Types of Claims in a Bankruptcy Case

When a person or business files for bankruptcy, creditors file claims for payments on the debts they're owed. There are different types of claims, and not all are treated equally in any given bankruptcy case.

Whether you're filing a bankruptcy case, or you're a creditor looking for payment in someone else's case, know the types of claims and how your claim may be handled.

Claim Definition Basics

Claims differ based on who the creditor is. Nongovernment claims arise when there's liability based on a transaction, or a duty to do something. A government claim may also be based on a transaction or a duty to act, and there's some relationship that existed with the filer before the case started.

A creditor's right to payment can come from many sources, including contracts or a court's judgment. For example, someone could break a contract term, or fail to perform some duty owed to a creditor, and a court awards a payment to the creditor.

Claim Types and Qualities

Get an idea of the different types and qualities of claims you may see in a bankruptcy case.

Reduced to Judgment

A claim is reduced to judgment when a judge orders one party to pay or give property to another party. A creditor who has a judgment may enjoy preferred status when a debtor's available assets are paid out if there aren't enough assets to pay all creditors' claims in full.

Liquidated

A debt that is for a fixed amount of money is considered liquidated.

Unliquidated

An unliquidated claim is one for which a specific value has not been determined. Tort claims, such as a personal injury claim, are usually unliquidated until the related lawsuit is completed, and there's a judgment for damages against the responsible party.

Fixed

A fixed claim is one for a specific amount of money.

Contingent

A contingent claim is one owed to the creditor under certain circumstances. For example, a debtor may be a loan co-signer, and must pay if the borrower doesn't make the loan payments. A contingent debt is one in which there is a triggering event for the debt to exist. All the events needed to create liability haven't happened before the date the bankruptcy petition is filed.

Matured

A matured claim is for a debt that exists currently and the date of payment has come due.

Unmatured

An unmatured claim is for a debt that exists, but the payment date is in the future.

Disputed

A disputed debt is one that you don't agree you owe to the creditor.

Undisputed

A undisputed debt is one that you agree is owed to the creditor.

Legal Claim

A request for money is generally a legal claim.

Equitable

A request to the court to order someone to do something, or stop or not do something is an equitable claim, meaning to do what is fair or right.

Secured

A claim is secured when payment is backed up by a lien on the debtor's property, or loan collateral. The creditor has the right to use the property as a source of payment if the debt isn't paid. Property sales proceeds are first used to pay the secured creditor, and if there's anything left, it might be used to pay creditors without liens on the property.

Unsecured

Claims are unsecured if they don't have secured status. It's also possible for a given claim to be partly secured and partly unsecured – this happens when a creditor's lien is less than the full amount of the debt, or the property is worth less than the full debt owed.

A creditor has no special assurance of payment for an unsecured claim. The debt is often for credit extended solely on an assessment of the borrower's ability to pay. A credit card balance is a good example.

Unsecured claims are assigned different priorities or order for payment by bankruptcy law. When there aren't enough funds to pay all claims in a case, unsecured claims with the highest priority stand the best chance to be paid compared with claims with a lower ranking.

Questions for Your Attorney

• I think I have an equitable remedy against someone who filed a bankruptcy case, so can I make a claim and how is it done?
• Can you tell whether or not the unsecured claim I filed in a customer's bankruptcy case will be paid?
• Can a claim be based on something that happens after a bankruptcy petition is filed, such as a missed loan payment after the filing date?