Simple English definitions for legal terms
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Term: NOVA DEBITA
Definition: Nova debita refers to new debts that are different from preexisting ones. In Scots law, if a debtor grants security within sixty days of their bankruptcy for a debt that was contracted before that period, it is considered a fraudulent preference. However, if the security or payment is granted for a novum debitum, which is a debt that is presently contracted, it is not considered fraudulent even if it is granted within the sixty days.
Definition: Nova debita (noh-vuh deb-i-tuh) is a Latin term used in Scots law to refer to new debts that are distinct from preexisting ones.
For example, if a debtor grants a security within sixty days of their bankruptcy for a debt that was contracted before that period, it is considered a fraudulent preference and can be reduced. However, if the security or payment is granted in consideration of a novum debitum (a debt presently contracted), it is not reducible even if granted within the sixty days.
Here's an example to help illustrate the definition: Let's say John owes $500 to his friend Bob, and he also owes $300 to his neighbor Sarah. If John grants a security to Bob within sixty days of his bankruptcy for the $500 debt, it would be considered a fraudulent preference and can be reduced. However, if John grants a security to Bob for a new debt of $200 that he owes him presently, it would not be reducible even if granted within the sixty days.