Is my salary a preference payment if it reduces an overdraft?

david_m4

My income fluctuates quite a bit, and it's paid into my main current account where I have an overdraft. In a month when I get a large salary payment, I've been leaving the surplus in my current account, reducing the overdraft balance. But if I go bust when my overdraft isn't maxed out, will that be seen as an illegal preference? Should I be withdrawing the whole lot and sharing it out equally between my creditors? The money is paid directly from my employer by bank transfer.

Davey

debt_doctor

No, you have nothing to worry about.

A preference as per the insolvency legislation has two parts (although the DRO application only ASKS one) in that;

1) you have made a preferential payment ( a payment not part of a normal business agreement)

....with a view....

2) to improving that creditors position should you become formally insolvent.

So there is the 'action' and the 'intent'

- in your case - no preference.

DD