Bill's bicycle business has gone bust.The week before Bill went into bankruptcy,he paid $200 for a used bicycle that he intended to re-sell for a profit.This $200 payment is a preference under Chapter 7.

Chapter 7

A bankruptcy process outlined in the United States Bankruptcy Code whereby a debtor's assets are liquidated to pay off creditors.

Bankruptcy

A judicial procedure allowing individuals or companies that cannot pay off their debts to obtain relief from part or all of their financial obligations.

$200 Payment

A financial transaction involving the transfer of two hundred dollars from one party to another.