An Example of a “Preference”
A "preference" makes more sense when you see an example. Here's one. This also helps explain how to avoid creating one.
If you pay on or pay off certain debts it may create a preferential payment
Do you feel like you should pay on or pay off a certain debt now, even though you're behind on all your debts? It may be dangerous to do so.
Debts Voluntarily Paid in Chapter 7
Chapter 7 is usually much better if one of your high priorities is to favor a debt by paying it. You can do so more easily and flexibly.
Using “Preference” Law to Your Advantage
Make your bankruptcy trustee work for you by retrieving your recent payments to, or garnishments by, creditors--to your benefit.
Avoiding the “Preference” Problem
Prevent your trustee from giving you a big headache if you paid a debt to a friend or relative during the year before filing bankruptcy.