Cite as: Keith M. Lundin, Lundin On Chapter 13, § 56.5, at ¶ ____, LundinOnChapter13.com (last visited __________).
In many jurisdictions, the preconfirmation period is very short—as few as 30 to 50 days.1 Absent specific creditor action, the only opportunity to discover the debtor will be the limited questioning possible at the meeting of creditors.2 Counsel in need of further information from the debtor or other persons (for example, an employer of the debtor or a relative) has two choices: an examination under Bankruptcy Rule 2004 or mainstream discovery (for example, depositions or interrogatories) under Bankruptcy Rules 7026 through 7037.
A Rule 2004 examination is available by motion, and the scope of examination is quite broadly described in Rule 2004(b).3 The discovery provisions of the Federal Rules of Civil Procedure are incorporated into the Bankruptcy Rules,4 but the civil discovery rules are not available unless there is pending an adversary proceeding or contested matter as described in Bankruptcy Rule 9014. Contested matters include objections to confirmation, motions to dismiss or convert and requests for relief from the stay. If no dispute is pending that would be characterized as a contested matter, counsel can request by motion under Bankruptcy Rule 9014 that the civil discovery rules be made applicable.
The relatively short time between filing and confirmation demands that counsel move quickly if formal discovery is needed. Especially after the 1993 amendments to Rule 26 of the Federal Rules of Civil Procedure, it will be necessary to move for an order adjusting the normal response times for discovery to force the completion of discovery within the accelerated procedures of a Chapter 13 case.
The Chapter 13 trustee can be a less expensive and often quicker source of information than formal discovery under the Bankruptcy Rules. Trustees will tell creditors what they know about a debtor’s property, income, expenses and the like, without a formal discovery request. Debtors’ counsel know that they must deal with the trustee throughout the Chapter 13 case. On request of the trustee, debtors are often more forthcoming than upon a formal discovery request from a creditor. Working with and through the trustee can enhance the effectiveness of informal discovery by a creditor.
1 See §§ 38.2 [ Time for Filing Schedules, Statement of Financial Affairs, Plan and Other Documents ] § 37.4 Time for Filing Schedules, Statement of Financial Affairs, Plan and Other Documents, 42.1 [ Timing and Procedure ] § 43.1 Timing and Procedure and 216.1 [ Timing of Hearing on Confirmation ] § 115.1 Timing of Hearing on Confirmation before BAPCPA.
3 See, e.g., Buckner v. Oklahoma Tax Comm’n (In re Buckner), No. EO-00-073, 2001 WL 992063, at *5 (B.A.P. 10th Cir. Aug. 30, 2001) (unpublished) (Table Decision at 271 B.R. 213) (Chapter 13 trustee’s postconfirmation Rule 2004 examination of the debtors with respect to preparation of the statements and schedules and tax returns is sustained on appeal because pro se debtors failed to provide transcript or other documents necessary for appellate review. BAP notes, “[I]nquiry by a Trustee regarding preparation of a debtor’s bankruptcy schedules and tax returns is within the broad scope permitted a Rule 2004 examination.”). See also In re Crudup, 287 B.R. 358 (Bankr. E.D.N.C. 2002) (Creditor is refused 2004 examination of the debtor and prohibited from discovering documents as a sanction for violating automatic stay. Creditor, claiming debtor sold motorcycles on consignment and kept proceeds, wrote debtor’s wife and parents, threatening to publish the debtor’s misconduct throughout the business community. When creditor sought 2004 exam, debtor moved for a protective order and for sanctions for violation of the automatic stay.); In re Bellville, No. 00-11144, 2002 WL 31761279, at *3 (Bankr. D. Vt. Aug. 9, 2002) (unpublished) (Plaintiffs in an adversary proceeding in a Chapter 11 case pending in Maryland cannot use Bankruptcy Rule 2004 to examine a Vermont Chapter 13 debtor when “the only purpose to be served is one which should not be served, namely, to enable the movant to procure information it cannot obtain through the discovery tools available to it in the chapter 11 adversary proceeding pending in Maryland.”).
4 See Fed. R. Bankr. P. 7026–7037.