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What’s the difference between contingent, liquidated, and disputed bankruptcy claims?

When you file for Chapter 7 bankruptcy in New York, you need to provide a complete overview of your financial situation to the U.S. bankruptcy court. This includes your assets, such as bank accounts, savings, retirement accounts, and real property, and all of your debts.

Most of your debts will be easy to list. For example, you have a MasterCard balance of $8,000, owe $10,000 on a personal line of credit, and your car loan has a $15,000 balance. Other debts, however, can be hard to calculate at the time that you file for bankruptcy because you don’t know yet what they will amount to or if you will ever owe them in the first place. They generally fall into one of three categories: contingent, liquidated, and disputed.

Contingent debt

Contingent debts are ones that you may owe in the future if a particular event transpires. One of the more common examples is a loan that you cosigned for a friend or family member. As long as they keep making the payments, you will never owe it, but if they stop, the liability becomes yours.

Unliquidated debt

Like contingent debts, unliquidated debts are liabilities that you may assume in the future, but the amount is currently unknown. One example, if you are due to receive a personal injury award and your attorney is getting a percentage as payment, you won’t know how much you owe him or her until the case is over, and you’re filing for bankruptcy now.

Disputed debt

A debt becomes disputed when you disagree with it or the amount that the creditor claims you owe. What is important is that you have a valid reason for disputing the debt. For example, the account was opened as a result of identity theft, then you have standing for claiming that you don’t owe it. It can’t be a matter of disputing the debt because you can’t afford to pay it.

New Yorkers who are filing for bankruptcy often hesitate at the thought of listing disputed debts, worried that doing so means that they agree that they owe them. This is not the case. The bankruptcy court needs to know how many claims may be eligible for discharge. If you leave anything out because you dispute it, the creditor will not be stopped from bringing a collection action against you, even after your discharge.

Contact a New York bankruptcy attorney

Bankruptcy paperwork can be complex, especially the assets and obligations section. A New York bankruptcy attorney can explain what information you need to provide and ensure that you don’t leave out anything that could jeopardize your future discharge.

If you are considering filing for personal bankruptcy, then contact Jayson Lutzky. He is a highly experienced lawyer with an office in the Bronx. He offers free in person consultations. Call 718-329-9500 to set up an appointment or visit www.MyNewYorkCityLawyer.com to learn more.

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