Legal Definitions - dirt-for-debt transfer

A dirt-for-debt transfer is a type of transaction that occurs when a debtor who has gone bankrupt transfers ownership of a piece of property to a creditor in order to satisfy all or part of a secured debt.

For example, let's say that John owns a house that he used as collateral to secure a loan from the bank. However, John is unable to make his loan payments and eventually declares bankruptcy. In order to satisfy his debt to the bank, John agrees to transfer ownership of the house to the bank. This is an example of a dirt-for-debt transfer.

Another example could be a farmer who uses his land as collateral for a loan to purchase equipment. If the farmer is unable to make his loan payments, he may agree to transfer ownership of the land to the lender in order to satisfy the debt.

Overall, a dirt-for-debt transfer is a way for a debtor to satisfy a secured debt by transferring ownership of the collateral to the creditor.