When you file for bankruptcy, you are required to list all of the debt that you owe. What the attorney is trying to do is to gather together both a total of the debt owed, or that will be owed and to balance it between income and assets so the courts may see the justification for the bankruptcy and/or make decisions as to which debts must be honored. Declaring bankruptcy is a very involved process and one that you don’t want to do without the help of a dallas bankruptcy lawyer. If you do not list all of your debt correctly, your bankruptcy claim may be denied, or you may wind up being held responsible for the debt amount.
The most common type of debt is direct debt. An example of direct debt is a payment on an auto loan or an amount owed on a bill. The debt amount is calculated to include interest rates at the minimum amount payment per month until the debt would be repaid. These debts are easy to calculate and to list.
The next most common debt type is a liquidated debt. These are debt amounts that are dependent on outcomes of legal decisions involving responsibility and awards, typically in court cases. For instance, if you are awaiting an accident settlement then the un-liquidated debt is the amount the lawyer will get paid from the settlement amount. In the same manner, if you are the responsible party in an accident, you may have to wait for a decision on the amount owed to be able to list the debt.
The third type of debt is called “contingent debt.” A contingent debt replies you have agreed to take on responsibility for a certain amount of debt should a default occur. This can happen when you cosign on loans or act as the securing signature on a loan agreement.
The last kind of debt is referred to as a disputed debt. This is when you may have a debt credited to you but you are disputing the debt amount or the debt account itself. All of these different types of debt have to be accounted for when you file for bankruptcy. There are protections built into the process for you and unlike dealing with creditor agencies, listing a disputed debt does not mean you are acknowledging responsibility for it. Should you have any questions about listing your debt, always consult a bankruptcy attorney to make sure you don’t wind up carrying the debt past the bankruptcy decision.