Creditors should identify the debtor’s legal name when searching financial records to avoid losing their control over the secured lien due to court nullifications. Debtors have perfected the art of pegging their collateral on their trading names, as opposed to their legal names, a move that hinders creditors from verifying the financial statements associated with the debtors. From this realization, the approaches used by creditors to regain their control in the lending process is primarily influenced by their ability to overcome various challenges that influence their perspectives towards the court processes, which determine their ability to secure the lien.
Even though the bankruptcy trustee flouted the ethical concerns highlighted by the relationship between a creditor and debtor, his actions were legally validated because of the absence of an important premise that demonstrates the control of the lien. According to Chapter 7 in the bankruptcy laws, the clause sidelines the process of filing a repayment plan, which promoted the bankruptcy trustee to exploit this anomaly to change the identity and position of the lien in the entire interactions. Given that a section of the debtor’s property is subject to the lien identity, filing the property according to the law may lead to the loss of property.
The filing error for the financial statement is an aspect that could have been avoided if the creditor had conducted a thorough search to identify the anomalies that led to the loss of property. Even though chapter 7 exempts parties from filing a repayment plan that is part of the financial records sought by a creditor, the approach taken to facilitate the lending should have adopted unique mechanisms that would have prevented the mistake from happening. Therefore, creating an enabling environment that supports the changing needs of individuals presents an opportunity for creditors to avoid mistakes that compromise their influence in the lending process.