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Ellen
Ellen, Attorney
Category: Bankruptcy Law
Satisfied Customers: 36714
Experience:  Bankruptcy Lawyer. Experienced.
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If i paid my father an amount that will be classified as a

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If i paid my father an amount that will be classified as a preference payment but he extends credit again to me before I file, can we use the new value defense (if we are a consumer bankruptcy)?
Submitted: 7 years ago.
Category: Bankruptcy Law
Expert:  Ellen replied 7 years ago.
Hello,


Thank you for your question.

The new value defense applies when there is a contemporaneous exchange for new value. in order to prevail on this defense, you must prove you intended the transfer to be a contemporaneous exchange for new value received and that the exchange was, in fact, contemporaneous.
Customer: replied 7 years ago.

I am looking at the new value defense under 547 4a,b in the bankruptcy code. I believe what you are referring to is 547 1a. Please advise what you think about 547 4a,b.

 

Thanks.

 

 

Expert:  Ellen replied 7 years ago.
The new value defense can be used in a consumer bankruptcy. It does not require a business setting.
http://www.burbageweddell.com/resources/bankruptcy-creditor-statutes/bankruptcy-code-section-547-annotated/#bc-def-new-value
Customer: replied 7 years ago.
Do you know of any instances where this has been used?
Expert:  Ellen replied 7 years ago.
Yes. However I am unable to do the research due to time constraints
Customer: replied 7 years ago.
I am aware of instances where it is used for revolving credit such as a visa card, can it be used with personal loans, with an insider (such as my father), who issued a new personal loan before filing bankruptcy?
Expert:  Ellen replied 7 years ago.
yes it can
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