§ 14.3     Use of Statements and Schedules in Eligibility Calculations
Cite as:    Keith M. Lundin, Lundin On Chapter 13, § 14.3, at ¶ ____, LundinOnChapter13.com (last visited __________).
[1]

There is much local variation with respect to how debts are counted for purposes of the eligibility limitations in 11 U.S.C. § 109(e).1 The reported decisions have produced no consensus on two fundamental questions: (1) To what extent are the amounts and characterizations of debt in the statements and schedules accepted by the court? (2) Does the court “split” claims into secured and unsecured portions consistent with § 506(a) at the threshold eligibility stage?2

[2]

A substantial number of courts at least pay lip service to the “general rule” that the amount and character of debt will be determined from the debtor’s schedules, and proof beyond those documents is considered only if there is evidence of bad faith by the debtor.3 This approach has been likened to the determination of the amount in controversy in federal diversity jurisdiction cases.4 The United States Court of Appeals for the Sixth Circuit explained this approach as a practical necessity in Chapter 13 cases: if bankruptcy courts undertake to routinely litigate debt limitations, the administration of Chapter 13 would collapse. Only through expeditious resolution of eligibility questions can speed and efficiency be accomplished in a Chapter 13 program.5

[3]

But staying within the schedules to determine debts for eligibility purposes is not as simple as it sounds. As currently constructed, the schedules do not contain a debt calculation for eligibility purposes in Chapter 13 cases. There is much information in the schedules about secured and unsecured debts, valuation of collateral, exemptions and the like, but no form, summary or table exists in which secured and unsecured debts are accurately totaled in a manner that can be reliably measured against the limitations in § 109(e).

[4]

This creates a conundrum for all who would apply the general principle that courts “normally” rely on the schedules to determine eligibility for Chapter 13. On which schedules are we relying? What does that reliance mean? Courts that say reliance on the schedules is appropriate absent bad faith only get us partway toward a determination of debt for eligibility purposes. More has to be done to massage the information in the schedules into a form that can be mathematically measured against the debt limitations in § 109(e).

[5]

A quick look at the schedules illustrates the problem. There are two summaries of the numbers in the schedules now required by Official Form 106Sum. One of these summaries is a “statistical” summary for data-gathering purposes. The other is the official “Summary” of the schedules. Neither produces the numbers necessary to determine whether a debtor is eligible for Chapter 13. “Normally” relying on the schedules inevitably drives courts into doing some math that is not the same math the debtors did to prepare the schedules. It is more than just an intellectual curiosity that debtors preparing the schedules in perfect good faith consistent with all the instructions will not produce numbers that reliably determine eligibility for Chapter 13 without additional math by someone.

[6]

Schedule A/B, Official Form 106A/B, now requires the debtor to list all real property. Schedule A/B cross-references Schedule D, Official Form 106D, where the debtor is supposed to list secured claims. There is a column in Part 1 to Official Form 106A/B, in which the debtor is instructed to provide the “current value” of the portion of real property owned by the debtor. The instructions tell the debtor to “Put the amount of any secured claims on Schedule D.” Nothing on Schedule A/B instructs the debtor to list exactly the amount the debtor assigns to each secured claim.

[7]

Similarly, for personal property, Schedule A/B requires the debtor to state the current value of the interests owned by the debtor without deduction for “secured claims or exemptions.” There is no column for “Amount of Secured Claim” with respect to claims secured by personal property.

[8]

On Schedule C, Official Form 106C, the debtor is instructed to list exemptions and to copy the value of property from Schedule A/B. The “amount of the exemption” must be listed, but none of the information on Schedule C carries into the Summary now found at Official Form 106Sum, net of exemptions.

[9]

Secured claims are listed on Schedule D, Official Form 106D, but not for purposes of eligibility in a Chapter 13 case. Debtors are instructed on Schedule D to list the “Amount of claim” without deducting value of collateral and to list the “Unsecured portion if any” for each secured claim. The unsecured portion column does not go to the Summary, Official Form 106Sum. The unsecured portion shown on Schedule D does not go to Schedule F—unsecured claims. The result of these cross-references is that the unsecured portion of any undersecured claim is not automatically added to other unsecured claims for eligibility purposes without actually digging through the schedules to find the numbers.

[10]

When is a court acting “normally” under these circumstances? Is it normal to rearrange the amounts and characterization of debts to determine eligibility? Some courts routinely redo the math by moving debts from secured to unsecured and vice versa based on the amounts, valuations and exemptions scheduled by the debtor. In other words, even without evidence that good faith is lacking, some courts shuffle the schedules to determine whether the debtor is eligible. Other courts don’t.

[11]

Debt counting for eligibility purposes is most often undertaken in the first instance by the standing trustee for Chapter 13 cases in the district.6 Different trustees conceive of this task differently. Some parse the schedules carefully in every case to make a detailed calculation of secured and unsecured debts. Others look at the Summary and rarely pull in issues such as exemptions, valuation of collateral or lien avoidance.

[12]

In one sense, it is not going “outside” the schedules to mathematically manipulate the numbers provided by the debtor. On the other hand, recharacterizing debts as secured or unsecured based on valuations, exemptions and other information provided by the debtor is not a fixed calculus. As demonstrated below, even courts following the general rule of reliance on schedules in the absence of bad faith don’t necessarily do the same math or do the math in the same way.

[13]

In jurisdictions following the Sixth Circuit, debtors’ counsel must be especially careful to schedule the amounts of debts accurately and to characterize those debts as secured or unsecured,7 contingent or noncontingent,8 liquidated or unliquidated.9 If eligibility is challenged, the court will first examine the honesty of the debtor in the preparation of the schedules. Debtors’ counsel must not be too cute in the schedules. For example, the practice of listing many or all debts as “disputed,” “contingent” or “unliquidated”—rather than listing specific dollar amounts and proper characterizations—becomes evidence that the debtor has not made a good-faith effort to generate the schedules.10 Intentional omission of a creditor can be fatal.11 One bankruptcy court in the Sixth Circuit found that listing claims as “unknown” when the debtor knew the exact amounts of state court judgments was a violation of the good-faith standard in Comprehensive Accounting Corp. v. Pearson (In re Pearson)12 and justified penetrating the schedules to determine eligibility.13 One district court in the Sixth Circuit found that “shameful” or “shocking” testimony at a deposition that the debtor did not know her current address or telephone number and had no information about her personal checking account or income from her psychiatry practice was evidence that the schedules were not prepared in good faith; the debtor was ineligible based on an unscheduled debt to the IRS in excess of $300,000.14

[14]

There are variations in jurisdictions approving the Sixth Circuit approach. Some courts are willing to massage and manipulate the schedules to determine eligibility.15 These courts profess to accept the debtor’s schedules, absent bad faith, but then go behind the debtor’s characterizations of debts to rework the eligibility calculus without first finding a lack of good faith.16 For example, one court held that “ordinarily” it is appropriate to rely on the debtor’s schedules, if filed in good faith, but where the debtor lists a claim as disputed, it is appropriate to “determine the liquidated amount of [the] disputed claim prior to making the computation required by § 109(e).”17

[15]

The Bankruptcy Appellate Panel for the Eighth Circuit falls in this category. Barcal v. Laughlin (In re Barcal)18 found a debtor ineligible for Chapter 13 based in part on the debtor’s schedules and in part on proofs of claim filed by the IRS. The BAP gave this account of Pearson and the proper rules for determining eligibility:

To require the bankruptcy court to decide the merits of disputed claims before determining eligibility imposes an impractical burden and delay upon the Chapter 13 court. . . . [I]t is appropriate for a court considering eligibility to rely primarily upon a debtor’s schedules and proofs of claim, checking only to see if these documents were filed in good faith. [Comprehensive Accounting Corp. v. Pearson (In re Pearson), 773 F.2d 751 (6th Cir. Oct. 9, 1985) (Engel, Keith, Jones)]. In so doing, however, the court should neither place total reliance upon a debtor’s characterization of a debt nor rely unquestionably on a creditor’s proof of claim, for to do so would place eligibility in control of either the debtor or the creditor. . . . At a hearing on eligibility, the court should thus, canvass and review the debtor’s schedules and proofs of claim, as well as other evidence offered by a debtor or the creditor to decide only whether the good faith, facial amount of the debtor’s liquidated and non-contingent debts exceed [sic] statutory limits.19
[16]

Pearson does not always work to the debtor’s advantage, even when the schedules are prepared in good faith. For example, when the schedules reflect personal liability for rent under a lease, unsecured debts for eligibility purposes include the unsecured liability to the landlord notwithstanding that the debtor disputes liability or the amount of the landlord’s claim.20 Even in a jurisdiction that is bound by Pearson, courts have struggled to avoid a strict or technical application of its rule when the debtor is almost eligible or almost ineligible or when amendments to the schedules could make the difference.21

[17]

Decisions from the Ninth Circuit are a study in the ambiguous use of schedules to determine a Chapter 13 debtor’s eligibility. In Slack v. Wilshire Insurance Co. (In re Slack),22 the Ninth Circuit cited the Sixth Circuit’s decision in Pearson for the proposition that the bankruptcy court should “normally” look to the petition to determine the amount of debt. This implicit adoption of Pearson was made explicit two years later in Scovis v. Henrichsen (In re Scovis):23

We now simply and explicitly state the rule for determining Chapter 13 eligibility under § 109(e) to be that eligibility should normally be determined by the debtor’s originally filed schedules, checking only to see if the schedules were made in good faith.

