§ 16.1 — What Is a Liquidated Debt?

Revised: April 29, 2016

[1]

Liquidated debts are counted toward the debt limitations for Chapter 13 eligibility.1 The term “liquidated” is not defined by the Bankruptcy Code. The word has appeared in the eligibility limitations for Chapter 13 in every version of the Bankruptcy Code since 1979 without modification.

[2]

At its simplest, liquidated means that the amount of the debt is known or is easily calculated.2 An expanded definition is that the “dollar amount (1) is determined, fixed, settled, adjusted, and made certain mathematically and with precision, (2) is agreed upon, or (3) is fixed by operation of law. . . . In short, a ‘liquidated’ debt is one that is certain both as to amount and liability.”3 These loose definitions of liquidated have produced uncertainty and conflicting outcomes.

[3]

When is the amount of a debt “known or . . . easily calculated”? It has been held that the amount of a debt is known when proofs of claim have been filed and the debtor does not object to the claims.4 This is not particularly satisfying because a Chapter 13 debtor has no statutory obligation to object to claims at the eligibility stage of the case—§ 109(e) bases eligibility on the liquidated and noncontingent character of debts without regard to whether those debts are ultimately allowed or disallowed in the claims allowance process.5 Sometimes the courts use the claims allowance process as an excuse for declaring debts to be liquidated in a particular amount. In other situations, the courts hold that allowance of claims is irrelevant to Chapter 13 eligibility. For example, it was held that a debt to the IRS for a 100 percent tax penalty should be counted for eligibility purposes, even though the IRS failed to timely file a proof of claim and could not have an allowed claim.6 On the other hand, when a debt was based on the debtor’s guaranty of a lease, it was held that the amount of the debt for eligibility purposes was limited by § 502(b)(6)—a section of the Code dealing with the allowance of claims—to either the rent reserved in the lease for one year or 15 percent of the entire lease, not to exceed three years.7

[4]

Perhaps a better description of the effect on liquidation of filing a proof of claim would be that a properly prepared proof of claim is prima facie evidence of the amount of the debt,8 but that evidentiary effect can be overcome by contrary proof from the debtor.9 For example, in United States v. May,10 the debtor convinced the bankruptcy and district courts that a tax claim was unliquidated notwithstanding a filed proof of claim for $803,401.76 with evidence that similarly situated taxpayers had won tax court cases against the IRS. The debtor in In re Mandarino11 did not object to the $450,000 proof of claim for pirated de-scrambling devices, but the bankruptcy court found the debt was unliquidated because “[t]here is no ‘simple computation’ this court can use to fix the amount of the claim. Under 47 U.S.C. § 605, the sanctions range from ‘$10,000 per unit’ to as little as a total fine of $250.”12 On the other hand, in In re Knize,13 the debtors failed to produce evidence to rebut the prima facie effect of an IRS proof of claim for $1,148,967.96 and were declared ineligible for Chapter 13. This evidentiary effect quickly degenerates into full-scale claims litigation that eliminates all ease of calculation that may have flowed from the filing of a proof of claim.14

[5]

Ease of calculation may mean that the amount can be determined by reference to a statute or an agreement, from the schedules or by simple computation from a contract.15 It has been held that whether a debt is liquidated for eligibility purposes turns on how complicated a hearing would be necessary to determine the precise amount of the debt. If precise computation of the amount due can be accomplished after a “simple hearing,” the debt is liquidated; if “an extensive and contested evidentiary hearing in which substantial evidence may be necessary” would be required, then the debt is unliquidated and is not counted.16

[6]

Obviously, whether a hearing is simple or extensive is highly subjective and places a premium on the debtor’s ability to confuse and complicate the dispute with a creditor.17 When the bankruptcy court determined “there was simply no method” by which the court could ascertain with precision the amount of damages that should be assessed against the debtor for selling motor vehicles with altered odometers, the debt could not be easily calculated and was unliquidated for eligibility purposes.18 In contrast, when an exhibit was filed at the eligibility hearing from which the amount of sales of vehicles out-of-trust could be determined with certainty, the debt against the debtor for breach of trust was liquidated for § 109(e) purposes.19 Dissatisfaction with the highly subjective nature of a test based on the complexity of a hearing inspired the Bankruptcy Appellate Panel for the Eighth Circuit to substitute the following highly subjective alternative formulation of the test for liquidated debts:

We hold that the key factor in distinguishing liquidated from unliquidated claims is not the extent of the dispute nor the amount of evidence required to establish the claim, but whether the process for determining the claim is fixed, certain, or otherwise determined by a specific standard. . . . [T]ax liabilities were indeed readily determinable and liquidated because at the time of filing, the liabilities had already been fixed or established by the Service’s Certificates of Assessment. The assessment of a tax liability is essentially a bookkeeping function . . . . [T]he taxes were determined or liquidated through the Service’s process of assessment.20
[7]

The third element of the expanded test seems to define liquidated in terms of both “amount and liability.” As discussed above,21 if there are conditions precedent to the debtor’s personal liability (other than the mere passage of time or entry of a court judgment), the obligation may be contingent. If there is no personal liability, there is no right to payment and thus no claim against the debtor at all under 11 U.S.C. § 101(5).22 If there is a right to payment but the extent of that right is uncertain, the debt may be unliquidated. Including consideration of disputed liability to determine whether a debt is liquidated is confusing and has been appropriately criticized.23 The Tenth Circuit Bankruptcy Appellate Panel recently stated, “[T]he overwhelming body of precedent holds that a dispute regarding liability on a claim is insufficient to render a claim unliquidated.”24

[8]

The Ninth Circuit tackled the question whether a debt is liquidated when the debtor fundamentally disputes liability in Slack v. Wilshire Insurance Co. (In re Slack).25 Wilshire sued the debtor before the petition for misrepresentation and negligence. The debtor contested liability but stipulated in the state court and in the bankruptcy court that if the debtor was liable, the actual damages were $255,954. The bankruptcy court found the debtor ineligible and on appeal, the debtor argued that Wilshire’s claim was unliquidated. The Ninth Circuit disagreed in terms that arguably exclude consideration of liability from the test whether a debt is liquidated:

This circuit has held that a debt is liquidated for the purposes of calculating eligibility for relief under § 109(e) if the amount of the debt is readily determinable. . . . “The definition of ‘ready determination’ turns on the distinction between a simple hearing to determine the amount of a certain debt, and an extensive and contested evidentiary hearing in which substantial evidence may be necessary to establish amounts or liability.” . . . Bankruptcy courts in this circuit have held that disputes regarding liability arising out of contract and tort claims do not render a debt unliquidated. . . . We are persuaded that under this circuit’s “readily determinable” standard, if the amount of the creditor’s claim at the time of the filing [sic] the petition is ascertainable with certainty, a dispute regarding liability will not necessarily render a debt unliquidated. Whether the debt is subject to “ready determination” will depend on whether the amount is easily calculable or whether an extensive hearing will be needed to determine the amount of the debt, or the liability of the debtor. . . . [T]he mere assertion by the debtor that he is not liable for the claim will not render the debt unliquidated for the purposes of calculating eligibility under § 109(e). . . . “[T]he concept of a liquidated debt relates to the amount of liability, not the existence of liability.” . . . Even if a debtor disputes the existence of liability, if the amount of the debt is calculable with certainty, then it is liquidated for the purposes of § 109(e). . . . Here, the amount of the debt at the time the petition was filed is readily determinable because the parties stipulated before the state and the bankruptcy courts that Wilshire suffered damages in the amount of $255,954. This amount exceeds the $250,000 maximum limit to a bankruptcy court’s jurisdiction over a Chapter 13 petition. This stipulation established the precise amount of Wilshire’s claim under the “readily determinable” standard. . . . The fact that Slack contests his liability for these debts does not render the debt unliquidated.26
[9]

Almost before the ink was dry in Slack, the Bankruptcy Appellate Panel for the Ninth Circuit faced a fact pattern that challenged the conclusion that disputing liability does not render a debt unliquidated for § 109(e) purposes. In Ho v. Dowell (In re Ho),27 the debtor scheduled a large contract debt owed by a corporation in which the debtor was an officer and shareholder. The debtor was not a party to the corporation’s contract and did not guarantee the debt. A prebankruptcy lawsuit was pending against the corporation in which the creditor did not claim that the debtor was personally liable. Out of an (over?)abundance of caution, the debtor scheduled the corporation’s debt as unliquidated and disputed. Counting the corporation’s debt would render the debtor ineligible for Chapter 13 under § 109(e).

