How long before filing a bankruptcy petition must payments for preferences typically occur?

In bankruptcy law, the concept of "preferences" refers to certain payments made by a debtor to creditors prior to filing for bankruptcy that give one or more creditors more than what they would have received in a liquidation scenario. To protect the integrity of the bankruptcy process and prevent preferential treatment of certain creditors, the law allows a bankruptcy trustee to recover these payments under specific conditions.

Payments made within 90 days before the debtor files for bankruptcy typically fall under this preferential treatment rule. If a debtor has made payments or transferred assets to creditors within this period, those transactions can be scrutinized and potentially reversed. This timeframe is designed to ensure fairness among creditors and to allow the bankruptcy trustee to maximize the recovery for the bankruptcy estate.

Payments made outside this 90-day window are generally not subject to recovery as preferences, which is why understanding this timing is crucial in bankruptcy cases. The 90-day rule applies generally to most creditors, while payments to "insider" creditors (like relatives or business partners) can have a longer look-back period of up to a year.