Preferential Transfer (Preference)

Last Updated: Jun 7, 2019

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A Preferential Transfer, also known as a Preference, is a transfer from the debtor to the creditor before a bankruptcy filing (and during the Preference Period) to the exclusion or detriment of other creditors. Other creditors may sue when 1) a transfer exists to the benefit of the creditor for prior debt; 2) the debtor was insolvent when the transfer was made; 3) the transfer was made 90 days prior to the bankruptcy filing; 4) the transfer allowed the preferred creditor to receive a larger payment than if the transfer was part of a bankruptcy filing.