The Ninth Circuit attributes this statement of the rule to Pearson, but there is no source in Pearson for the limitation in Scovis that eligibility is determined by the “originally” filed schedules.24

[18]

In Scovis,25 the debtors scheduled a residence valued at $325,000 encumbered by a first mortgage of $249,026.91. Henrichsen held a judgment lien of $208,000. The debtors listed a $100,000 homestead exemption in Schedule C. The original schedules showed general unsecured claims of $40,499.83 and a priority claim of $6,000. During the Chapter 13 case, the debtors amended the schedules to delete some creditors based on payments from insurance and other sources, reducing the general unsecured debt to $22,919.85. Six months after the petition, Henrichsen’s judgment lien was avoided by bankruptcy court order.

[19]

The Ninth Circuit had no trouble concluding that “even though the lien was not judicially avoided until after the Chapter 13 petition was filed, the fact that debtors listed both the homestead exemption and the lien on the schedules provides the bankruptcy court with a sufficient degree of certainty to regard the judgment lien as unsecured for eligibility purposes.”26 But with respect to the amended schedules, a majority of the Ninth Circuit Panel refused to consider the reduced amount of unsecured debt: “Since we determine eligibility from the time the petition is filed and since ordinary events occurring subsequent to the filing (e.g., paying down debt) do not affect the eligibility determination, the correct amount of general unsecured debt is $40,499.83.”27

[20]

There is no finding in Scovis that the amended schedules were filed in bad faith. Scovis seems to announce a modified Pearson rule that amended schedules are not considered in the eligibility calculus—at least when the amendments reflect “ordinary events” after the petition.28 That the avoidance of Henrichsen’s lien was an (ordinary?) event subsequent to the petition and was considered by the majority in Scovis provided grist for the dissenting Ninth Circuit judge. Scovis puts a premium on careful preparation of the original schedules in Chapter 13 cases in the Ninth Circuit. Scovis certainly seems to invite bankruptcy courts to look beyond the schedules to determine eligibility.29

[21]

Other jurisdictions focus on the evidentiary effect of the schedules and hold that the amounts stated by the debtor are “evidentiary admissions”30 or a “rebuttable presumption” upon which eligibility can be based unless and until a challenger overcomes the presumption.31 Creditor’s counsel must be prepared to come forward with proof contrary to the amounts or characterizations stated by the debtor.

[22]

Some courts have used a “keep-it-simple approach”—if the determination of the amount or character of a debt cannot be accomplished expeditiously, then the characterization by the debtor is accepted.32 This approach is similar to the Sixth Circuit’s, but the focus, rather than being the debtor’s good faith, is the complexity of the claims dispute. If the debtor has disputed a debt and listed it at some amount, debtor’s counsel should be ready to demonstrate that calculating any other amount would involve complicated litigation that should be (temporarily) resolved in the debtor’s favor for eligibility purposes.

[23]

Still other decisions treat the eligibility calculation as a free-for-all in which disputes about claims are properly litigated and the debt structure recalculated. For example, one court first determined whether a debtor could avoid a prepetition judgment lien as a preference under 11 U.S.C. § 547 and then recalculated the allowance of secured and unsecured debts at the eligibility stage of a Chapter 13 case.33 Another court granted relief from the stay after the petition to permit a state court to enter summary judgment for a creditor and then, based on that postpetition judgment, determined the debtor ineligible for Chapter 13.34 Finding that “deference to the numbers and designations found on a debtor’s schedules is unwarranted,” one bankruptcy court took the debtor’s schedules as a “starting point in the section 109(e) inquiry” but then “consider[ed] postpetition events and developments to the extent . . . they shed light on the amount of secured and unsecured debt actually owed by the debtor at the time of the filing of the petition.”35 Some reported decisions engage in extensive recalculation of the amounts of claims despite the debtor’s good-faith preparation of the petition and schedules.36 Some courts have gone behind the debtor’s characterization of debts as contingent or unliquidated to determine the nature of the claim by taking evidence.37 This free-for-all approach can be time consuming and complicated and may result in a determination that the debtor is ineligible based on postpetition events.38

[24]

Within and across these various approaches, the courts have used many different rules for dealing with filed proofs of claim in the eligibility calculus. Often, the eligibility dispute arises on a motion to dismiss well in advance of the deadline for filing proofs of claim.39 But many creditors immediately file proofs of claim upon notice of the Chapter 13 petition. The Bankruptcy Rules provide that a properly filed proof of claim is “prima facie evidence of the validity and amount of the claim.”40 Some courts have recognized that a filed proof of claim has this prima facie effect in an eligibility dispute.41 Using the prima facie evidentiary effect of the proof of claim in an eligibility dispute is an invitation to full-scale litigation of claims allowance—presumably, the only way the debtor could overcome the prima facie effect would be to successfully contest the claim during the hearing on eligibility. This is a slippery slope. Many reported decisions include consideration of filed claims in the eligibility calculus though not always revealing exactly what weight or effect is given to the proof of claim.42

Because eligibility for Chapter 13 at conversion is measured as of the date of the original petition under another Chapter,43 it has been held that proofs of claim filed during the Chapter 7 case cannot rescue the debtor when the Chapter 7 schedules show unsecured debt in excess of the § 109(e) limitation.44 When good faith is challenged at conversion, courts have looked beyond the original schedules, just as in cases without conversion.45

[25]

Because the debt limitations for eligibility for Chapter 13 are not jurisdictional,46 it should at least be true that confirmation of a plan precludes further challenge to eligibility without regard to changes in the debtor’s liabilities or the allowance or disallowance of claims after entry of the confirmation order.47

[26]

In a jurisdiction yet to reveal its view on the eligibility process, debtor’s counsel will probably want to argue in favor of the Sixth Circuit approach because it puts a premium on evidence more or less within the debtor’s control—carefully prepared schedules—with the focus on the debtor’s good faith. Creditor’s counsel should quickly file proofs of claim and argue for litigation of the nature and extent of claims at the threshold when the case might be derailed before more significant rights are affected by confirmation.

[27]

Great care in the preparation of the schedules is important under any procedural framework. As discussed below, merely listing a debt as disputed or unknown gets the debtor nothing except increased scrutiny in the eligibility calculus.48 Intentionally omitting or mischaracterizing debts in the schedules to create eligibility exposes the debtor and counsel to sanctions, if not criminal liability.49


 

1  The debt limits for Chapter 13 eligibility are discussed in § 14.1  Dollar Amounts.

 

2  See § 14.4  Are Claims Split under 11 U.S.C. § 506(a)?.

 