[10]

The appeal in Ho presented the Bankruptcy Appellate Panel for the Ninth Circuit with a dilemma. All of the events necessary to determine the liability of the debtor for the corporation’s debt occurred before the petition—the debt did not fit any definition of “contingent” recognized by the Ninth Circuit.28 But reading Slack without embellishment, that the debtor in Ho disputed liability did not render the debt unliquidated. It looked like the debt had to be counted for eligibility purposes notwithstanding fundamental questions whether the debtor was liable at all for the corporation’s debt.

[11]

Describing as “ambiguous” the discussion in Slack of the effect of disputed liability on whether a debt is liquidated, the Bankruptcy Appellate Panel held that disputed liability can render a debt unliquidated for eligibility purposes in a Chapter 13 case:

Slack should not be read to remove [issues of liability] from the analysis. . . . If Slack were interpreted to preclude consideration of the remoteness of liability, we would have created a dilemma that inevitably will lead to schedules that are shaded to omit debts at the margin of liability. . . . [I]n this case, there would need to be allegations of liability and an extensive hearing to determine Debtor’s liability for the Great Tone contract debt. . . . [N]ot even Great Tone contends that Debtor is personally liable. Therein lies the rub. This is not a case where all that is lacking is a final determination as to the debtor’s liability. . . . While a dispute as to liability will not “necessarily render a debt unliquidated,” . . . the nature of this dispute does.29
[12]

Slack and Ho illustrate a problem with words in the Bankruptcy Code. The definition of debt in § 101(12) requires that there be “liability” on a claim. “Claim” means “right to payment, whether or not such right is . . . liquidated, unliquidated . . . contingent.”30 As detailed above,31 § 109(e) counts toward eligibility in a Chapter 13 case only “noncontingent” and “liquidated” rights to payment. Some liabilities that would otherwise constitute debts under § 101(5)(A) and (12) are not counted for eligibility purposes in a Chapter 13 case under § 109(e).

[13]

But if characterizing a debt as liquidated includes some consideration of liability—as the Ninth Circuit BAP concludes in Ho—then questions of liability arise twice in this calculus: once to determine whether there is a debt and again to determine whether that debt is liquidated. Is this the same “liability”? If the BAP is correct in Ho, there must be either different notions of liability or different measures of the same notion of liability at work here: there is liability sufficient to constitute a debt for bankruptcy purposes, but that (same?) liability can be fragile enough to render the debt unliquidated in a Chapter 13 case. This is a lot of baggage for one word.

[14]

That the Bankruptcy Code itself uses the word “liability” to define the word “debt” is modest but not compelling support for an argument that disputed liability should not render a debt unliquidated for § 109(e) purposes. On the other hand, the Supreme Court’s broad reading of the meaning of debt and claim for bankruptcy purposes32 creates some room for disputed liability insufficient to defeat the existence of a debt but great enough to put in doubt whether any amount would be payable by the debtor. It is into this gap that the Bankruptcy Appellate Panel for the Ninth Circuit stepped in Ho.33

[15]

This semantic discussion has teeth. If the debtor’s personal liability in Ho was too remote to spawn a debt for bankruptcy purposes, then discharge at the completion of payments in the Chapter 13 case would not affect whatever obligation the debtor had individually for the corporation’s debt. This would be true because there would be no debt to be discharged under § 1328.34 On the other hand, if the debtor’s remote responsibility for the corporation’s debt in Ho was a claim in the Chapter 13 case, then the BAP’s conclusion that this debt was unliquidated permits a Chapter 13 case in which discharge of the debtor’s individual liability for the corporate debt is possible.

[16]

The aggressive reading of Slack by the BAP in Ho is controversial and not likely to end the debate whether disputed liability is relevant to whether a debt is liquidated for Chapter 13 eligibility purposes.35

[17]

