This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
Discharge in bankruptcy is merely a bar to an action upon the debts of the bankrupt affected thereby. It does not amount to a discharge on the debt itself. Accordingly, if a creditor has obtained a valid lien,1 as by attachment,2 or by garnishment,3 or by judgment4 or by levy,5 or by mechanic's lien,6 such lien is in no way affected by a subsequent discharge of the debtor in bankruptcy. So a discharge in bankruptcy does not prevent either a creditor,7 or the trustee in bankruptcy,8 from setting aside conveyances of property by the debtor in fraud of his creditors. So a discharge in bankruptcy does not avoid an assignment of future wages to secure one of the debts thus barred.9 In many of the cases the lien was created more than four months before the institution of bankruptcy proceedings.10
6 Knott v. Putnam, 107 Fed. 907.
1 Philmon v. Marshall, 116 Ga. 811; 43 S. E. 48; McCall v. Herring, 116 Ga. 235; 42 S. E. 468; Evans v. Rounsaville, 115 Ga. 684; 42 S. E. 100; Dozier v. McWhorter, 113 Ga. 584; 39 S. E. 106; Paxton V. Scott, - Neb. - ; 92 N. W. 611; Bank of Commerce v. Elliott, 109 Wis. 648; 85 N. W. 417.
2 In re Blumberg, 94 Fed. 476; Wakeman v. Throckmorton, 74 Conn. 616; 51 Atl. 554; Stickney, etc., Co. v. Goodwin, 95 Me. 246; 85 Am. St. Rep. 408; 49 Atl. 1039; Rochester Lumber Co. v. Locke. 72 N. H. 22; 54 Atl. 705; Powers Dry Goods Co. v. Nelson. 10 N. D. 580; 58 L. R. A. 770; 88 N. W. 703. Apparently contra, Wood v. Carr, - Ky. - ; 73 S. W. 762.
3 Marx v. Hart, 166 Mo. 503; 89 Am. St. Rep. 715; 66 S. W. 260.
4 Dozier v. McWhorter, 113 Ga. 584; 39 S. E. 106.
5 Frazee v. Nelson. 179 Mass. 456; 88 Am. St. Rep. 391; 61 N. E. 40; Pinkhard v. Willis, 24 Tex. Civ. App. 69; 57 S. W. 891.
6 Seibel v. Simeon, 62 Mo. 255.
7 Johnson v. Grocery Co., 112 Ga. 449; 37 S. E. 766; Evans v. Staalle, 88 Minn. 253; 92 N. W. 951.
8 In re Pierce, 103 Fed. 64. 9 Mallin v. Wenham, 209 111. 252;
70 N. E. 564; affirming 103 111. App. 609.
10 In re Blumberg, 94 Fed. 476;
However, the provision of the bankrupt act which declares levies made within four months of the institution of bankruptcy proceedings to be void, means merely that the trustee may, by taking proper steps, have such levy declared void. If the trustee does not attack such levy, a sale thereunder is valid as against the debtor.11 The same principle applies to attachments which the trustees does not attack.12 Any preference obtained within the four months, as by levy,13 may be set aside on direct proceedings by the trustee. If, however, no lien exists a debt is barred, even though no exemptions could have been had against a judgment rendered thereon. Thus a debt for the purchase price of a chattel is barred by bankruptcy even though such property could not have been held as exempt against such debt.14