Asked by Jeanette Avila on Jul 28, 2024

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If the debtor made any payments within one year of the bankruptcy filing,the bankruptcy trustee can examine these payments as preferential payments.

Preferential Payments

Transactions made before a bankruptcy filing where a debtor gives preferential treatment to certain creditors over others.

Bankruptcy Filing

The formal process by which an individual or entity declares an inability to pay outstanding debts, seeking relief through legal proceedings.

Bankruptcy Trustee

A legally appointed individual responsible for managing the financial affairs of a person or business declared bankrupt, including asset liquidation and disbursing proceeds to creditors.

  • Clarify the ramifications of bankruptcy for secured transactions.
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AP
Amber PerkinsJul 31, 2024
Final Answer :
False
Explanation :
Because a major purpose of the Bankruptcy Code is to prevent debtors from making payments to one creditor and thus treating that creditor preferentially,the trustee has the power to recover preferential payments,or payments made by an insolvent debtor that give preferential treatment to one creditor over another.If the debtor made any payments within ninety days of the bankruptcy filing,the trustee can examine these payments as preferential payments.For a payment to be preferential,the trustee must show that the transfer gave the creditor more money than the creditor would have received through bankruptcy proceedings.Thus,other creditors are disadvantaged by the debtor's preferential payment.