One type of asset that the Chapter 7 trustee often pursues is the avoidance and recovery of preferential transfers. Preferential transfers are payments the debtor made shortly before bankruptcy that allowed the debtor to "prefer" certain creditors instead of providing equal treatment to all creditors.
It is not illegal under state or federal law to receive a preference payment, but the creditor may have to return the payment to the Chapter 7 trustee. There are defenses to preference suits, and often a trustee may be willing to compromise to settle a case. If a creditor is sued to recover a preference, legal advice and representation is recommended.
RSS
One type of asset that the Chapter 7 trustee often pursues is the avoidance and recovery of preferential transfers. Preferential transfers are payments the debtor made shortly before bankruptcy that allowed the debtor to "prefer" certain creditors instead of providing equal treatment to all creditors.
It is not illegal under state or federal law to receive a preference payment, but the creditor may have to return the payment to the Chapter 7 trustee. There are defenses to preference suits, and often a trustee may be willing to compromise to settle a case. If a creditor is sued to recover a preference, legal advice and representation is recommended.