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If i pay off a creditor will it automaticaly pull it from the bankruptcy
Asked on June 5, 2009 under Bankruptcy Law, California
M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney
Answered 13 years ago | Contributor
Paying one creditor and not others is known for bankruptcy purposes as a "preference". A preference is usually a problem for your creditors, and not for you. If you have made payments to creditors which qualify as preferences, the Trustee may seek to recover your preferential payments from the creditor. Your debt to that creditor would still be discharged.
There would be a problem if for some reason you wanted the creditor to be able to keep the preferential payments, such as when the creditor is a relative, or when you have made payments on accounts on which a relative might be liable. If you made preferential payments to a relative, you can expect the Trustee to recover those payments from the relative. If you made preferential payments to a creditor on an account on which the relative might be a cosigner, the creditor will still expect your relative to pay the account after it returns the preference to the Trustee.
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