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LSDefine

Simple English definitions for legal terms

preference

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A quick definition of preference:

Preference in law is a way for a trustee to get back money that a debtor paid to creditors before filing for bankruptcy. The trustee can only do this if the payments were made within a certain time period, usually 90 days, and meet other requirements. This is done to discourage creditors from demanding too much money from someone who can't pay, which could cause them to go bankrupt and hurt other creditors.

A more thorough explanation:

In law, preference refers to a tool used in bankruptcy called recapture. This allows a trustee to recover payments made by the debtor to creditors before the bankruptcy proceeding. The purpose of recapture is to prevent creditors from aggressively pursuing payments from insolvent debtors, which could lead to bankruptcy or harm other creditors' claims.

In order for a trustee to recapture preference payments, the payments must meet certain requirements:

  • The payments must have been made within a set period of time, usually 90 days for most creditors.
  • The payments must exceed what the creditor would receive in a Chapter 7 liquidation action.

For example, if a debtor owes money to two creditors and pays one of them $10,000 within 90 days of filing for bankruptcy, the trustee may be able to recapture that payment if it exceeds what the creditor would receive in a Chapter 7 liquidation. This means that the trustee could take back the $10,000 payment and distribute it among all the creditors equally.

Overall, preference is a bankruptcy tool that helps ensure fair treatment of creditors and prevent aggressive collection actions that could harm the debtor's financial situation.

Preemptive right | preferred dividend

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Dkk
20:13
https://www.youtube.com/watch?app=desktop&v=0uzynaLi4Tg&t=0s such a minor joke, so good to me.
babycat
20:16
I hate The Good Morty
Dkk
20:21
I hate him too. So lame.
Dkk
20:23
If someone has over like a 170 and they report their stats in the 2023-2024 cyle, I really question if they deserved that 170.
Dkk
20:23
I'm gunna report all my shit in the 2025-2026 cycle for now on.
babycat
20:28
Dk have you gotten into any schools yet?
Dkk
20:28
Nope! Heard nothing so far!
babycat
20:28
oh okay it’s coming!
Dkk
20:28
No Wl, No R, No A. It will probably be a while for me cus of my weird stats and softs.
babycat
20:28
me neither but I applied this month
Dkk
20:29
Yeah, I would say you gotta wait until Chrsitmas or early january now.
babycat
20:29
I’ll probably wait another month or two before I start freaking out
2big2fail
20:29
@Dkk: what are weird softs
Dkk
20:29
That is a good plan.
babycat
20:30
he’s a crypto billionaire
2big2fail
20:30
he beat mike tyson in a boxing match
2big2fail
20:30
last week
babycat
20:30
he also has a hot tub which is a big deal
Dkk
20:30
Paralegal, military, entrepreneurship, crypto, weird other work experiences like Disney. COVID issues, UCLA issues, drug addiction with my brother.
Dkk
20:31
Yeah, hot tub is the biggest one.
@Dkk: I feel ur pain with no responses yet
2big2fail
20:31
were you a disney channel child star
we are all going crazy
babycat
20:32
he’s bridgit mendler
2big2fail
20:32
im just waiting for pellerdine
2big2fail
20:32
peggerdine
Dkk
20:32
Crypto is booming right now and my friend is CPO of a carbon creidt company on the blockchain and the Canadian government has called him like 3 times this week and he needs help so he actually just gave me a job offer today.
i aspire to be bridgit mendler
Dkk
20:32
Nah, just security there.
wait are u actuaLLY a big crypto guy
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