FOR THE NORTHERN DISTRICT OF CALIFORNIA
JOSEPH A. COSIO-BARRON, No. 1-90-00820
Memorandum and Order
The debtor in this Chapter 7 case has scheduled $83,800.00 in undisputed unsecured debt. He
has also scheduled debts of $19,867.00, $211,000.00, and $100,000.00 denoted as disputed and
unliquidated. The issue now before the court is whether the debtor meets the Chapter 13 eligibility
requirement of section 109(e) of the Bankruptcy Code, which restricts Chapter 13 eligibility to
only those debtors whose noncontingent, liquidated debts are less than $100,000.00.
If any one of the three disputed debts is properly counted for eligibility purposes, then the
debtor is ineligible for Chapter 13. Since it appears from the admissions made in the debtor's
Contentions Regarding Disputed Unliquidated Claims, filed August 14, 1990, that all three
disputed debts must be included in the eligibility calculation, the court must find the debtor
ineligible for Chapter 13.
The $19,867.06 is claimed by a Mercedes Benz car dealership for breach of two contracts to
purchase new automobiles. The debtor purchased the automobiles for $133,987.20, but had to
return them when he could not obtain financing. The dealership resold them for $15,531.81 less
than the debtor's contract price, and added contractual charges and expenses of $12,535.25. After
deducting an $8,200.00 trade-in allowance, the balance claimed by the dealership is $19,867.06.
The debtor argues that it was the dealer's fault that financing could not be arranged, and,
somewhat belatedly, that he purchased the automobiles on behalf of a corporation and is not
The fact that the debtor disputes his liability on the two contracts does not mean that the debt
is not counted for eligibility purposes. From the debtor's own pleading, the court can determine
exactly what the claim will be if the debtor is liable. Where the amount of the debt is readily
ascertainable, the fact that the debtor disputes liability does not mean that the debt is excluded
from the Chapter 13 calculation. In re Sylvester
, 19 B.R. 671, 673 (9th Cir. BAP 1982). The
amount owed on a contract may include any charges, fees and costs provided for in the contract.
In re Wenberg
, 94 B.R. 631, 635 (9th Cir. BAP 1988). Accordingly, the debt of $19,876.06 must
be included as a liquidated debt notwithstanding the debtor's defenses, and this debt alone puts the
debtor over the limit.
The $100,000.00 debt relates to a pending lawsuit against the debtor to recover payment on
a promissory note. The debtor's defense is that he has paid the note. Since the lawsuit is still
pending and the amount is readily ascertainable, this debt too must be included in the eligibility
The $211,000.00 debt is based on two promissory notes signed by the debtor as president of
a wholly-owned corporation and personally guaranteed by the debtor. His defense is that he
repaid $185,000.00 by cash at various locations around the world, and that the holder of the notes
agreed to forgive the remaining balance in return for "substantial personal services." Again, the
amount is readily ascertainable so that the debt must be counted notwithstanding that liability is
disputed. A debt is not considered to be contingent for purposes of section 109(e) just because
the debtor may share liability with another. In re Fostvedt
, 823 F.2d 305 (9th Cir.1987).
For the foregoing reasons, the debtor does not meet the eligibility requirements for Chapter 13.
It is therefore
ORDERED that this Chapter 13 proceeding shall be dismissed on the tenth day after service
of this order on the debtor, unless before that date the debtor has converted the case to another
Dated: August 16, 1990 _______________________