Fraudulent preference.

May 29th, 2007 by Questions

If a close relative makes a big payment to an unsecured creditor on your behalf in the period prior to bankruptcy is that payment considered fraudulent preference? My father (81 years old…) paid off a credit card debt of mine for 5500 dollars last month after being contacted by a collection agency (a possibly illegal contact…). He thought he was helping me and did not realize the legal ramifications of that payment.

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One Response to “Fraudulent preference.”


May 30, 2007 at 9:56 am, Barton Goth GCO Bankruptcy Trustees said:

If you didn’t make the payment and it was done by a 3rd party, then you haven’t done anything that will pose problems during the administration of a bankruptcy.

The intent of the fraudulent preference sections of the Bankruptcy and Insolvency Act is to prevent people from purposely paying off one or two specific creditors and hence creating that preference. If you father paid this, you have clearly not done anything questionable.

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