objection to their objection, asking them to produce their evidence, which they don't have.

Sigh ... almost 8 months in and I don't think it is going to be over yet.

When does the lawyer's oath that they are sworn in by come into play? When does an attorney look at things and accept the true situation and let something like this go? When do they advise their client that there is nothing more to pursue? When do they look at the human aspect of this and and the whole big picture and stop trying to screw us to the wall? If they file an objection without merit, will the judge reprimand them and possibly file sanctions?

They have until Friday to file an objection. I hope our attorney is wrong about this. He still is not concerned about it not being discharged, just really pissed that they are doing this and it will probably go to the next step.

I can't take much more of this, it has been going on so long now.
I called my doctor today to start an antidepressant - I have nothing left in me to cope anymore with the foreclosure and moving stuff still in process and this stuff still not being over.

[catleg]

The best revenge is just to get on with your life. Don't waste your energy and emotions on bankers and creditors lawyers. Cause, the trouble is, any tort you'd recover would just be a pre-petition asset to be distributed to ... creditors . :-(

Practice your answers, bring your lawyer, and get it over with.

I agree it sounds like you got taken advantage of, doesn't everyone who goes into debt with a banker? :-)

[AngelinaCatHub]

As one having to go through a 2004, it is easy and relatively painless. We did not have our lawyer with us (of course we had no idea what we were doing anyway) but we met with the Trustees lawyer. Ours was to determine a preferential payment and where the money came from. Of course like you folks we were terrified and stammered and stuttered as well. He taped the talk, I don't remember being sworn in, there were only us three. He asked where this and that came from. and thanked us. Later on, a paper hit PACER asking to recover our two payments that were preferential. I actually called the lawyer and followed up with a letter asking if we could pay this amount instead of recovery it from the kids. He gave permission, we did the thing and all went well.

NO ONE has messed up their case as badly as we did, but our ignorance was so becomingly apparent that anyone could see we did nothing in malice or fraud.

The 2004 is used only as if it were a deposition. You are asked to provide the answers to their questions. The only right answers are "Yes, No, I don't remember". Volunteer no explanations. Say only what is asked of you.

Now if they get an exception to this creditor on your bk, you can fight this situation. It will not stop your bk from all the rest of the credit being discharged nor will an AP stop the bk. Our AP was open a year longer than our bk.

You cannot make a sanction against your adversary. Sanctions are made by a Judge. As all have said here on your thread, wait and see. They seemingly have a weak case. If they cannot come up with more than the facts, I would say the 2004 action will be denied by the Judge. You now have less that two weeks and things will get better. 'Hub

[AbbeyA]

They are probably hoping you will suggest negotiating, in hopes of a settlement, before Monday.

If you are in the right, so to speak, and your attorney is confident, I wouldn't worry. Many times, the exam reveals nothing of interest, and the opposing party, left with nothing to pursue, drops the case.

So you think they are just continuing to bully us into settling the debt? At what point does it need to go to where we can file sanctions against them? They can't file an objection without warrant, right? If they did file an objection without warrant, do we then file sanctions against them? I would like to file harassment charges against them if we can.

This bank has gone above and beyond corruption in my opinion. When it all started, they threatened dh with collapsing on the business loan b/c a collateral stock account was down due to the economy/market. There were significant cash flow problems at that time due to people not paying bills and such. The banker knew of all of this and we knew things were on shaky ground, dh was in the process of having a workout specialist scale things down to bare essentials and ride out the economy and pull through on the other side. (In hindsight, I don't think this would have been successful in the long run, but that was the plan at the time.) Shortly thereafter, the banker called dh and said they needed more money to have the loan better collateralized. DH foolishly trusted the banker in that he wouldn't collapse on the loan once he got the money --- fast forward about a month or less and there was one other big thing that happened within the business and the banker called it quits. The additional money put in was gone, everything was over, and the entire company was no longer worth anything b/c of how it ended so abruptly on the bank's call. Dh begged and pleaded to taper things off, hoping to sell off the "intellectual property" without the company being out of business, just on a skeleton crew but still operating -- so there would be more money recouped from the sale of the "assets." No go from the banker, it was over, and they never got anything from the "assets" aside from the outstanding accounts receivables. Furthermore, the bank made a preferential payment to one of the businesses creditors out of the business account for about $40k. The creditor is the business accountant, who was the accountant suggested by the bank when the loan was taken out. The whole thing smells like a dead rat.

