Bankruptcy cases can be simple or complex. Thus it is always advised to hire a bankruptcy lawyer to deal with the nuances of the case and get you the benefit of a fresh start. One of the major challenges of a bankruptcy case is having to deal with the trustee\u2019s preference challenge. A majority of the cases, however, do not involve preference problem as they can be easily avoided, defended or circumnavigated. However, it is important to know and understand what bankruptcy trustee\u2019s preferences are so that you and your legal professional are well prepared to handle the problem.<\/p>\n
What is Preference Law?<\/strong><\/p>\n Preference law (Section 547) of the U.S. Bankruptcy Code with around 55 subsections is more than 175 years old with numerous revisions done since the time it was introduced. A preference is a preferential payment (monetary or property) which is made to one creditor within a specified time frame before bankruptcy filing as a preference over your other creditors. Under specific conditions, the creditor which benefitted from the payment can be forced to repay the amount paid or return the property over to bankruptcy trustee. Preference payments can easily be undone. In case the creditor you had paid in preference of other creditors is a friend or relative, the results can be detrimental for you.<\/p>\n To be more specific, preference law is put in force only if a particular creditor is paid within 90 days of the filing of your bankruptcy case. In case the creditor is an insider i.e. family or friend, this period is a full year. Any money paid to a creditor does not necessarily come under preference. To qualify as a preference, it has to meet 5 essential requirements. There are a number of exceptions too. The 5 necessary elements as stated in Section 547(b) of Bankruptcy Code include:<\/p>\n The trustee can avoid any transfer made by a debtor if:<\/p>\n\n
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