Asked by Santi Contreras on May 10, 2024
Verified
Which type of payment does an insolvent debtor make that gives preferential treatment to one creditor over another creditor?
A) A deferential payment
B) A payment in equity
C) A preferential payment
D) A liquidated payment
E) A non-liquidated payment
Preferential Payment
A financial transaction that gives prior payment to one creditor over others before a debtor's bankruptcy.
Insolvent Debtor
A debtor who cannot pay debts in a timely fashion.
- Comprehend the foundational principles and conditions applicable to challenging preferential payments in treatment.
Verified Answer
CH
Crystal HernandezMay 16, 2024
Final Answer :
C
Explanation :
Because a major purpose of the Bankruptcy Code is to prevent debtors from making payments to one creditor and thus treating that creditor preferentially,the trustee has the power to recover preferential payments.Preferential payments are payments made by an insolvent debtor that give preferential treatment to one creditor over another.
Learning Objectives
- Comprehend the foundational principles and conditions applicable to challenging preferential payments in treatment.