A Bankruptcy 2004 Examination Audit is most commonly held when the debtor fails to include income and attempts to file a Chapter 7, hides transfers or assets. When the petition is inaccurate the US Trustee will often become involved and investigate with a 2004 examination which is held under oath like a deposition. These audits are very much like an IRS audit where the debtor is being questioned under oath for about 1-2 hours. The questions are under oath and can continue for hours or days if the answers are not complete and the Debtor is using creative accounting methods. Additional records may be requested or subpoenaed.
In minor cases the 2004 examination may only require that the petition is amended to be made more accurate or less confusing. In major cases the Debtor may be denied a discharge, required to convert from Chapter 7 to a Chapter 13 or have his case dismissed. In the worst cases it may be sent to the AUSA (Assistant United States Attorney) for criminal prosecution but that is very rare.
If the trustee asks for documents provide them. If the documents are not submitted to the trustee within 14 days as required by our local rules the case can be dismissed. The trustee simply files a motion to dismiss the case. The debtor loses his $300 filing fee and all of the funds that were paid to the attorney because of the delay caused by not supplying documents. The case will have to be re-filed and the debtor will have to start all over again. The rule in filing is to document and accurately disclose, disclose, disclose and to provide documentation.