Are the preferential transfer rules that are applied in bankruptcy affected by whether an insolvent individual debtor filed a voluntary bankruptcy petition as opposed to an involuntary petition? Simply state ""yes"" or ""no.""

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Business

Darien Vega

31 December, 23:34

Are the preferential transfer rules that are applied in bankruptcy affected by whether an insolvent individual debtor filed a voluntary bankruptcy petition as opposed to an involuntary petition? Simply state ""yes"" or ""no.""

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Answers (1)

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Liana Higgins · Answer 1

YES

Explanation:

It is true that the preferential transfer rules that are applied in bankruptcy is affected by whether an insolvent individual debtor filed a voluntary bankruptcy petition as opposed to an involuntary petition.

A preferential transfer can only occur when an insolvent individual, before voluntarily filing for Chapter 7 bankruptcy, settles a creditor or a category of creditors which then implies that the remaining creditors will be entitled to less in the bankruptcy.