People filing for bankruptcy will meet a lot of terms including unliquidated claims. They ask what is unliquidated claim and what they need to do to file for this bankruptcy necessity. Find out what this claim type is and its importance to the filing process.
An Introduction to Unliquidated Claims
A claim is the term that refers to the debt obtained from different entities. They are called claims because loan providers and other organizations claim payment for the loan. A claim can be categorized in different types and one of them is an unliquidated claim.
An unliquidated claim is the debt with undetermined amount. This means that the debt exists, but its value is still undetermined due to disputes from creditors and debtor. A debt can also be an unliquidated claim simply because the debtor can’t determine the actual amount yet due to other factors. Contrary to popular opinion, an unliquidated claim doesn’t mean a debtor can dodge the debt as if it doesn’t exist or is free from financial responsibility from paying them. This is the importance of answering what is unliquidated claim to keep people from getting a different idea from the debt.
Types of Loans that can be Unliquidated Claims
There are different types of loans falling under this category. Common debts include litigation fees that haven’t been settled yet. A good example is getting into a contingency fee agreement with a lawyer for a litigation procedure. This type of litigation means the lawyer would get a percentage from the money you’ll get after winning a case, which is common in civil cases. The amount or damages to be obtained from these cases are unknown because it awaits jury decision or lawyer’s recommendation. Since the amount is still unknown, the debt won’t remains unknown as you don’t know how much you’ll get or if you’ll win the case. Losing the case means your lawyer won’t get a fee, which means the value owed will remain unknown until the case is closed.
Another case is when a debtor got into a case where he’s found guilty of accidents and would need to pay for damages. The value will also remain unknown because the court has yet to decide on the value to pay for the plaintiff.
Solving Unliquidated Claims
An unliquidated claim should be filed accordingly, but the undetermined value often intimidated debtors. They don’t know how much money to declare and would think that they may make a mistake. Debtors simply need to declare these debts even without actual value yet. They can add an addendum indicating the facts surrounding the unliquidated claims.
If an individual is still not confident about declaring this debt, he can ask for an expert’s advice as to how to write the debt accordingly to the file. Financial experts like bankruptcy attorneys can assist in writing these debts as well as identifying the types of loans that fall under this category.
Get to know what is unliquidated claim and the technicalities surrounding it. It will be helpful for everyone filing for bankruptcy and ensuring they will get utmost benffit from this move.