The holder in due course of a note discharged in bankruptcy can never collect any funds because bankruptcy is a real defense against payment.

Holder in Due Course

A legal term referring to a party that has acquired a negotiable instrument, like a check, in good faith and has the right to collect the face value of the instrument without any defenses.

Bankruptcy

A legal process through which individuals or businesses unable to meet their financial obligations can seek relief from some or all of their debts.

Real Defense

In negotiable-instruments law, any defense that can be used against everyone, including holders in due course. Also called absolute defense and universal defense.