Earmarking Doctrine - Definition - Law Dictionary Home Dictionary Definition earmarking-doctrine

earmarking doctrine

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[probably so called because the loan has been earmarked, i.e., specifically designated, by the debtor to pay a specific creditor]
: a doctrine in bankruptcy law: a loan made by a third person to a debtor to enable the debtor to pay off a specified creditor cannot be avoided by the trustee as a preference since the debtor never actually had control of the funds and the transfer does not diminish the debtor's estate