In determining whether Mr. Green was eligible, under 11 U.S.C. § 109(e), to be a Chapter 13 debtor due to debt limitations, the bankruptcy court reviewed several types of claims to determine whether each was “noncontingent” or “liquidated”.
While determination of whether a debt is “noncontingent” or “liquidated” is a question of law, See In re Goralnick, 81 B.R. 570, 571 (9th Cir. BAP 1987) the amount of a debt is a question of fact. “[A] debt is noncontingent if all of the events necessary to give rise to liability for it take place prior to the filing of the petition.” In re Sappah, No. 11-03129-8-SWH, 2012 WL 6139644 (Bankr. E.D.N.C. Dec. 11, 2012) (quoting In re Knowles, Case No. 05-06402-8-ATS (Bankr. E.D.N.C. Oct. 31, 2005)). That Mr. Green disputes a debt or has potential defenses or counterclaims that might reduce the claim does not render a debt contingent. A liquidated debt is certain as to the amount and can be “readily and precisely” determined. Simply scheduling a a debt as disputed, however, is insufficient to have that claim excluded from the debt limitations, but must be subject to a bona fide dispute.
Applying these standards, the bankruptcy court first held that there was an objective basis to find that the amounts of the Equitable Distribution Award to Mr. Green’s ex-wife were, due to the pending appeal, unliquidated.
Next, as to a mortgage claim held by Wells Fargo, such claim was unsecured as to Mr. Green’s estate, as he no longer had any interest in the property securing that note. As Mr. Green is joint primarily liable on that debt with his ex-wife, Wells Fargo could proceed against either without seeking to sell the collateral. Accordingly, its claim was noncontingent and liquidated.
Rewardingly a guaranty by Mr. Green of a debt to First Bank, for which his law firm was primarily liable, the bankruptcy court held that it was an obligation to pay a debt only if it is not paid by the principal obligor. In O’Grady v. First Union Nat’l Bank, 296 N.C. 212, 220 (1978). As the bankruptcy court found that this claim was not in default, it was accordingly contingent and excluded from the debt limitation calculation.
As to a claim asserted by a contractor for renovations, the bankruptcy court held that unknown value of the contractor’s use of Mr. Green’s boat should be credited against as such claim, left the claim unliquidated.
Following In re Hanson, 275 B.R. 593, 597-98 (Bankr. D. Colo. 2002), the bankruptcy court held that a preferential payment to a creditor resulted in such claim being unsecured in the bankruptcy case as of the petition date. That such creditor did not file a Proof of Claim determine whether the creditor receives disbursements under a plan, but is not determinative as to eligibility.
At the end, the bankruptcy court found that Mr. Green had $437,225.77 in noncontingent, liquidated debt and was ineligible under § 109(e) for Chapter 13.
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