3  Comprehensive Accounting Corp. v. Pearson (In re Pearson), 773 F.2d 751 (6th Cir. Oct. 9, 1985) (Engel, Keith, Jones). Accord Martindale v. Meenderinck (In re Meenderinck), No. 06-35391, 2007 WL 4192637, at *1 (9th Cir. Nov. 19, 2007) (unpublished) (Canby, Graber, Gould) (Applying Scovis v. Henrichsen (In re Scovis), 249 F.3d 975 (9th Cir. May 11, 2001) (Nelson, Brunetti, Kozinski): “‘[E]ligibility should normally be determined by the debtor’s originally filed schedules, checking only to see if the schedules were made in good faith.’ . . . There was and is no allegation of bad faith here, so the bankruptcy court properly confirmed the Chapter 13 plan given the facts presented at the time of the petition.”); NCI Bldg. Sys. LP v. Harkness (In re Harkness), No. 05-11497, 2006 WL 1880384, at *3 (5th Cir. July 7, 2006) (unpublished) (King, Wiener, DeMoss) (“Ordinarily, the bankruptcy court will not look beyond the amounts asserted by the debtor in the debtor’s schedules in conducting the § 109(e) eligibility analysis, unless it finds that the schedules were not filed in good faith.”); Murphy v. McArthur (In re Murphy), 146 F. App’x 285, 289 (10th Cir. Aug. 22, 2005) (unpublished) (Seymour, Kelly, Murphy) (When good-faith objections are raised, “it [is] proper for the bankruptcy court to look past the characterization of [debtor’s] claims in his schedules and consider other evidence.”); Scovis v. Henrichsen (In re Scovis), 249 F.3d 975, 982 (9th Cir. May 11, 2001) (Nelson, Brunetti, Kozinski) (“We now simply and explicitly state the rule for determining Chapter 13 eligibility under § 109(e) to be that eligibility should normally be determined by the debtor’s originally filed schedules, checking only to see if the schedules were made in good faith.”); Lantzy v. Rojas (In re Lantzy), No. CC-10-1057-KiLPa, 2010 WL 6259984, at *3 (B.A.P. 9th Cir. Dec. 7, 2010) (unpublished) (Kirscher, Lynch, Pappas) (“Eligibility is normally determined based on the figures included in the debtor’s original schedules, checking only to see that the schedules were prepared in good faith. Scovis v. Henrichsen (In re Scovis), 249 F.3d 975, 982 (9th Cir. [May 11, 2001) (Nelson, Brunetti, Kozinski)]. In light of a good faith objection, the court may look beyond the schedules to other evidence.”); Smith v. Rojas (In re Smith), 435 B.R. 637 (B.A.P. 9th Cir. July 8, 2010) (Dunn, Markell, Jaroslovsky); Nichols v. Whipple (In re Nichols), No. AZ-05-1360-KPaD, 2007 WL 7541002 (B.A.P. 9th Cir. Jan. 3, 2007) (unpublished) (Klein, Pappas, Dunn) (Although bankruptcy courts generally rely on statements and schedules to determine eligibility, scheduled amount of a state court judgment was inconsistent with other “unambiguous evidence” that the judgment was in a larger amount and that debtors were not eligible for Chapter 13. Debtors and counsel misrepresented amount of the state court judgment based on an “immaterial and plainly inadvertent typographical error” in a bankruptcy court order.); Guastella v. Hampton (In re Guastella), 341 B.R. 908 (B.A.P. 9th Cir. Apr. 11, 2006) (Lee, Marlar, Pappas) (Bankruptcy court did not err in looking beyond scheduling of debt as “$0.00” to examine state court record to determine that $495,000 damage award against debtor’s parents was liquidated claim against debtor. Plaintiffs in state court litigation made good-faith objection to eligibility, triggering further inquiry.); Martindale v. Meenderinck (In re Meenderinck), No. WW-05-1365-RSKr, 2006 WL 6810973 (B.A.P. 9th Cir. Mar. 31, 2006) (unpublished) (Russell, Smith, Kirscher) (Citing Scovis v. Henrichsen (In re Scovis), 249 F.3d 975 (9th Cir. May 11, 2001) (Nelson, Brunetti, Kozinski), because no party challenged debtor’s good faith in filing the petition, bankruptcy court appropriately relied on amount of unsecured debt scheduled and debtor was eligible for Chapter 13.), aff’d, 256 F. App’x 913 (9th Cir. Nov. 19, 2007) (unpublished) (Canby, Graber, Gould); Mendoza v. Curry (In re Duque), No. CC-05-1069-MaMcB, 2005 WL 6960181 (B.A.P. 9th Cir. Dec. 30, 2005) (unpublished) (Marlar, McManus, Brandt) (Determine debts for eligibility purposes at the petition based on schedules absent claim of bad faith.); In re Silva, No. 10-60077 CN, 2011 WL 5593040 (Bankr. N.D. Cal. Nov. 16, 2011) (Novack) (Applying Scovis v. Henrichsen (In re Scovis), 249 F.3d 975 (9th Cir. May 11, 2001) (Nelson, Brunetti, Kozinski), eligibility is normally determined by reference to schedules, unless filed in bad faith.); In re Thompson, No. 11-20138-13, 2011 WL 5520963, at *1 (Bankr. D. Kan. Nov. 14, 2011) (Somers) (Citing Sixth, Seventh and Ninth Circuit authority, § 109(e) eligibility “is similar to the amount in controversy question in federal diversity jurisdiction cases, and should similarly be decided based on the debtor’s assertions in the schedules unless the assertions were not made in good faith.”); In re Frederick, No. 11-31435, 2011 WL 5908957 (Bankr. E.D. Mich. Nov. 14, 2011) (Opperman) (Applying Comprehensive Accounting Corp. v. Pearson (In re Pearson), 773 F.2d 751 (6th Cir. Oct. 9, 1985) (Engel, Keith, Jones), eligibility is determined by looking to schedules, if filed in good faith.); In re Rottiers, 450 B.R. 208, 216 (Bankr. D.N.M. Apr. 12, 2011) (Starzynski) (Citing Comprehensive Accounting Corp. v. Pearson (In re Pearson), 773 F.2d 751, 756 (6th Cir. Oct. 9, 1985) (Engel, Keith, Jones), to determine eligibility, courts “‘rely primarily upon a debtor’s schedules and proofs of claim, checking only to see if these documents were filed in good faith.’” It was not necessary to conduct full-blown trial to authenticate each scheduled debt. Motions to dismiss for ineligibility were denied.); In re Hargrove, 465 B.R. 507 (Bankr. E.D. Ark. Mar. 7, 2011) (Mixon) (Absent evidence of bad faith, eligibility was determined by schedules. When debtors did not know exact amount of creditor’s claim and scheduled it in principal amount of note, they remained eligible, even though claim was now higher due to judgment on note, with accrued interest. Judgment external to record could not be considered without showing of debtors’ bad faith.); In re Nowakowski, 404 B.R. 789 (Bankr. M.D. Pa. Apr. 15, 2009) (Thomas) (Court can look beyond amount of scheduled debt to determine eligibility when there is evidence of lack of good faith in preparation of schedules; here, schedules control in absence of sufficient evidence of bad faith.); In re Smith, 365 B.R. 770 (Bankr. S.D. Ohio Feb. 12, 2007) (Hoffman) (Citing Comprehensive Accounting Corp. v. Pearson (In re Pearson), 773 F.2d 751 (6th Cir. Oct. 9, 1985) (Engel, Keith, Jones), § 109(e) eligibility analysis is based on petition and schedules unless lack of good faith in preparing schedules is established. However, schedules are not always dispositive of eligibility. Court independently determined that SEC’s claim was noncontingent but unliquidated on petition date.); Sullivan v. Java Oil Ltd. (In re Sullivan), No. CIV S-06-20-LKK, 2006 WL 1686732, at *3 (E.D. Cal. June 20, 2006) (unpublished) (Karlton) (“[A] court typically looks to the face of the petition to determine the amount of debt owed . . . but the court is allowed to go beyond the schedules when faced with a good faith objection from creditors.” Debtor’s failure to list a $1 million plus claim and other inaccuracies and misstatements supported the bankruptcy court’s consideration of evidence beyond the schedules.); In re Tabor, 232 B.R. 85, 91 (Bankr. N.D. Ohio Mar. 29, 1999) (Shea-Stonum) (Applying Comprehensive Accounting Corp. v. Pearson (In re Pearson), 773 F.2d 751 (6th Cir. Oct. 9, 1985) (Engel, Keith, Jones), “Debtors’ provision of a $78,000.00 amount for the Schumacher Claim was not provided in good faith, but rather was provided in an attempt to bring Donald Tabor within the unsecured debt limit under 11 U.S.C. § 109(e). Although Mr. Tabor used the $78,000.00 figure because the Schumachers allegedly were willing at one time to dismiss Mr. Tabor from their lawsuit if he immediately paid them $78,000.00, Mr. Tabor admitted that he could not afford to pay that amount . . . . Mr. Tabor produced no evidence of a final agreement to a settlement at that amount. . . . Mr. Tabor cannot legitimately contend that his liability on the Notes is limited to $78,000.00. Because Mr. Tabor has provided this Court with an inappropriate basis to use $78,000.00 as the amount of the Schumacher Claim, the Court will use the proof of claim filed by the Schumachers [$233,494.31] when calculating the amount of Mr. Tabor’s noncontingent, liquidated, unsecured debt as of the filing date.”); In re Camp, 170 B.R. 610, 611–12 (Bankr. N.D. Ohio July 7, 1994) (Krasniewski) (Applying Comprehensive Accounting Corp. v. Pearson (In re Pearson), 773 F.2d 751 (6th Cir. Oct. 9, 1985) (Engel, Keith, Jones), because the debtor scheduled the IRS’s claim as “a disputed and unliquidated priority claim in the amount of $215,000.00” and “a review of the Debtors’ bankruptcy schedules does not indicate that the Debtors have listed the IRS’ claim as contingent [sic] and disputed in bad faith,” the IRS’s motion to dismiss is denied.); In re Hutchens, 69 B.R. 806 (Bankr. E.D. Tenn. Jan. 20, 1987) (Stair); In re Koehler, 62 B.R. 70 (Bankr. D. Neb. Jan. 6, 1986) (Mahoney).

