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In bankruptcy, what is a fraudulent transfer? How does this relate to a preference payment?

Answer: A fraudulent transfer involves the sale or transfer of property made by the debtor with intent to defraud creditors - or for which the debtor received less than the transferred property's value. A preference payment is payment made to a creditor in the 90-day period before a debtor files bankruptcy (or within one year if the creditor in question was an insider) that results in that creditor receiving more than the creditor would have received in the bankruptcy case. Preferential transfers are not fraudulent.

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