Section 547 (Preferential Transfers)

Section 547 addresses "preferential transfers," which are payments or transfers made by a debtor to certain creditors within a specific time frame before declaring bankruptcy. These transfers can unfairly favor one creditor over others and might be reversed by the bankruptcy trustee to ensure fair treatment of all creditors. Generally, if a transfer is made shortly before bankruptcy and gives a creditor more than they would have received through the bankruptcy process, it could be considered preferential and subject to recovery. The goal is to maintain fairness among all creditors when a debtor's financial situation ends.