Search by Keyword
Preference
Explanation:
Preferences are payment on a previous debt that was made by an insolvent debtor within 90 days of filing bankruptcy, that allows the creditor to receive more on its claim than it would have, had the payment not been made and the claim paid through the bankruptcy proceeding, according to Bankruptcy Code 547.
Our Thoughts:
The Bankruptcy Code permits a trustee or debtor in possession to recover these payments made before the bankruptcy filing, to diminish the advantages that a creditor would receive through litigation or aggressive collection actions forcing the debtor into bankruptcy.