What Is a Disputed Bankruptcy Claim?

If you don't agree with a debt, you can dispute it in your bankruptcy paperwork.

A bankruptcy claim is disputed when the debtor (the bankruptcy filer) and the creditor disagree on the amount the debtor owes or whether the debtor is responsible for the debt at all.

Listing the Disputed Debt in Your Bankruptcy Paperwork

When you file a bankruptcy case, you’re required to fill out paperwork in which you’ll list your assets, income, expenses, recent financial transactions, and debts. You’re required to list not only the debts that you accept liability for, but you must also include any debt that a creditor claims you owe. This is the case even if you disagree with the amount, paid off the debt, or don’t remember incurring the debt.

If you don't list it, and it turns out that you owe it, there’s a good chance that it won't be discharged (forgiven) in the bankruptcy case. Listing it isn’t necessarily the same as admitting that you owe it, however. If you don’t agree with it, you can mark the debt as disputed.

Why Dispute a Creditor's Claim?

Issues that can cause a debtor to question a claim’s validity can include:

  • Is the creditor the right lender?
  • Are you the correct borrower?
  • Does the creditor have enough documentation to prove that you owe the debt?
  • Did the creditor calculate the fees and interest correctly?
  • Did the creditor give you credit for all payments?
  • Did you pay the debt off but the creditor still shows a balance?

A creditor that wants to get paid out of bankruptcy funds (if any are available) must file a proof of claim form in Chapter 7 or Chapter 13 bankruptcy. The creditor will attach documentation to the form that demonstrates the following:

  • the creditor owns the debt
  • the account paperwork is in order, and
  • enough documentary evidence exists to show the balance owed.

Anyone with a stake in the claim (or the outcome of the dispute) can file a claim objection. The assigned bankruptcy judge will resolve the matter.

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