Memorandum of Decision Re: Eligibility for Chapter 13

FOR THE NORTHERN DISTRICT OF CALIFORNIA In re JOSEPH A. COSIO-BARRON,                                       No. 1-90-00820      Debtor. ___________________________/
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 personally liable.      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 calculation.      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 chapter.
Dated: August 16, 1990                                                                              _______________________                                                                                                                      Alan Jaroslovsky                                                                                                                      U.S. Bankruptcy