The Difference Between Contingent, Unliquidated, and Disputed Claims

When you file bankruptcy, you need to list all of your debts so that you can be discharged from them once your case is complete. While some of these obligations are straightforward- for example, you owe $5500 on a Visa card you haven’t been able to make payments on for months- others can’t be quantified at the time you file. They include contingent, liquidated, and disputed claims. In this blog, we’ll explain what they are and how you account for them on your bankruptcy petition.

Contingent Claims

Contingent claims are obligations that you could eventually owe, even if you don’t at the moment. One of the most common examples is a co-signed debt. If you guaranteed a loan for someone with shaky credit, you will never be responsible for that money as long as they make regular payments on it. If they default, the creditor could come after you. By listing these debts on your petition, you protect yourself should you ever become responsible for them.

Unliquidated Claims

Like contingent debt, unliquidated debt is unknown at present. In this case, you’re reasonably confident that you will owe something, but exactly how much won’t be known until later. 

For example, if you’re pursuing a claim against another party for a personal injury, copyright infringement, or other point of contention, you likely won’t know how much you will owe your attorney until the case is over. It is important to list these unliquidated claims even if you don’t know their value at the time you file, so that you can be discharged from them at the end.

Disputed Claims

Debts are disputed when a creditor claims you owe money but you disagree with the amount or even the claim itself. For example, someone took out a credit card or line of credit in your name and without your knowledge, but you’re still being pursued by the lender. 

Adding the debt to your petition doesn’t mean that you agree with what they’re demanding, but they will have to cease collection efforts and you will receive a discharge if the matter isn’t resolved.

Contact the Hedtke Law Group

At the Hedtke Law Group, we understand that being in debt is stressful and can take a huge toll on your personal and professional life. Attorney Neil R. Hedtke will help you prepare a petition that addresses all claims that you currently and potentially owe, so that you can count on a clean financial slate when your case is over. If you have questions about bankruptcy in California or want to schedule a consultation, contact us today.