In re Wells, (6th Cir.BAP (Mich.)

Avoidance - Debtor's use of credit card convenience checks to pay other credit card debt diminished bankruptcy estate.

A Chapter 7 debtor who used convenience checks that she received from one credit card company to make challenged prepetition payments to another credit card company thereby effected a "transfer of an interest of the debtor in property," of a kind potentially subject to avoidance as preferential, despite a contention that these transactions merely substituted one creditor for another and did not result in any diminution of the estate. The extensions of credit that the debtor obtained by signing the checks could have been used for other purposes, including the purchase of assets which then would have been available for the payment of creditor claims. Thus, the estate was diminished by the debtor's use of the checks to pay this other credit card debt.

Date of decision: 2/13/08

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