 

4  See In re Thompson, No. 11-20138-13, 2011 WL 5520963, at *1 (Bankr. D. Kan. Nov. 14, 2011) (Somers) (Citing Sixth, Seventh and Ninth Circuit authority, § 109(e) eligibility “is similar to the amount in controversy question in federal diversity jurisdiction cases, and should similarly be decided based on the debtor’s assertions in the schedules unless the assertions were not made in good faith.” Although schedules were in good faith, undersecured portions of debts were added to other unsecured debts and made debtors ineligible.).

 

5  Comprehensive Accounting Corp. v. Pearson (In re Pearson), 773 F.2d at 757. See Nicholes v. Johnny Appleseed of Wash. (In re Nicholes), 184 B.R. 82, 87 (B.A.P. 9th Cir. June 23, 1995) (Russell, Meyers, Jones) (“When a party challenges a debtor’s eligibility for Chapter 13 relief, the bankruptcy court needs to make a prompt and effective determination of a debtor’s eligibility.”).

 

6  See § 53.1  Know the Trustee’s Operating Procedures and § 53.2  Who Will Be the Trustee?.

 

7  See § 76.1  Valuation, Claim Splitting and Dewsnup, § 76.2  Is Claim Secured, and By What?, § 76.3  As of What Date Is Value Determined?, § 76.4  Valuation in Chapter 13 Cases before Rash, § 76.5  Rash and Valuation and § 76.6  Valuation after Rash.

 

8  See § 15.1  What Is Noncontingent Debt?, § 15.2  Is Partnership Debt Contingent?, § 15.3  Are Guaranties Contingent?, § 15.4  Are Contract Debts Contingent?, § 15.5  Is Tort Liability Contingent?, § 15.6  Are Claims through and against Debtor’s Corporation Contingent? and § 15.7  Are Prebankruptcy Judgments Contingent?.

 

9  See § 16.1  What Is a Liquidated Debt? and § 16.2  Effect of Defenses and Counterclaims.

 

10  See, e.g., In re Kwiatkowski, 486 B.R. 409 (Bankr. E.D. Mich. Jan. 25, 2013) (Tucker) (Scheduling unsecured deficiency debt after prepetition foreclosure as “unknown” was improper when debtor knew deficiency was at least $250,000. Scheduling debt in that manner was effort to conceal ineligibility. Case was filed and plan proposed in bad faith. Case would be dismissed unless debtor converted to Chapter 7.); In re De La Hoz, 451 B.R. 192 (Bankr. M.D. Fla. May 5, 2011) (Adams) (When virtually all debts are scheduled as contingent or unliquidated, court looks beyond schedules for good-faith purposes. State court judgment debts were liquidated and noncontingent. Debtors were ineligible.).

 

11  See In re Smith, 325 B.R. 498 (Bankr. D.N.H. Apr. 15, 2005) (Deasy) (Because the debtor omitted tax claims after not filing tax returns for several years, the schedules were not prepared in good faith and it was appropriate for the court to consider proofs of claim filed after the petition by the taxing authority in the eligibility calculation.). Compare In re Sullivan, No. 11-03291, 2011 WL 6148709 (Bankr. S.D. Ala. Dec. 12, 2011) (Mahoney) (Although inaccuracies and omissions in schedules may be evidence of bad faith, debtor did not intentionally understate unsecured debt amount and intent is essential inquiry for bad-faith finding. Debtor misstated amount based on mistaken belief that debt was secured by property owned jointly with wife, but it was only secured by debtor’s one-half equity interest. Debtor was ineligible using corrected amount of unsecured debt.); In re Thomas, No. 03-21545, 2004 WL 4960374 (Bankr. D. Idaho Jan. 21, 2004) (unpublished) (Myers) (Schedules were filed in good faith notwithstanding omission of $30,000 debt to debtors’ parents because debtors knew that parents would withdraw their claim and there was no other evidence of bad faith for purposes of eligibility calculation.).

 

12  773 F.2d 751 (6th Cir. Oct. 9, 1985) (Engel, Keith, Jones).

 

13  In re Redburn, 193 B.R. 249, 255–56 (Bankr. W.D. Mich. Feb. 29, 1996) (Gregg) (Debtor agreed to a judgment in favor of an investor group in 1991 in the amount of $303,219.80. In 1992, debtor filed a Chapter 7 case and the investors filed a complaint to determine the dischargeability of their claims. Before the nondischargeability proceeding went to trial, the debtor filed a Chapter 13 case. “[T]he Sixth Circuit has held that ‘Chapter 13 eligibility should normally be determined by the debtor’s schedules checking only to see if the schedules were made in good faith.’ . . . [T]he court is not necessarily bound by the information contained in a debtor’s schedules where ‘“it appears to a legal certainty that” . . . the amount owed is other than what the debtor says is owed . . . .’ . . . Debtor described the amount of each [investor] claim as ‘unknown’, even though he knew the exact amounts awarded to each of the judgment creditors as set forth in the stipulated state court judgment . . . . [I]t appears to ‘a legal certainty’ that the total amount claimed by the creditors exceeds the limits on unsecured debt as set forth in § 109(e). The Debtor cannot circumvent this limitation on eligibility by simply ignoring what he knows and listing the amounts of the debts as ‘unknown’ in his schedules. . . . Regardless of the nature of the debts, the amount of the debts were [sic] known to the Debtor and should have been included in his schedule of liabilities. Under these circumstances, the failure to include the amounts of the debts represents a violation of the good faith standard set forth in [Comprehensive Accounting Corp. v. Pearson (In re Pearson), 773 F.2d 751 (6th Cir. Oct. 9, 1985) (Engel, Keith, Jones)], and thus, the court shall look beyond the Debtor’s schedules in determining eligibility under § 109(e).”). Accord Guastella v. Hampton (In re Guastella), 341 B.R. 908 (B.A.P. 9th Cir. Apr. 11, 2006) (Lee, Marlar, Pappas) (Bankruptcy court did not err in looking beyond scheduling of debt as “$0.00” to examine state court record to determine that $495,000 damages award against debtor’s parents was liquidated claim against debtor.); In re Faulhaber, 269 B.R. 348, 356–57 (Bankr. W.D. Mich. Nov. 7, 2001) (Hughes) (Comprehensive Accounting Corp. v. Pearson (In re Pearson), 773 F.2d 751 (6th Cir. Oct. 9, 1985) (Engel, Keith, Jones), requires the bankruptcy court to accept the amounts and characterizations of debt in the schedules if made in good faith; amendment changing amount of securities account churning claim from $615,000 to “unknown” and recharacterizing the debt as “contingent, unliquidated and disputed” was not in good faith. “If debtor’s assessment as set forth in the schedules appear[s] to be made in good faith, then no further inquiry is required of the bankruptcy court concerning debtor’s eligibility. . . . The ‘good faith’ test required by Pearson is simple to apply. The first step is to determine which of the claims against debtor are both non-contingent and liquidated. The debtor’s designation of such claims on her schedules assist[s] the court in making this determination. However, the debtor’s designation is not conclusive. . . . [D]etermining whether a debt is contingent or non-contingent or liquidated or unliquidated . . . is definitional, not factual. The court is perfectly capable of making these determinations expeditiously without having to rely upon the debtor’s own assessment, whether made in good faith or not. The second step is to determine whether the debtor has set forth the amount of each liquidated, non-contingent debt in good faith. . . . The court may . . . rely upon the debtor’s own representation of these amounts as set forth in her schedules. The only proviso is that these schedules represent a good faith effort on the part of the debtor. This means that the debtor must make an honest effort to set forth the amount of each claim which is non-contingent and liquidated. If the debtor’s schedules do not reflect such an effort, then debtor should be denied Chapter 13 relief.”). See also In re Farber, 355 B.R. 362 (Bankr. S.D. Fla. Nov. 9, 2006) (Ray) (Case dismissed when debtors grossly misrepresented amount of scheduled debt to be under debt limit.).