Does anyone have any suggestions/comments on if we could go after this bank when it is all over. Obviously we don't have the money at this time to do anything like this, but just wondering -- I know there are some lawyers on here -- your thoughts?

[DeadManCrawling]

They are probably hoping you will suggest negotiating, in hopes of a settlement, before Monday.

If you are in the right, so to speak, and your attorney is confident, I wouldn't worry. Many times, the exam reveals nothing of interest, and the opposing party, left with nothing to pursue, drops the case.

[AbbeyA]

So I just heard from our attorney -- we are supposed to go meet with the bank's attorneys on Monday morning for this portion of the 2004 exam. Are they just going through the motions of all of this? Our attorney said that he is not worried, they are doing what the bank has asked them to do ... blah blah blah ... Worried.

Again, I keep telling myself that there are no assets hidden, there is nothing to find so we will be OK in the end. But I am still scared of all of this. I hate this bank. Has anyone been through this 2004 exam before? I am anticipating it like the 341 meeting, but only more nerve wracking.

[catleg]

It also occurs to me that if there is a cozy relationship between the bank employee and the attorney, that they could just be "looting" the bank by running up unnecessary legal expenses. Maybe if you feel like having some fun at their expense you could drop a dime on them to the bank president. But wait until your case gets past the deadline. :-)

By itself it may not mean much, but there could be a pattern of activity by the husband/wife team that is suspicious.

[AbbeyA]

Its not like the bank represents itself. They will hire attorneys. Of course objecting to the the discharge of a debt is very difficult. Most of the time a 2004 is conducted to see if they catch you with a smoking gun. Personally I find them to be a waste of time and money. Great the attorneys get to ask a couple of questions. If your case is based entirely on that its a waste. Mind as well object to the discharge and ask those questions while deposing the debtor while going through a discovery. The truth is that if you dig deep enough (both into the debtors personal business as well as case law) you will find something. Its usually not much but enough to push it to a trial. If it gets that far you can drop some coin on defending yourself OR settle for less than it would cost to defend yourself. If what you say is true that seems to be your worst case scenario.

This was a business debt - and a significant amount of money. We will not settle with them, we did nothing wrong. We are like the thousands of other small business owners who have lost businesses in this economy.

[AbbeyA]

You are being harassed within the law, as you stated. Just sit tight and think happy thoughts and it'll all be over soon. For all you know the FDIC could march in and close the bank on any given Friday (it's not one of the "too big to fail" banks is it? Sounds like local yokel community bankers).

A couple of weeks ago, the 10:00 news had a tag line report about a local bank being shut down by the FDIC. We looked at each other like - OMG! What if it is "THE" Bank?? Unfortunately it wasn't that one, so now we wait ... ... Yes, it is considered a local bank, but there are several branches so I don't think it is considered to be a small banking institution.

Thanks for your thoughts, sometimes I think I am being oversensitive to the whole thing - but then I absolutely know they are harassing us and convince myself that my feelings are just and warranted. OK, bring on May 21st. I'm ready!

[Brazzy]

Its not like the bank represents itself. They will hire attorneys. Of course objecting to the the discharge of a debt is very difficult. Most of the time a 2004 is conducted to see if they catch you with a smoking gun. Personally I find them to be a waste of time and money. Great the attorneys get to ask a couple of questions. If your case is based entirely on that its a waste. Mind as well object to the discharge and ask those questions while deposing the debtor while going through a discovery. The truth is that if you dig deep enough (both into the debtors personal business as well as case law) you will find something. Its usually not much but enough to push it to a trial. If it gets that far you can drop some coin on defending yourself OR settle for less than it would cost to defend yourself. If what you say is true that seems to be your worst case scenario.