What is a preference action?

A preference action is a type of lawsuit available to creditors in New York. This type of action is designed to prevent creditors from being deprived of the payment that is due to them by another party. In New York, a creditor can file a preference action when another party has made a payment to them before filing for bankruptcy. Under these circumstances, the creditor can file a lawsuit known as a preference action. This type of suit claims that the payment was made with the intent to hinder, delay or defraud other creditors that may have been owed money. If the creditor can prove that the payment was indeed made with the intent to prevent other creditors from being paid, the made payment can be reversed and distributed among all of the creditors equally. This ensures that all creditors receive the money that is owed to them and prevents any single creditor from being unfairly favored over another. A preference action is a valuable tool available to creditors in New York. By using this action, creditors can protect their rights in the event that debtors file for bankruptcy and try to deprive them of the payments that are due. This can help lenders and credit companies be sure that they receive the payment that they are owed.

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