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Non-Contingent Liquidated Debt in Bankruptcy

Orlando bankruptcy attorneys Lanigan and Lanigan consult with clients to explain non-contingent liquidated debt in bankruptcy vs. contingent debt. Chapter 13 provides not only that the debt within the bankruptcy be within the prescribed limits but also must be BOTH non-contingent and liquidated. Contingent means something that is dependent on some future occurrence that is not certain to occur.

For example, if you make a bet in May that the Rays will win the World Series and that if you lose you owe someone $10,000. Then, that amount of debt is contingent until the winner of the World Series is determined.

Conversely, non-contingent means that it not dependent on something else. Most courts hold that lawsuit in it of itself is not a contingency and that the contingency is the event that makes the debtor liable to the creditor.

Furthermore, liquidated debt means that it must have a determinable cash value. On the other hand, unliquidated debt is one that does not yet have a set value, such as a tort claim not yet reduced to judgment. However, courts sometimes disagree as to what exactly is liquidated or unliquidated.

Understanding Non-Contingent Liquidated Debt in Bankruptcy

Liquidated, unliquidated, contingent, non-contingent and other legal terms in a bankruptcy can be confusing. Clear up you questions in a meeting with Roddy Lanigan and Eric Lanigan of Lanigan and Lanigan in Winter Park, Florida.

For example, if a car accident occurs and the amount of potential liability owed by the debtor is already determined to be $100,000 (the parties stipulate that if Debtor is found liable, this is the amount owed based on proof of medical expenses) then it increases the chances of finding this as a liquidated debt.

Although it is considered non-contingent (by majority of courts), if the amount the debtor is liable is still unknown because the judge hasn’t rendered final judgment on money owed then it is most likely unliquidated. Thus, in order to be eligible for chapter 11 or 13 the debt must not be dependent on some future event and must have a determinable cash value.

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