What is the meaning of “preference”?

Preference is a legal term that refers to the actions of a creditor in receiving payment from a debtor before other debts. This is seen in specific cases where a creditor insists on repayment of their debt before others. In California, this preference is an offense that can be legally pursued by other creditors. This is due to the fact that being “preferred” in this way puts the recipient of the payments at an unfair advantage over other creditors. In the state of California, a creditor can sue another creditor to recover funds they paid out if this preference was given unlawfully. This type of preference can also come in the form of tangible assets that are used to pay off a debt. For example, if a debtor gives away an expensive car to one of their creditors, that creditor would be seen as having been given a preference over other creditors. The idea behind creditors rights laws in California is to protect all creditors and ensure that they are all treated fairly regardless of their status or relationship with the debtor. By preventing preference, this law attempts to ensure that all creditors have the same chances of receiving payment for the money owed to them.

Related FAQs

How can creditors collect on bad debts?
What is a post-judgment discovery?
What is a priority tax claim?
What is a discharge in bankruptcy?
What is the meaning of “secured debt”?
What is the meaning of “creditors’ rights litigation”?
What is an unsecured creditor?
What is the meaning of “time’s up”?
What is a turnover order?
What is the meaning of “unsecured debt”?

What is the meaning of “preference”?

Related FAQs

Related Blog Posts