What Is a Disputed Debt in Bankruptcy?

Find out whether you should check the "disputed claim" box on your bankruptcy paperwork.

A disputed debt (or claim) is an obligation that you don’t believe you owe. For instance, you might not agree with an amount billed by a creditor, or, you might not think that you owe a debt at all.

In bankruptcy, a disputed debt can arise in different ways. A delinquent account that doesn’t belong to you might show up on your credit report. Your gym might claim that you have an outstanding balance of $3,000 when it should be $100. Or, someone could file a lawsuit against you claiming that you’re responsible for medical expenses resulting from an injury that wasn’t your fault. In each situation, you’d want to dispute all or a portion of the claim.

When you file for bankruptcy, you’ll have the opportunity to let the court know about disputed claims when you prepare your bankruptcy paperwork. After you list the creditor, you’ll check the “disputed” box made available for that purpose.

If you’re filing a Chapter 7 bankruptcy case, you won’t need to do much else as long as the debt is the type that will get wiped out (discharged). Also, there’s nothing more to do if there isn’t any money to distribute to creditors.

A problem might arise if funds will be dispersed to your creditors because it might matter how much each will get paid. As a result, you’ll likely want to consult with a bankruptcy attorney if you’re facing one of the following situations:

(To learn more, read When Is a Bankruptcy Claim Contingent, Unliquidated, or Disputed?)

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