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Simple English definitions for legal terms
avoiding power
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A quick definition of avoiding power:
Avoiding power is the ability to not control someone else's actions or responses. It is a type of power that allows a person to avoid having dominance or influence over others. In bankruptcy, it refers to the power of a trustee or debtor in possession to void certain transfers or obligations made by a debtor. Power can also refer to physical strength, moral or intellectual force, or a nation's military or unit.A more thorough explanation:
Avoiding Power
Avoiding power is the ability to cancel or void certain transfers or obligations made by a debtor in bankruptcy. This includes fraudulent conveyances, preferences transferred to creditors, unperfected security interests in personal property, and unrecorded mortgages. It is a power held by a bankruptcy trustee or debtor in possession.
- If a debtor transfers property to a family member to avoid paying creditors, the bankruptcy trustee can use avoiding power to cancel that transfer and recover the property for the benefit of the creditors.
- If a debtor pays off a loan to a friend before filing for bankruptcy, the trustee can use avoiding power to recover that payment and distribute it equally among all creditors.
These examples illustrate how avoiding power can be used to prevent debtors from unfairly favoring certain creditors or transferring assets to avoid paying debts. It helps ensure that all creditors are treated fairly in the bankruptcy process.