 

14  Alt v. United States (In re Alt), 251 B.R. 831 (W.D. Mich. May 19, 2000) (Miles).

 

15  See, e.g., In re Hurtt, 454 B.R. 733 (Bankr. E.D. Ky. Apr. 21, 2011) (Scott) (Debtor was ineligible based on schedules that clearly demonstrated unsecured debt in excess of statutory limits. Nothing in schedules supported assertion that USDA guaranty satisfied business debt.); In re Perkins, No. 08-33352, 2009 WL 2983034 (Bankr. N.D. Ohio Sept. 14, 2009) (Whipple) (Under Comprehensive Accounting Corp. v. Pearson (In re Pearson), 773 F.2d 751 (6th Cir. Oct. 9, 1985) (Engel, Keith, Jones), schedules are relied on as starting point in § 109(e) eligibility analysis, subject to good-faith requirement and independent review of characterization as contingent or unliquidated.); In re Bowes, No. 08-36417, 2009 WL 2983036 (Bankr. N.D. Ohio Sept. 14, 2009) (Whipple); In re Hutchens, 69 B.R. 806 (Bankr. E.D. Tenn. Jan. 20, 1987) (Stair); In re Koehler, 62 B.R. 70 (Bankr. D. Neb. Jan. 6, 1986) (Mahoney).

 

16  See, e.g., In re Thompson, No. 11-20138-13, 2011 WL 5520963 (Bankr. D. Kan. Nov. 14, 2011) (Somers) (Citing Sixth, Seventh and Ninth Circuit authority, § 109(e) eligibility is ordinarily decided based on the schedules when made in good faith. Although schedules were in good faith, undersecured portions of debts were added to other unsecured debts and made debtors ineligible.); In re Fuson, 404 B.R. 872 (Bankr. S.D. Ohio Oct. 24, 2008) (Walter) (Although court typically does not look beyond schedules to determine eligibility, when debtor scheduled debts as secured but listed value of collateral as zero, amounts scheduled as secured must be reclassified as unsecured, rendering debtors ineligible.). See also In re Steffens, 342 B.R. 851 (Bankr. M.D. Fla. Sept. 14, 2005) (Paskay) (Without evidence of bad faith, bankruptcy court considers proofs of claim to determine that debtor is ineligible.).

 

17  In re Rigdon, 94 B.R. 602 (Bankr. W.D. Mo. Dec. 22, 1988) (Koger). Accord In re Salazar, 348 B.R. 559, 565–67 (Bankr. D. Colo. Aug. 15, 2006) (Tallman) (Although eligibility is a threshold matter that should be determined “on a summary basis without the need for extensive evidence,” schedules alone do not control; it is appropriate to examine whether scheduled or filed claims are liquidated. Debtors scheduled unsecured debts of $129,544. Proofs of claim were filed totaling $4,713,709.69. “If the Court were to adopt the view that the contents of the Debtors’ schedules, if filed in good faith, control the eligibility determination, then the Court would easily find that the Debtors are eligible for chapter 13 relief. The claims asserted by the Judson Creditors are scheduled variously as either ‘$0.00’ or ‘unknown,’ and are all scheduled as disputed and unliquidated. The Court has no evidence before it to lead it to the conclusion that those entries were made in bad faith. . . . But, the Court does not adopt the view that the Debtors’ schedules alone control the eligibility determination. The requirement that a debt must be liquidated to apply towards the eligibility requirements suggests that the Court may not rely solely upon the Debtors’ schedules. A claim may well be liquidated even though the debtor, in good faith, schedules a claim at $0.00 or ‘unknown’ because there is a dispute as to liability on the claim. . . . Neither may the Court rely solely upon amounts reflected in filed proofs of claim. Those claims amounts may be liquidated or unliquidated depending upon the basis of the claim and the certainty with which damages may be calculated. Instead, the Court must examine the schedules and the filed proofs of claim. . . . [T]he purpose of the Court’s review of the Debtors’ schedules and the creditors’ proofs of claim is not to address the merits of the claims or to attempt to determine liability. It is solely to determine: 1) whether or not the schedules and proofs of claim were made in good faith; and 2) whether the claim is liquidated or not so that the eligibility determination may be made.”).

 

18  213 B.R. 1008 (B.A.P. 8th Cir. Nov. 14, 1997) (Kressel, Schermer, Scott).

 

19  Barcal v. Laughlin (In re Barcal), 213 B.R. at 1015. Accord In re Reader, 274 B.R. 893, 899 (Bankr. D. Colo. Mar. 26, 2002) (Brown) (Scheduling of probate estate as “contingent, unliquidated, disputed claim, in the amount of ‘zero’” was not in good faith for eligibility purposes because prepetition Special Master Report listed inappropriate transfers by the debtor as conservator in the amount of $270,527.43 and estate filed a proof of claim for that amount. “This Court finds that its duty is to canvass and review the Debtor’s schedules and the proofs of claim and other evidence offered, but only as to whether the good faith, facial amount of the Debtor’s liquidated and noncontingent debts exceed[s] the eligibility limits. In light of the Special Master’s Report, the Debtor could not in good faith list the probate estate’s claim with a value of $0.00. . . . The Special Master’s Report is not conclusive as to the amount of this claim or its validity, but it meets the good faith, facial test.”).

 

20  In re Jerome, 112 B.R. 563 (Bankr. S.D.N.Y. Mar. 29, 1990) (Schwartzberg).

 

21  See In re Rohl, 298 B.R. 95, 99 (Bankr. E.D. Mich. Sept. 3, 2003) (Shefferly) (Citing Comprehensive Accounting Corp. v. Pearson (In re Pearson), 773 F.2d 751 (6th Cir. Oct. 9, 1985) (Engel, Keith, Jones), “[t]he starting point for the determination of eligibility is the debtor’s own schedules. . . . It is appropriate then for this Court to consider both the Debtor’s schedules themselves and other evidence to ascertain whether the Debtor’s assessment of his debts in the schedules represents a good faith assessment.” Recharacterizing scheduled debts as contingent or unliquidated at conversion to Chapter 13 based on postpetition efforts at settlement is not good faith.); In re Redburn, 193 B.R. 249, 255–56 (Bankr. W.D. Mich. Feb. 29, 1996) (Gregg) (“[T]he Sixth Circuit has held that ‘Chapter 13 eligibility should normally be determined by the debtor’s schedules checking only to see if the schedules were made in good faith.’ . . . [T]he court is not necessarily bound by the information contained in a debtor’s schedules where ‘“it appears to a legal certainty that” . . . the amount owed is other than what the debtor says is owed’ . . . . Debtor described the amount of each [investor] claim as ‘unknown’, even though he knew the exact amounts awarded to each of the judgment creditors as set forth in the stipulated state court judgment . . . . [I]t appears to ‘a legal certainty’ that the total amount claimed by the creditors exceeds the limits on unsecured debt as set forth in § 109(e). The Debtor cannot circumvent this limitation on eligibility by simply ignoring what he knows and listing the amounts of the debts as ‘unknown’ in his schedules. . . . Regardless of the nature of the debts, the amount of the debts were [sic] known to the Debtor and should have been included in his schedule of liabilities. Under these circumstances, the failure to include the amounts of the debts represents a violation of the good faith standard set forth in [Comprehensive Accounting Corp. v. Pearson (In re Pearson), 773 F.2d 751 (6th Cir. Oct. 9, 1985) (Engel, Keith, Jones)], and thus, the court shall look beyond the Debtor’s schedules in determining eligibility under § 109(e).”); In re Mannor, 175 B.R. 639, 641–42 (Bankr. E.D. Mich. Dec. 13, 1994) (Spector) (That the debtor was unaware of a state court judgment at the filing of statements and schedules and thus omitted the judgment in “good faith” does not require the court to ignore the judgment for eligibility purposes in a jurisdiction bound by Comprehensive Accounting Corp. v. Pearson (In re Pearson), 773 F.2d 751 (6th Cir. Oct. 9, 1985) (Engel, Keith, Jones). “Under Pearson, then, a debtor’s good-faith assertion as to how much she owes is ‘normally’ accepted at face value. . . . But the qualifier ‘normally’ implies that there are exceptions to this rule. And Pearson itself suggests one such exception: if ‘it appears to a legal certainty that’ the amount owed is other than what the debtor says is owed, then the debtor’s good faith is irrelevant. . . . In this case, it is clear—legally certain—that when the Debtor filed for chapter 13 relief, he owed $41,383.30 to Great Lakes. It therefore makes no difference whether he was aware of the judgment at that point in time, or whether he believed in good faith that he owed nothing. Pearson is frequently misinterpreted as requiring in all cases that the court not engage in an inquiry as to whether the unsecured debts exceed the limit but instead inquire into whether the debtors believed in good faith that they were eligible for chapter 13 relief.”); In re White, 148 B.R. 283 (Bankr. N.D. Ohio Dec. 9, 1992) (Snow) (Struggling to apply Comprehensive Accounting Corp. v. Pearson (In re Pearson), 773 F.2d 751 (6th Cir. Oct. 9, 1985) (Engel, Keith, Jones), the court held that when the debtors own only a one-half undivided interest in their home, the full amount of the debt and the full value of the property should be considered for eligibility purposes. It is not necessary to resolve dispute with IRS over the amount of its claim; the amount listed by the debtors controls because there is no claim of bad faith in preparation of the schedules. Where statements and schedules indicate that the debtor is ineligible for Chapter 13 relief, but the pleadings filed by the creditor attacking the debtor’s eligibility established that the debtor is eligible, it is appropriate to resolve the § 109(e) issue in favor of the debtor.); In re Tomlinson, 116 B.R. 80 (Bankr. E.D. Mich. July 13, 1990) (Spector) (If Comprehensive Accounting Corp. v. Pearson (In re Pearson), 773 F.2d 751 (6th Cir. Oct. 9, 1985) (Engel, Keith, Jones), were applied strictly, debtor is not eligible in a case in which the Chapter 13 statement lists total unsecured debt of $111,415. However, because the debtor “may amend her statement” to change the eligibility calculus, the court must go beyond the Chapter 13 statement and determine whether the debts are properly characterized as secured or unsecured, contingent or noncontingent.); In re McClaskie, 92 B.R. 285 (Bankr. S.D. Ohio Oct. 7, 1988) (Sellers) (Approving but distinguishing Comprehensive Accounting Corp. v. Pearson (In re Pearson), 773 F.2d 751 (6th Cir. Oct. 9, 1985) (Engel, Keith, Jones), court explained that debtor is ineligible where amended schedules show IRS’s claim would be undersecured and when added to other unsecured obligations the $100,000 limit is exceeded.).

