Chapter 7 trustee, Roy V. Creasy, filed an adversary proceeding on behalf of the debtor to recover property obtained by the defendant through a pre-petition garnishment summons. The Court found that the defendant’s lien against the judgment debtor’s bank account became effective on the date the writ of fieri facias was delivered to the county sheriff. Even though the payment at issue occurred within ninety days prior to the debtor’s bankruptcy filing, it represented a transfer in partial satisfaction of an existing lien upon that account which had been created more than ninety days before such bankruptcy filing. For that reason the payment was not preferential within the meaning of § 547 of the Bankruptcy Code because a lien creditor is entitled in bankruptcy to the benefit of its lien against the debtor’s property. The Court dismissed the trustee’s complaint and entered final judgment in favor of the defendant.
Judge:
Date:
Thursday, October 11, 2012
Category:
Adversary Proceedings
Chapter 7 Issues
Garnishment
Preference
Chapter:
7
