subject: CC Brown Law – All about Bankruptcy Clawback [print this page] CC Brown Law All about Bankruptcy Clawback
If you have recently filed the bankruptcy, then someone has or owed money by someone who has or pays to be on the lookout for the phenomenon known as the Bankruptcy claw back. In uncommon situations, the normal progression of a bankruptcy proceeding can be dramatically altered if certain circumstances are met. Then various parties involved in the bankruptcy are used to relinquish assets where they might be rightfully theirs.
What is a Bankruptcy Claw back?
A bankruptcy claw back typically works by undoing one or two types of past transactions committed by the person filing the bankruptcy. This is usually done because, it has been determined that the transactions in question led to unfair situations regarding the bankruptcy requested by the debtor. The two types of transactions are subject to the claw backs which are fraudulent transactions and preferences.
The claw back provision in a bankruptcy case enhances the trustee which can void certain transactions easily. If a debtor has participated in transactions which transfer assets and the money should be available in the bankruptcy to other creditors where some of the trustee in certain circumstances can use the claw back provision to recapture those assets.
Claw back Provisions:
Normally, there are two main situations where the claw back provisions come up in the bankruptcy law. And they are known as fraudulent transfers and preferential transfers. The Fraudulent transfers are prior during the bankruptcy which allows a trustee to void the transfer and returns the assets to the bankruptcy estate for helping the pay off creditors.
But the Preferential transfers involve the cases where certain creditors are chosen as the preferred creditors which are entitled to be repaid first and ahead of other creditors. Usually, all creditors are treated equally in the bankruptcy case, but if a debtor pays back one creditor before bankruptcy and not to others then the money can be recovered to pay back the other creditors in a more equitable way. In some tough situations the mortgage creditors are preferred over the second creditor. So, the terms of a repayment contract will easily dictate the status of each creditor.
Getting Legal Help:
In common, you can avail the help of the Knowledgeable bankruptcy attorney for further clarifications about the claw back. An attorney knows the laws and the working of legal system. So you can get through the complex process.
Thus, a preference situation happens when the debtor pays off one, his or her creditors immediately prior to filing the bankruptcy. Suppose, if you owe money to three creditors before a few weeks for filing the bankruptcy, you have to pay one of those creditors. When that creditor received full payment on your debt, then the other two are going to settle with the reduced repayments that come out of your bankruptcy. So the bankruptcy process dealt should be very fair.