 

22  187 F.3d 1070 (9th Cir. Sept. 9, 1999) (Reavley, Alarcon, McKeown).

 

23  249 F.3d 975, 982 (9th Cir. May 11, 2001) (Nelson, Brunetti, Kozinski). See also Martindale v. Meenderinck (In re Meenderinck), No. 06-35391, 2007 WL 4192637, at *1 (9th Cir. Nov. 19, 2007) (unpublished) (Canby, Graber, Gould) (Citing Scovis v. Henrichsen (In re Scovis), 249 F.3d 975, 982 (9th Cir. May 11, 2001) (Nelson, Brunetti, Kozinski), eligibility under § 109(e) is determined by reference to original schedules, “‘checking only to see if the schedules were made in good faith.’”).

 

24  See In re Faulhaber, 269 B.R. 348, 352 (Bankr. W.D. Mich. Nov. 7, 2001) (Hughes) (“[Comprehensive Accounting Corp. v. Pearson (In re Pearson), 773 F.2d 751 (6th Cir. Oct. 9, 1985) (Engel, Keith, Jones),] does not mandate that the bankruptcy court’s evaluation must be limited to only the schedules as originally filed.”). But see Nelson v. Meyer (In re Nelson), 343 B.R. 671 (B.A.P. 9th Cir. May 15, 2006) (Klein Ryan, Brandt), on remand, No. 05-10660, 2006 WL 2091899, at *2 (Bankr. N.D. Cal. July 26, 2006) (unpublished) (Jaroslovsky) (Debtor with scheduled unsecured debts of $324,832 is ineligible notwithstanding amended schedules that reduced unsecured debt by $279,000 after trustee objected to eligibility.); In re Holland, 293 B.R. 425, 428 (Bankr. N.D. Ohio Dec. 23, 2002) (Speer) (Applying Comprehensive Accounting Corp. v. Pearson (In re Pearson), 773 F.2d 751 (6th Cir. Oct. 9, 1985) (Engel, Keith, Jones), secured debt is determined from original schedules, and bankruptcy court “will not utilize any amended figures put forth by the Debtor concerning his secured debts.”).

 

25  See § 14.2  Time for Determining Debt for further discussion of Scovis.

 

26  Scovis v. Henrichsen (In re Scovis), 249 F.3d at 984. Accord Lantzy v. Rojas (In re Lantzy), No. CC-10-1057-KiLPa, 2010 WL 6259984, at *3 (B.A.P. 9th Cir. Dec. 7, 2010) (unpublished) (Kirscher, Lynch, Pappas) (When debtors knew that junior lien was unsecured, scheduled the lien as secured in order to be eligible and then moved to value the lien as unsecured for purposes of plan treatment, it was appropriate for bankruptcy court to consider all evidence and determine that debtors were not eligible under § 109(e). “Eligibility is normally determined based on the figures included in the debtor’s original schedules, checking only to see that the schedules were prepared in good faith. Scovis v. Henrichsen (In re Scovis), 249 F.3d 975, 982 (9th Cir. [May 11, 2001) (Nelson, Brunetti, Kozinski)]. In light of a good faith objection, the court may look beyond the schedules to other evidence. . . . The bankruptcy court determined that in light of a good faith eligibility objection it was compelled to ‘look beyond the schedules and consider whether the schedules were designed to achieve eligibility at the expense of reality.’ While the Lantzys appeared to be eligible for chapter 13 on the face of their schedules because JP Morgan’s Second Lien was listed as a ‘secured’ claim, when the Lantzys filed bankruptcy in December 2008, they were in possession of an August 11, 2008 appraisal that [indicated] the value of their home was insufficient to provide any security for the Second Lien. Thus, the bankruptcy court concluded the Lantzys knew on the petition date that JP Morgan’s Second Lien was unsecured despite their attempt to list it in their Schedule D, and they relied on this fact to prove that very point in their section 506(a) valuation motion, which relegated JP Morgan’s claim to an unsecured status and rendered its Second Lien void under section 506(d). While recognizing that JP Morgan’s interest is contingent until the Lantzys complete their chapter 13 plan and receive a discharge, the bankruptcy court reasoned that the Lantzys were receiving the benefit of treating JP Morgan’s claim as unsecured during the pendency of their case; they could not treat it as unsecured for plan purposes and secured for determining eligibility.”); Smith v. Rojas (In re Smith), 435 B.R. 637, 646–47 (B.A.P. 9th Cir. July 8, 2010) (Dunn, Markell, Jaroslovsky) (Applying Scovis v. Henrichsen (In re Scovis), 249 F.3d 975 (9th Cir. May 11, 2001) (Nelson, Brunetti, Kozinski), and Miller v. United States (In re Miller), 907 F.2d 80 (8th Cir. July 3, 1990) (Lay, Wollman, Stuart), and distinguishing Slack v. Wilshire Insurance Co. (In re Slack), 187 F.3d 1070 (9th Cir. Sept. 9, 1999) (Reavley, Alarcon, McKeown), unsecured status of wholly unsecured junior lien can be determined with “sufficient degree of certainty” from schedules to be counted as unsecured debt for eligibility purposes under § 109(e). “[T]he Smiths and the Hamburgs listed in Schedule D the value of their residence and the amount owing on the first trust deed. Because the first trust deed in each case exceeded the value of the residence, the bankruptcy court had a ‘sufficient degree of certainty’ to determine that the second liens were wholly unsecured under § 506(a). . . . [T]he ‘principle of certainty’ applies where the effect of the value of the property on the status of Appellants’ debts as secured or unsecured is readily ascertainable. . . . Nor are we persuaded that the Scovis analysis is in any way altered because the second liens may not have been avoided. Scovis itself involved a judgment lien that had not yet been avoided.”); Nichols v. Whipple (In re Nichols), No. AZ-05-1360-KPaD, 2007 WL 7541002 (B.A.P. 9th Cir. Jan. 3, 2007) (unpublished) (Klein, Pappas, Dunn) (Although bankruptcy courts generally rely on statements and schedules to determine eligibility, scheduled amount of a state court judgment was inconsistent with other “unambiguous evidence” that the judgment was in a larger amount and that debtors were not eligible for Chapter 13. Debtors and counsel misrepresented amount of the state court judgment based on an “immaterial and plainly inadvertent typographical error” in a bankruptcy court order.); Cini v. Genesis Enters., Inc. (In re Cini), No. 11-00056, 2011 WL 6209610 (Bankr. D. Mont. Dec. 14, 2011) (Kirscher) (Looking to statements for eligibility purposes is not iron-clad rule when it is readily ascertainable that unsecured debt on petition date exceeded statutory limits. Prior stipulation and related order admitted that principal creditor did not have perfected security interest and that its claim was wholly unsecured, in amount exceeding § 109(e) eligibility limit. Debtor given 14 days to convert, or case would be dismissed.); In re Silva, No. 10-60077 CN, 2011 WL 5593040 (Bankr. N.D. Cal. Nov.  6, 2011) (Novack) (Applying Scovis v. Henrichsen (In re Scovis), 249 F.3d 975 (9th Cir. May 11, 2001) (Nelson, Brunetti, Kozinski), eligibility is normally determined by reference to schedules, unless filed in bad faith; schedules provided exact value of property and debt, making undersecured portion readily ascertainable. Debtors exceeded unsecured debt limit.).

