Legal Question in Credit and Debt Law in California

Promissory Note

A promissory note was executed in September of 2001 from my domestic partner to my corporation only. The business failed due to the events of 9-11 and I later filed chapter 7 BK personally. I signed the note but the note itself only states loan to the corp. and not me personally. Does statute of limitations apply? Can I be held personally liable? If so does the BK cover me even though it was not listed as a debt?


Asked on 5/23/08, 7:32 pm

2 Answers from Attorneys

Michael Stone Law Offices of Michael B. Stone Toll Free 1-855-USE-MIKE

Re: Promissory Note

The statue of limitations is an affirmative defense, meaning the debt is still theoretically valid, it's just that any lawsuit can be shot down if (and only if) the defense is raised. Since you signed the note, wouldn't you in effect be suing yourself? Look up a case called Lodi v. Lodi (Google ["oreste lodi"])....

I don't even want to think about the community property issues on this one.

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Answered on 5/23/08, 7:51 pm
Robert F. Cohen Law Office of Robert F. Cohen

Re: Promissory Note

Inadvertently omitted debts are discharged under a no-asset case. I would think that your domestic partner knew about your bankrutpcy, and therefore had the opportunity to timely contest the discharge of that debt within the context of the bankruptcy if there was an issue of fraud, intentional injury to another party, etc.

If there were no bankruptcy, the issues would have been when performance on the promissory note was due, and whether four years have elapsed. The other issue, as you recognize, is whether you would be insulated because of the corporate structure. An attorney would have to review everything to make that determination.

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Answered on 5/23/08, 7:54 pm


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