What is a “debtor’s exam” in a Chapter 11 bankruptcy?

A debtor’s exam in a Chapter 11 bankruptcy, also known as an Order to Show Cause, is an order from the court that directs the debtor to appear in court and answer questions about their assets. This process is initiated when a creditor requests the court to issue an Order to Show Cause, which then orders the debtor to appear in court and answer questions about their financial situation. The debtor typically will need to provide documentation such as bank account statements, tax returns, and recent pay stubs. The purpose of a debtor’s exam is to make sure the debtor is being forthcoming and honest about their financial situation in order to determine that all creditors are being treated fairly. Creditors can ask about the debtor’s assets, liabilities, income, expenses, and other financial matters, and the debtor must answer truthfully. The debtor’s exam also gives creditors the opportunity to present claims against the debtor that they may not have known about before. In Texas, the debtor is usually required to attend at least one debtor’s exam. The debtor is also responsible for all costs associated with the debtor’s exam, such as attorney’s fees and court costs. If the debtor fails to appear in court or fails to truthfully answer questions, the court can find the debtor in contempt and may impose penalties. Therefore, it is very important for a debtor to understand the importance of a debtor’s exam and take it seriously.

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What is a “debtor’s exam” in a Chapter 11 bankruptcy?

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