Unfair preference
This applies to all personal insolvency options.
An unfair preference is a payment made by the client to a creditor which is prejudicial to the interests of the other creditors.1s99 B(S)A 2016 For example, paying off a family debt just before going bankrupt. The trustee could raise a statutory action for the ‘reduction’ of an unfair preference if it took place less than six months before the date of sequestration. If successful, the creditor who benefited will have to refund some or all of the money to the trustee.
Make sure you ask your clients if they have paid any debts in the last six months which could be consideredan unfair preference.