What Is An Unliquidated Bankruptcy Claim?

When a claim is unliquidated we know who is responsible for paying it, but we don't know how much money will satisfy the claim.

By , Attorney Tulane University School of Law
Updated 5/23/2024

In most cases, a bankruptcy claim is an amount a creditor hopes to recover from bankruptcy funds. The claim is unliquidated if the creditor doesn't know how much the "debtor" or bankruptcy filer will eventually owe. Some factor prohibits the creditor from establishing the final amount.

Before the bankruptcy trustee—the official responsible for overseeing the case—can pay a creditor in bankruptcy, the creditor must prove several things:

  • the amount of the debt
  • the debtor legally owes the debt
  • the creditor has a right to payment
  • the debtor doesn't have a good faith dispute about the amount owed, and
  • there aren't any unresolved contingencies.

Many debts, like loans and credit cards, are based on contracts between the parties. The contract explains the duties, liabilities, and terms, such as payment amount and interest rate. A balance usually isn't difficult to figure out at any given time. It's a relatively simple calculation of the principal amount borrowed, plus fees and interest minus payments. However, sometimes something must occur before the creditor will know how much is owed.

Example. Suppose you're involved in an automobile accident, and the other driver's insurance company sues you. The monetary cost to the injured person or "damages" can't be determined because the other party's medical treatment is ongoing. Those costs won't get finalized until the treatment ends. You also won't know the total cost that your attorney will charge for defending you. Both the insurance claim and your attorney's claim are unliquidated. The amounts will be "liquidated" or known after the case settles or goes to trial and the court enters a judgment.

Unliquidated Claims in a Chapter 7 Bankruptcy Case

When the trustee finds money to pay claims, the unsecured creditors usually only receive a pro-rata share (a percentage of the funds available). The trustee can't calculate the pro rata share if unliquidated claims exist. The trustee must know each creditor's claim amount. Therefore, a Chapter 7 bankruptcy case can't end before the claims get liquidated.

The same holds true for claims the trustee might have against other parties. Trustees often enter into litigation to recover money owed to the debtor (the bankruptcy filer) by people not involved in the bankruptcy. The trustee's claims must be liquidated so that the trustee knows how much money will be available to distribute to creditors.

For more information, see When Is a Bankruptcy Claim Contingent, Unliquidated, or Disputed?

Get Professional Help
Get debt relief now.
We've helped 205 clients find attorneys today.
There was a problem with the submission. Please refresh the page and try again
Full Name is required
Email is required
Please enter a valid Email
Phone Number is required
Please enter a valid Phone Number
Zip Code is required
Please add a valid Zip Code
Please enter a valid Case Description
Description is required

How It Works

  1. Briefly tell us about your case
  2. Provide your contact information
  3. Choose attorneys to contact you