Suppose Harvey is a secured creditor and Joe is the debtor. If Harvey sells the collateral because Joe defaulted, Joe is not liable for any deficiency.

Question

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If Harvey sells the collateral and does not get enough proceeds to cover the debt owed by Joe, then Joe may be liable for the deficiency amount. This is because the sale of the collateral does not always guarantee that the entire debt will be paid off. However, if the collateral sale does generate enough funds to cover the debt, then Joe would not be liable for any deficiency.

Suppose Harvey Is a Secured Creditor and Joe Is the Debtor