Alabama § 7-9A-912 - Disputed and Disallowed Claims.

§ 7-9A-912. Disputed and Disallowed Claims.

(a) An assignee may dispute a creditor’s claim before final distribution by sending notice in a record stating the nature of the assignee’s dispute to the creditor.

(b) If a dispute cannot be resolved consensually, the assignee may commence a proceeding to disallow the claim under Section 7-9A-921. The assignee must commence the proceeding before final distribution under Section 7-9A-915. If the proceeding is not filed before final distribution, the assignee shall allow the claim under Section 7-9A-911.

(c) An assignee shall create a dollar-for-dollar reserve for the estimated amount of the potential distribution on a disputed claim.

(d) Subject to subsection (b), an assignee shall disallow a claim for reimbursement or contribution of a person that is liable with the assignor on, or that has secured, the claim, to the extent:

(1) The claim against the assignment estate is disallowed;

(2) The claim for reimbursement or contribution is contingent as of the time of allowance or disallowance; or

(3) The person asserts a right of subrogation to the rights of a creditor.

(e) A claim for reimbursement or contribution of a person liable with the assignor on, or that has secured, the claim that becomes fixed after the effective date of the assignment agreement shall be determined, and shall be allowed or disallowed, subject to subsection (b), as if the claim had become fixed before the effective date of the assignment agreement.

(f) An assignee may reconsider the assignee’s decision to allow or disallow a claim for cause. If a reconsidered claim is allowed under Section 7-9A-911, before the assignee makes additional payments or transfers to other creditors that are equal or junior in priority under Section 7-9A-15 to the reconsidered claim, the creditor with the reconsidered claim shall receive a payment or transfer in an amount proportionate in value to the payments or transfers already received by the other creditors. This subsection does not modify the assignee’s right under other law to recover from a creditor an excess payment or transfer made to the creditor. If a reconsidered claim is disallowed, the assignee must comply with subsections (b) and (c).