 

27  Scovis v. Henrichsen (In re Scovis), 249 F.3d at 984.

 

28  See Nelson v. Meyer (In re Nelson), 343 B.R. 671 (B.A.P. 9th Cir. May 15, 2006) (Klein Ryan, Brandt), on remand, No. 05-10660, 2006 WL 2091899 (Bankr. N.D. Cal. July 26, 2006) (unpublished) (Jaroslovsky) (Debtor cannot create eligibility by amending schedules to delete a $279,000 debt after trustee objects to eligibility.). See also Singer Asset Fin. Co., LLC v. Mullins (In re Mullins), 360 B.R. 493 (Bankr. W.D. Va. Feb. 12, 2007) (Krumm) (Through three postpetition amendments to the schedules, debtor went from eligible to not eligible and then back to eligible again as debt moved from unsecured to partially secured and liens and mortgages were disclosed.).

 

29  See Guastella v. Hampton (In re Guastella), 341 B.R. 908 (B.A.P. 9th Cir. Apr. 11, 2006) (Lee, Marlar, Pappas) (Bankruptcy court did not err in looking beyond scheduling of debt as “$0.00” to examine state court record to determine that $495,000 damages award against debtor’s parents was liquidated claim against debtor. Plaintiffs in state court litigation made good-faith objection to eligibility, triggering further inquiry.); In re Farris, No. 02-20785 A13G, 2006 WL 3804669, at *3 (Bankr. E.D. Cal. Dec. 22, 2006) (unpublished) (McManus) (Citing Scovis v. Henrichsen (In re Scovis), 249 F.3d 975, 982–83 (9th Cir. May 11, 2001) (Nelson, Brunetti, Kozinski), “[t]he amount of debt is to be determined from the debtor’s schedules unless the debtor files the schedules in a bad faith attempt to gerrymander the eligibility restraints of section 109(e).”); In re Brown, 302 B.R. 913, 915 (Bankr. D. Or. Aug. 13, 2003) (Alley) (“In determining the amounts, a bankruptcy court may look past the schedules to other evidence submitted, including proofs of claim filed in the case, when an objection to the debtor’s eligibility under § 109(e) is raised.”).

 

30  See In re Corson, No. 03-18160F, 2004 WL 5865045, at *6, *7 (Bankr. E.D. Pa. June 25, 2004) (unpublished) (Fox) (To determine eligibility, original and amended schedules may be considered; original schedules are evidentiary admissions, and amended schedules are judicial admissions. “An evidentiary admission—statements in pleadings from another proceeding, superseded or withdrawn pleadings in the same proceeding, answers to interrogatories—may be controverted or explained by the party. . . . A judicial admission on the other hand—admissions in pleadings in the proceeding, stipulations, and admissions pursuant to requests to admit—are binding and may not be controverted at trial.” Amounts of debts stated in schedules “may not necessarily be conclusive admissions since those values may be viewed as mere opinion and therefore considered evidential rather than judicial admissions.” Rejecting Sixth Circuit’s emphasis on debtor’s good-faith assertions of amount of debt in Comprehensive Accounting Corp. v. Pearson (In re Pearson), 773 F.2d 751 (6th Cir. Oct. 9, 1985) (Engel, Keith, Jones), determination of eligibility should not rely completely on debtor’s good-faith assertion of debt. Debtor had burden to overcome original schedules of debt to bring total debt within statutory limits. Debtor failed to prove that amended schedules accurately reflected unsecured debt at case commencement.).

 

31  See, e.g., In re Edwards, 51 B.R. 790 (Bankr. D.N.M. July 18, 1985) (McFeeley).

 

32  See In re Sivertsen, 180 B.R. 513, 513–14 (Bankr. N.D. Ill. Dec. 27, 1994) (DeGunther) (IRS challenge to eligibility is determined from a limited review of the papers filed and the arguments of counsel. “[T]he Court and the parties need not engage in a full-fledged trial. Rather, the Court must render its judgment based on a review of the pleadings and documents on file, as well as the arguments of counsel. What is called for is a well-informed ready determination.” Debtor is not eligible because IRS filed proof of claim for $760,547.62 and “the methods utilized by the IRS to determine the correct amount of the claim . . . appear[ ] to be sound, w[ere] performed in good faith, and must be respected.”); In re Lambert, 43 B.R. 913 (Bankr. D. Utah Oct. 22, 1984) (Clark). See also In re Hutchens, 69 B.R. 806 (Bankr. E.D. Tenn. Jan. 20, 1987) (Stair) (Though professing to apply Comprehensive Accounting Corp. v. Pearson (In re Pearson), 773 F.2d 751 (6th Cir. Oct. 9, 1985) (Engel, Keith, Jones), because resolution of a tax dispute would require “an extensive inquiry,” the court rejects the debtor’s characterization of the tax claim as “disputed” and concludes that the entire tax claim is liquidated and noncontingent.).

 

33  In re Toronto, 165 B.R. 746 (Bankr. D. Conn. Mar. 31, 1994) (Shiff) (That the debtors can avoid a prepetition judgment lien as a preference and thus cause a secured debt to become an unsecured claim should be considered and renders the debtors ineligible for Chapter 13 relief.). See § 14.2  Time for Determining Debt.

 

34  In re Johnson, 191 B.R. 179, 182 (Bankr. D. Ariz. Oct. 5, 1995) (Case), and In re Johnson, 191 B.R. 184, 185 (Bankr. D. Ariz. Jan. 12, 1996) (Case) (“[T]his Chapter 13 case was filed on the day before continued summary judgment proceedings on the Russoli claims. The summary judgment proceedings could have, and could still, determine whether the Russoli claims were liquidated on the filing date—i.e. whether the Russoli claims are capable of ready computation. The fact that those proceedings were not finished on the bankruptcy filing date does not mean that the Russoli claims will forever be deleted from the Section 109(e) calculus. Rather, the state court can still decide today whether the debt was liquidated, and in what amount, on the filing date. . . . Therefore, the stay will be lifted to allow that determination to be made.” After the grant of relief from the stay, “the state court granted summary judgment in favor of the Russoli’s [sic] and against Debtor . . . . The summary judgment order from the state court on the Russoli claim establishes that the [Russolis] have a liquidated, noncontingent claim of at least $175,000, not including interest, attorney’s fees or treble damages.” When added to other noncontingent, liquidated, unsecured claims, the debtor does not qualify for Chapter 13 relief.). See also In re Wiencko, 275 B.R. 772, 782 (Bankr. W.D. Va. Apr. 3, 2002) (Krumm) (Debtors are not eligible based on provisional judgment of state court notwithstanding that schedules list the debt at substantially less than the provisional judgment. “The court is unwilling to be bound by the estimated amount of Ehrlich’s claims set forth in the respective schedules . . . . To do so would allow these putative debtors to bootstrap themselves into Chapter 13 by self-serving estimations that ignore the realities of their respective financial obligations.”).

 

35  In re Hatzenbuehler, 282 B.R. 828, 833 (Bankr. N.D. Tex. Aug. 26, 2002) (Lynn). See also In re Moore, No. 10-11491, 2012 WL 1192776, at *5 (Bankr. N.D.N.Y. Apr. 10, 2012) (Littlefield) (Schedules are “‘jumping off’ place for determining eligibility.”); In re Arcella-Coffman, 318 B.R. 463, 474 (Bankr. N.D. Ind. Dec. 8, 2004) (Klingeberger) (Rejecting Comprehensive Accounting Corp. v. Pearson (In re Pearson), 773 F.2d 751 (6th Cir. Oct. 9, 1985) (Engel, Keith, Jones), statement and schedules are the “jumping off” point for determining whether a debtor is eligible at conversion from Chapter 7 to Chapter 13. “[T]he § 109(e) determination may be made by review of pertinent facts apart from those stated in the debtor’s schedules.”).

