A preference occurs when a debtor transfers property or money favoring one creditor over others.

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A preference is a transfer of property or money made by a debtor to a creditor, which gives that creditor a preferred status over other creditors. This can occur prior to the debtor filing for bankruptcy or during the bankruptcy process. The purpose of bankruptcy laws is to treat all creditors fairly, so preferences are generally considered to be unfair and may be invalidated by the bankruptcy court.

A Preference Occurs When a Debtor Transfers Property or Money