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Preference Legal Definition

Are you a lawyer? Visit our professional website » The common law does not condemn preference. Some state laws require certain transfers to be void due to their preferred nature – without legal force or binding effect. If a State anti-preference provision protects an effective creditor of the debtor, the insolvency practitioner may make use of it. Abogado.com The #1 Spanish legal site for consumers Bankruptcy law condemns certain preferences. The insolvency practitioner may declare any transfer of the debtor`s assets invalid if the trustee can prove: The FindLaw Legal Dictionary – free access to over 8260 definitions of legal terms. Search for a definition or browse our legal glossaries. n. In bankruptcy, paying a debt to a creditor, rather than dividing assets equally among all those to whom it owes money, often by paying to a preferred creditor shortly before filing for bankruptcy. Such preferential treatment is prohibited by law and the beneficiary creditor must pay the money to the insolvency practitioner. However, the bankruptcy court may give secured creditors (with a judgment, lien, trust deed, mortgage, or secured loan) a legal preference over “general” creditors when distributing available funds or assets. (See: Bankruptcy) LawInfo.com Nationwide Bar Directory and Legal Consumer Resources (A) Payment made by a debtor to a creditor during a period immediately preceding the bankruptcy application. This is called preferential treatment because the debtor has decided which of its creditors should receive the balance of its assets at the unfair expense of others who have nothing to collect. Typically, this preference period covers the sale of money or property to regular business creditors within three months of bankruptcy filing and within one year for insiders who may be creditors, such as family, friends and business partners.

A trustee may preferentially claim the money paid from the distributors and distribute it among all creditors. (b) payment or security, in whole or in part, by an insolvent debtor of all or part of its claim against one or more of its creditors, to the exclusion of other claims. Preferential treatment also refers to the right that a creditor has acquired over others to be paid first on the assets of its debtor, since a creditor has obtained a judgment against its debtor that binds its country. 2. Voluntary preferences are prohibited by the insolvency laws of some States and are void when granted as part of a general assignment for the benefit of creditors. Insolvency; Priority. PREFERENCE. The payment or guarantee of all or part of its claim to one or more of its creditors by an insolvent debtor, excluding the remaining claims. Preferential treatment also refers to the right that a creditor has acquired over others to be paid first on the assets of its debtor, since a creditor has obtained a judgment against its debtor that binds its country. 2. Voluntary preferences are prohibited by the bankruptcy laws of some states and are void when made in a general assignment for the benefit of creditors. Insolvency; Priority.

At FindLaw.com, we pride ourselves on being the leading source of free legal information and resources on the Internet. Contact us. FindLaw.com Free and reliable legal information for consumers and legal professionals An act of an insolvent debtor who pays to one or more creditors the full amount of their claims or an amount greater than that to which he would have been entitled if it had been distributed on a pro rata basis. However, other legal provisions create exceptions; If a transfer falls within an exception, the insolvency practitioner cannot declare the transfer invalid even if all five of the above elements are present. For example, a debtor owes $5,000 each to three creditors. All three are equally entitled to payment, but the debtor has only $12,000 in assets. Instead of paying $4,000 to each creditor, the debtor pays two creditors in full and pays the third creditor the remaining $2,000. Privacy PolicyDisclaimerCookiesDo not sell my data The act of an insolvent debtor who, when distributing his assets or assigning it to his creditors, pays or guarantees the full amount of their claims or an amount greater than that to which he would be entitled to a proportional distribution.

Similarly, the right of a creditor under a lien or security right to be preferred (i.e. paid first) over others over the debtor`s assets that constitute the creditor fund. See Pirie v. Chicago Title & Trust Co., 182 U. pp. 438, 21 Sup. Ct 906, 45 L. Ed. 1171; Ashby v. Steere, 2 cases fed. 15; Chadbourne v. Harding, 80 Me.

580, 10 Atl. 248; Chism gegen Citizens` Bank, 77 Miss. 599, 27 South. 637; Dans Bezug auf Ratliff (D. C.) 107 Fed. 80; In re Stevens, 38 Minn. 432, 38 N. W.

111. Copyright © 2022, Thomson Reuters. Alle rechte vorbehalten. SuperLawyers.com Directory of U.S. Attorneys mit der exklusiven Super Lawyers-Bewertung Powered by Black’s Law Dictionary, Free 2nd ed., und The Law Dictionary. Quelle: Merriam-Webster’s Dictionary of Law ©1996. Merriam-Webster, Incorporated. Veröffentlicht unter Lizenz mit Merriam-Webster, Incorporated.

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