For most debtors, the process of completing the bankruptcy petition is not confusing. They need to document their income, property, monthly expenses, and debts, as well as recent property transfers. The listing for each debt will need to include the amount of the debt and the information of the creditor to which you owe the debt. This might involve the balance owed in a credit card account or payments that you have missed on a loan, for example.
While most debts involve no special issues, there may be some situations in which you need to make a notation about a contingency related to the debt. This could affect the amount that you need to pay. A contingent claim involves a debt that depends on an event that has not yet happened and may not necessarily happen. You might have agreed to cosign a loan for someone else, but you will not need to make payments on this loan if the main borrower on the loan keeps up with their payments. Thus, this is a debt that may never materialize.
Another situation in which a debt may be hard to quantify is when you know that you have a debt, but you do not know how much it is worth. You might have admitted to liability in a lawsuit, for example, but the damages in the case might not have been calculated. Or you might have retained someone to perform a service for you who charges by the hour rather than a flat fee, and the service might not have been completed, so the amount of the bill may be uncertain. As with contingency debts, you still need to include unliquidated claims in your bankruptcy petition. Otherwise, you might not be able to get the debt discharged in the bankruptcy proceeding.
You may need to file under Chapter 7 or Chapter 13 while you are in the midst of a dispute with the alleged creditor about how much you owe or even whether you owe anything at all. While you might think that you do not need to list this debt if you believe that you do not owe anything, you still need to list it if the creditor believes that you owe it. This will make sure that it is included in the proceedings if it turns out to be valid.
If there is a dispute over the amount of the debt, you should list the amount that the creditor is alleging rather than the amount that you believe is due. This does not amount to an admission that prevents you from further contesting the amount of the debt. You should put down the worst-case scenario to make sure that it is covered and discharged in the bankruptcy if needed. You can always note in your petition that the debt is disputed and explain why you think that you do not owe it or owe less than the amount alleged by the creditor.
Once your case gets started, the bankruptcy trustee will determine whether you have assets with which to pay creditors. If you do, they will send notice to potential creditors so that they can submit proof of claim forms. This will entitle a creditor to receive proceeds from the bankruptcy estate. The trustee will make payments from the estate in the required order of priority.
