In re Lambert, 43 B.R. 913 (Bankr.D.Utah)
PUBLISHED
See 138.pdf
Creditors moved to dismiss or convert debtors' chapter 13 petition, claiming that their debts exceeded the $100,000 limit for "noncontingent, liquidated, unsecured debts" for chapter 13 eligibility under 11 U.S.C. § 109(e). After defining all of the relevant terms in § 109(e), the court concluded that both "liquidated" and "noncontingent" debts may also be "disputed," and that a bona fide dispute regarding either debtor's liability for, or the amount of, a debt renders it "unliquidated," and therefore not includable in the § 109(e) eligibility calculation. The court further held that, where there is a question regarding a debt's inclusion in the chapter 13 debt limit, § 109(e) requires a hearing to determine debtor's qualification for chapter 13 relief, unless that issue cannot be resolved expeditiously. In cases where resolution cannot be accomplished expeditiously, the court will rely on the debtor's characterization of the debt in its schedules over the creditor's version of the facts. Because an adversary proceeding between creditors and debtors regarding the validity of creditors' claims was already pending in the district court, the court relied on debtors' characterization of the debt as disputed, and denied creditor's motion to dismiss in order to allow the adversary to proceed. The court acknowledged that its ruling, which largely adopted the position taken in In re King, 9 B.R. 376 (Bankr. D. Ore. 1981), was not in line with the majority view.