Bankruptcy Claims Trading Defined
As an alternative to waiting through the lengthy bankruptcy claims process with the potential for drawn out court litigation, Creditors can opt to monetize their claim in return for immediate cash.
"Claim" in bankruptcy is defined as: (A) a right to payment, whether or not reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured; or (B) a right to an equitable remedy for breach of performance if such breach gives rise to a
A contingent claim is a derivative or financial security with a payout that depends on uncertain future events.
In other words, the payment for a contingent claim relies on a situation that hasn't occurred yet or may never occur.
For example: You consigned to your brother's secured loan, specifically a car loan.