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In bankruptcy, the payment of a debt to one creditor rather than dividing the assets equally among all those to whom he/she/it owes money, often by making a payment to a favored creditor just before filing a petition to be declared bankrupt. such a preference is prohibited by law, and the favored creditor must pay the money to the bankruptcy trustee. however, the bankruptcy court may give secured creditors (with a judgment, lien, deed of trust, mortgage or collateralized loan) a legal preference over “general” creditors in distributing available funds or assets.

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