How to Make a Contingent Claim in a Bankruptcy Case

Contingent claims in bankruptcy are those claims which are contingent upon certain events occurring. For example, if a debtor has co-signed a loan, he would only be liable for that loan in the event that the original debtor failed to make payments or defaulted on the loan. Primarily, these would be loans that were automobile loans, personal loans or other loans where the primary debtor had insufficient credit or means to support a loan without a co-signer. In most cases, these contingent claims are often between a parent and child and may not necessarily be reflected in the parent's credit report. (See also When to Claim Bankruptcy).

Another type of contingent claim may be when a person who has filed for bankruptcy has a suit pending against him for personal injury claims. This type of contingent claim would be payable only in the instance where the person was found liable for damages. The liability need not be established in order to be considered a contingent claim as it is dependent on another event.

Contingent Claim Requirements

When a debtor files for bankruptcy, he may be required to include information regarding any loans that show him as a co-signer or in cases where he may be liable. Primarily, a contingent claim would be filed by a potential debtor and may be estimated. There are specific forms which must be filed by the creditor with the bankruptcy court, namely Form 10 which is required by the court.  In this instance, the creditor may estimate the amount that might be due by the person filing bankruptcy.

When Contingent Claims May be Assets

There are specific instances where a contingent claim must be filed as a potential asset. For example, a debtor who is party to a malpractice suit, a personal injury suit or a product liability suit may be required to list a contingent claim as an asset on his bankruptcy documents. Failure to list these as assets could negatively impact the debtor's ability to collect future awards on these types of suits.

Getting Legal Assistance

Whether a debtor is required to file a contingent claim as an asset or a creditor requests a contingent claim against a creditor, a qualified bankruptcy attorney may be of assistance. For those who believe that they may potentially have a contingent claim filed against them, it is a good idea to mention any debts where they are a co-signer to their bankruptcy attorney.  Additionally, anyone who is party to any suit which may result in a monetary award should discuss a contingency claim with their attorney.