Analysis Of The President Of Carter Oaks Crossing Was Loaned $ 400000 By Caroline Mcafee

1324 Words Nov 22nd, 2016 6 Pages
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Discharge in Bankruptcy In this case, Joseph Harman, the president of Carter Oaks Crossing was loaned $400,000 by Caroline McAfee. Harman signed a promissory note that specified the company would repay the amount of the loan with interest in installments in which the installments would begin in 1999 and end in 2006. Harman signed a personal guaranty with the promissory note. Carter Oaks Crossing eventually defaulted on the note causing McAfee to sue Harman for payment under the guaranty. Harman had filed Chapter 7 bankruptcy after 1999 but before defaulting on the note and thus moved for summary judgment on grounds that McAfee’s claim against him had been discharged in the bankruptcy case. However, Harman had not listed the guaranty among the debts in the bankruptcy case. The legal issue being presented in this case is exceptions to dischargeable debts in bankruptcy. This case raises the question of the whether the obligation under the guaranty would have been discharged in Harman’s bankruptcy. According to our textbook, Business Law Text and Cases, a guarantor can be required to pay the obligation only after the principal debtor defaults, and usually, only after the creditor has made an attempt to collect from the debtor. The Supreme Court had laid down a near per se rule that if a debtor failed to schedule a known debt, then that debt is not discharged unless the creditor received actual notice in enough time to participate in the administration of…

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