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How to handle disputed debts

A disputed debt is a bona fide disagreement between the creditor and the committee as to the existence of a debt or the amount owed by the committee. Until the creditor and committee resolve the dispute (assuming the creditor did provide something of value), the committee must disclose:

  • The amount the committee admits it owes;
  • The amount the creditor claims is owed; and
  • Any amounts the committee has paid the creditor.

When filing a debt settlement plan, a terminating committee must describe the nature of the dispute and the committee’s efforts to resolve it on Part II of Form 8. The committee may also note that the disclosure of a disputed debt does not constitute an admission of liability or a waiver of any claims the committee may have against the creditor.