Whether you like it or not, filing a Chapter 7 bankruptcy case, or any bankruptcy proceeding for that matter, will be a distinguished spot on one's credit rating. As a result, a person may experience more rejections in the future when creditors check out your credit history.

 

6. The trustee has full assumption of "avoiding powers" as provided by Chapter 7.

 

Chapter 7 provides the trustee "avoiding powers" to set aside preferential transfers made to creditors, the power to cancel security interests at the time of the petition, and the power to operate the business in the event that the debtor is a business. These are all in favor of the creditors and not of the debtor.

 

7. Bankruptcy discharge does not extinguish a lien on property.

 

Secured creditors do not have to file proofs of claim in Chapter 7 cases so as to safeguard their security interest or liens. A lien is the right to take hold or sell the property of a debtor as security or payment of debt. In this manner, even if discharge is granted to a debtor who filed Chapter 7 case, lien on property is not totally quenched. The debtor may lose the property.

 

8. The Chapter 7 exempt law is relative to state laws.

 

Even if a debtor can claim certain properties as exempt, the condition depends on, and is often a question, of state law. This means that certain exempt properties may be deemed as non-exempt depending on the provisions stated in the state law. In simple terms, a debtor may or may not be able to keep their home, car, or even a portion of their savings if the state law, where the debtor lives, specifies so.

 

9. It is difficult to withdraw once a debtor files a Chapter 7 bankruptcy.

 

Filing a Chapter 7 bankruptcy can be very tedious. The debtor is fully obliged to attend the 341 meetings. Failure to do so may result in the dismissal of the case. In the end, the debtor could be losing more. And so, it goes to show that once a debtor has decided to file a bankruptcy case, he has to stick with it until the end, no matter what happens. This is why Chapter 7 is often referred to as "straight bankruptcy" case.

 

10. Dischargeable debts are only available to individual debtors.

 

In a Chapter 7 case, dischargeable debts are only made available to a single debtor, and so corporations and partnerships are not granted discharge even if they qualify for relief under Chapter 7 of the Bankruptcy Code. Relief is available to the individual debtors as well as corporations or partnerships notwithstanding the amount of the debtor's debts or whether the debtor is financially able or broke.

 

So, when the going gets tough and the tough just keep on going, most often than not, you are left with no choices at all. And when you are just too buried with so much debt, filing a Chapter 7 bankruptcy case is the last, but not necessarily the best, resort one could ever think of. Try to think things over to see if Chapter 7 is the appropriate proceeding for your case. Nevertheless, the reality has to sink in now ... there is definitely no easy way out of debt!

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