 

36  See, e.g., Gould v. Gregg, Hart, Farris & Rutledge, 137 B.R. 761 (W.D. Ark. Feb. 5, 1992) (Waters) (“[W]e do not believe the court is bound by the debtor’s schedules. Rather the court is in agreement with Lucoski v. I.R.S., 126 B.R. 332 (S.D. Ind. [Apr. 8, 1991) (Brooks)]. . . . ‘[E]ven if the schedules reflect the eligibility requirements are met, if it is determined within a reasonable time that the debts exceed the statutory maximum, the case must be dismissed, or the debtor may be given the opportunity to convert.’ . . . To limit the eligibility determination to the debtor’s schedules would allow a debtor to avail himself of the protections of Chapter 13 based on his own subjective decisions regarding contingent and liquidated claims.”); Lucoski v. IRS (In re Lucoski), 126 B.R. 332 (S.D. Ind. Apr. 8, 1991) (Brooks) (Rejecting Pearson, bankruptcy court may look beyond schedules, even though filed in good faith, if dispute over eligibility arises within a reasonable period of time. Pro se debtor filed schedules indicating unsecured debt of less than $100,000. It was eventually determined that a claim listed as secured had not been perfected under state law. Notwithstanding a stipulation of good faith, debtor was not eligible at time of petition. Ineligibility was raised “within a reasonable time” by motion to dismiss before confirmation.); In re Rubens, No. 10-10142-BKC-RBR, 2010 WL 4791879, at *3 (Bankr. S.D. Fla. Nov. 17, 2010) (Ray) (“The Court is not constrained by the Debtors’ classification of secured and unsecured debt on their schedules. Although the Debtors listed zero (0) as the unsecured portion of BankAtlantic’s debt in their schedules, the Court will not blindly take as true that zero value. The Court is free to compare the value of the property with the value of the liens on the property, just as the Debtors asked this Court to do in their Motion to Value.”); In re Del Cristo, No. 04-10044-BKC-RAM, 2004 WL 2735240 (Bankr. S.D. Fla. Oct. 19, 2004) (unpublished) (Mark) (Court may look beyond scheduled debts and must split claims under § 506 to determine eligibility. Amount of undersecured IRS obligation makes debtor ineligible.); In re Newman, 259 B.R. 914, 917 (Bankr. M.D. Fla. Mar. 5, 2001) (Glenn) (“The Debtor’s schedules reflect that the eligibility requirements are met. However, even when there has been no allegation of a lack of good faith in the preparation of the Debtor’s schedules, the Court can look beyond the schedules to determine whether the Debtor’s debts exceed the statutory amounts.”); In re McGovern, 122 B.R. 712 (Bankr. N.D. Ind. Jan. 26, 1990) (Grant) (Eligibility is not determined solely by reference to debts and claims scheduled by debtor. “Even where the Chapter 13 statement is filed in good faith, it is not dispositive on the question of eligibility. Rather, it is only the point of beginning.”); In re Perry, 56 B.R. 663 (Bankr. M.D. Ga. Jan. 14, 1986) (Hershner).

 

37  See, e.g., Brockenbrough v. IRS, 61 B.R. 685 (W.D. Va. Feb. 12, 1986) (Michael); In re Crescenzi, 53 B.R. 374 (Bankr. S.D.N.Y. Sept. 30, 1985) (Abram); Jandel v. Precision Colors, Inc., 8 B.R. 855 (Bankr. S.D. Ohio Jan. 30, 1981) (Anderson); In re Prince, 5 B.R. 432 (Bankr. W.D.N.Y. Aug. 7, 1980) (Hayes).

 

38  See Merchantile Holdings, Inc. v. Dobkin, 12 B.R. 934 (Bankr. N.D. Ill. Aug. 4, 1981) (Eisen) (Amendment to add postpetition creditors may render debtor ineligible.). See also § 14.2  Time for Determining Debt.

 

39  See § 152.1  Procedure, Timing and Form and § 152.2  Cause for Dismissal—In General.

 

40  Fed. R. Bankr. P. 3001(f). See § 135.1  Timing, Procedure and Evidence Presumption.

 

41  See, e.g., In re Knize, 210 B.R. 773 (Bankr. N.D. Ill. June 17, 1997) (Schmetterer) (IRS’s proof of claim is prima facie evidence of the amount of debt for eligibility purposes; debtor’s failure to overcome evidentiary effect of proof of claim renders the debt liquidated for § 109(e) purposes.).

 

42  See, e.g., Barcal v. Laughlin (In re Barcal), 213 B.R. 1008 (B.A.P. 8th Cir. Nov. 14, 1997) (Kressel, Schermer, Scott) (Courts considering eligibility should rely on proofs of claim filed by creditors but not “unquestionably.”); In re Marrama, 345 B.R. 458, 468–69, 472 (Bankr. D. Mass. July 14, 2006) (Hillman) (“[T]here are ample facts to warrant the conclusion that the Debtor did not exercise reasonable diligence or good faith in completing and filing the schedules. . . . I cannot conclude . . . that it was error for me to examine the docket and claims register of the Chapter 7.”); In re Steffens, 342 B.R. 851, 852 (Bankr. M.D. Fla. Sept. 14, 2005) (Paskay) (Bankruptcy court determines debtor is ineligible based on sum of proofs of claim. “U.S. v. Verdunn, 89 F.3d 799 (11th Cir. [July 31, 1996) (Kravitch, Carnes, Hill),] implies that courts may look outside of the schedules in determining eligibility. While the Verdunn court did not specifically address this issue, the 11th Circuit did review a proof of claim to determine that a noncontingent, liquidated, unsecured claim from the Internal Revenue Service should be included in computing total unsecured claims to determine Chapter 13 debtor eligibility. . . . This Court is also persuaded . . . that even when there has been no showing of lack of good faith, it can look beyond the schedules in determining Chapter 13 debtor eligibility.”); In re Hanson, 275 B.R. 593, 596 (Bankr. D. Colo. Apr. 3, 2002) (Brown) (“In determining eligibility under Section 109(e), the Court must rely primarily on the debtor’s schedules and the timely-filed proofs of claim.”); In re Reader, 274 B.R. 893, 899 (Bankr. D. Colo. Mar. 26, 2002) (Brown) (“This Court finds that its duty is to canvass and review the Debtor’s schedules and the proofs of claim and other evidence offered, but only as to whether the good faith, facial amount of the Debtor’s liquidated and noncontingent debts exceed[s] the eligibility limits.”); In re Newman, 259 B.R. 914 (Bankr. M.D. Fla. Mar. 5, 2001) (Glenn) (On the IRS’s motion to dismiss 25 months after the petition but before confirmation, court considers series of amended proofs of claim filed by the IRS between the petition and the hearing on dismissal.); In re Berenato, 226 B.R. 819 (Bankr. E.D. Pa. Oct. 29, 1998) (Scholl) (Debtor ineligible based in part on IRS’s filed proof of claim for $461,647.08.); In re Brooks, 216 B.R. 838 (Bankr. N.D. Okla. Jan. 5, 1998) (Michael) (Debtor ineligible where IRS has filed an unsecured claim for $382,726.17.); In re Sivertsen, 180 B.R. 513 (Bankr. N.D. Ill. Dec. 27, 1994) (DeGunther) (Debtor ineligible based on a limited review of the documents on file, including an IRS proof of claim for $760,547.62.).

 

43  See § 14.2  Time for Determining Debt.

 

44  In re Grew, 278 B.R. 619 (Bankr. M.D. Fla. May 8, 2002) (Paskay).

 

45  See De Jounghe v. Mender (In re De Jounghe), 334 B.R. 760 (B.A.P. 1st Cir. Dec. 12, 2005) (Votolato, Deasy, Rosenthal) (At conversion from Chapter 11 to Chapter 13 when schedules were inaccurate, court appropriately looked beyond schedules to claims of two unsecured creditors, which exceeded debt limit. If schedules are completed with due diligence and in good faith, starting point is schedules, but court may look beyond schedules in absence of reasonable diligence or good faith.).

 

46  See § 9.5  Consequences of Ineligibility: Jurisdiction; Automatic Stay; Strike, Dismiss or Excuse? and § 120.2  11 U.S.C. § 1327(a): Binding Effect on Creditors and Debtors.

 

47  See discussion of the preclusive effect of confirmation in § 120.2  11 U.S.C. § 1327(a): Binding Effect on Creditors and Debtors.

 

48  See § 17.1  Disputed Debts.

 

49  See In re Bouley, No. 11-1682, 2011 WL 4458928 (Bankr. D. Haw. Sept. 23, 2011) (Faris) (Debtor not eligible when scheduled secured claim on home exceeded $6 million. Debtor and debtor’s attorney violated Rule 9011. Petition lacked legal merit and was filed for improper purpose of blocking foreclosure. Attorney was ordered to disgorge $3,200 fee and to pay same amount to homeowners’ association that moved for dismissal of case.); In re Moix-McNutt, 220 B.R. 631 (Bankr. E.D. Ark. Apr. 29, 1998) (Mixon) (Attorney who intentionally omitted large unsecured claim to make debtor eligible is fined $5,000 and suspended from practice before bankruptcy court for four years. Debtor scheduled unsecured claims of $233,358.80 and secured claims of $660,527.17. Debtor told attorney about additional unsecured claim of $208,000, and attorney instructed debtor not to list the claim.).