Discharge in bankruptcy is defined as an order that relieves from personal liability for certain types of debt. In other words, the law releases the debtor from any legal obligation to settle any discharged debts (Chen & Zhao, 2017). The case here involves Caroline McAfee who loaned carter oaks crossing $400000. Joseph Harman, the carter oaks crossing president, signed a promissory note that specified that his company would repay the loan with interest in seven years (1999-2006). In addition, Harman signed a personal guaranty for the loan which implies that he was liable in case the company failed to repay the loan. Later on, Joseph Harman was sued by the Caroline from the fact that carter oaks crossing had defaulted the loan. However, Joseph Harman had filed for chapter 7 bankruptcy. Harman had filed the bankruptcy after 1999, but that was before Carter Oaks had defaulted on the note. According to Harman, the claim was discharged from his bankruptcy, but in debt, he owned the note was not listed.
In bankruptcy, the obligation under the guaranty would not have been discharged. Some of the essential things to note in this case are that in the list of debts the claim did not show up nor was the creditor was informed that Harman was filing bankruptcy. Therefore, the discharge of the claim in Harman’s bankruptcy would not be justified. USC § 523(a) (2), (4), and (6) provides that a notice should be submitted to the creditors. In other words, the creditor must be made aware of the bankruptcy filing (Westbrook, 2017). This statement concludes that Joseph Harman was liable to settle the debt. In addition, Caroline had a colorable claim which means the claim had a reasonable chance since the creditor was able to prove the facts in the court. Also, the legal bases were generally correct as required by the section.
Chen, D., & Zhao, J. (2017). The impact of personal bankruptcy on labor supply decisions. Review of Economic Dynamics, 26, 40-61.
Westbrook, J. L. (2017). The Retreat of American Bankruptcy Law. QUT L. Rev., 17, 40.