Application of the tests for liquidation is especially problematic with respect to tort claims. If there is a prepetition tort judgment against the debtor, it is easy to conclude that the debt is liquidated.36 However, in the absence of a prepetition judgment, a tort claim will be liquidated or unliquidated depending upon the certainty or uncertainty of the amount due.37 For example, it has been held that civil liability for misappropriation of funds is liquidated for Chapter 13 eligibility when determining the amount of the debtor’s liability requires only simple arithmetic: “after determining debtor’s liability for a multitude of separate events, we need only add up the amount of money involved in each to determine the amount of the claim. This will require only mathematics, not the exercise of judgment. . . . [A]s a result, the claim is a liquidated one.”38 Damages for burglary and arson were held to be liquidated because “only property damages are involved. While certain types of damages cannot be readily computed because they involve pain and suffering, permanent injury or punitive damages, that is not the situation here.”39 A claim against an investment advisor for churning a securities account was liquidated because damages could be easily measured by reference to the market prices for securities.40 In contrast, damages for alleged sexual abuse by the debtor were held to be unliquidated and excluded from the eligibility calculation because the claim was not capable of ready determination.41

[18]

The Bankruptcy Appellate Panel for the Ninth Circuit held that tort claims for malpractice by a professional tax preparer were liquidated for eligibility purposes when many of the claimants admitted that their claims were barred by the statute of limitations and thus “only the briefest of hearings [was] needed” to determine the amount of debt.42 Although disallowance of claims that are time barred may be appropriate under 11 U.S.C. § 502(b)(1),43 it is not obvious that a debt is liquidated for eligibility purposes based on a statute of limitations. Eligibility for Chapter 13 is not based on the allowance of claims; rather, it is based on the amount of noncontingent, liquidated debt.44 Nowhere does § 109(e) require that a debt be allowable to be counted toward the debt limitations. The availability of defenses such as a state statute of limitations may affect the claims allowance process but should not determine whether a claim is liquidated for eligibility purposes.45

[19]

Reported decisions that creep into the postpetition period for facts or evidence to liquidate a debt threaten further to distort the eligibility calculus in Chapter 13 cases.46 For example, in Elliott v. Papatones (In re Papatones),47 a state court judge orally announced a judgment against the debtor for $276,606.87. The debtor quickly filed a Chapter 13 petition, and the state court clerk entered the judgment one day after the petition. Eligibility was challenged based on the postpetition judgment debt in excess of the eligibility limits at the time. The debtor defended that at the petition, the cause of action involved, and thus the underlying debt, were unliquidated.

[20]

The First Circuit “assumed” without deciding that the debt against the debtor “did not become ‘liquidated’ until the superior court judgment was docketed.”48 The court then determined that entry of the judgment by the state court did not violate the automatic stay. The First Circuit then leaped to the conclusion that “an unsecured debt becomes ‘liquidated’ in amount once reduced to judgment . . . . [T]he $276,606.87 unsecured, liquidated debt owed [the creditor] on the date of the filing of the chapter 13 petition rendered [the debtor] ineligible for chapter 13 relief.”49 Put another way, the First Circuit held that a judgment entered after a Chapter 13 petition can liquidate a debt as of the petition for eligibility purposes.50

[21]

Even before Papatones, one bankruptcy court followed similar odd logic to the disturbing conclusion that a tort claim for fraudulent inducement to make a loan was liquidated at the petition because, after the grant of relief from the stay, a state court fixed the amount of the claim. In In re Johnson,51 the Chapter 13 case was filed one day before a hearing on summary judgment in a state court lawsuit against the debtor. The bankruptcy court observed that “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.”52 The bankruptcy court lifted the stay. The state court entered summary judgment against the debtor. The bankruptcy court then held that the summary judgment order “establishes that the [Russolis] have a liquidated, noncontingent claim of at least $175,000,”53 rendering the debtor ineligible under § 109(e).

[22]

Johnson begs the question it asks. If “readily ascertainable” means that another court can determine the amount of a claim against the debtor, then every debt with respect to which litigation is pending at the petition becomes liquidated by relief from the stay. Is Johnson limited to its facts—only claims subject to summary judgment in another court are liquidated for purposes of § 109(e)? Johnson raises the specter that relief from the stay after a Chapter 13 petition changes the eligibility calculus based on postpetition litigation in another forum.54 This construction of liquidated contains too much potential for mischief.

[23]

Contrast Papatones and Johnson with Slack. Discussed in detail above,55 in Slack, a state court judge announced a “tentative decision” before the Chapter 13 petition that Slack was liable to Wilshire for $659,971. Slack filed Chapter 13 before a final judgment was entered. Slack disputed liability but stipulated that if liable to Wilshire, actual damages totaled $255,954. The bankruptcy court dismissed the petition on the ground that Slack was ineligible, and Slack appealed. No stay was in effect and during the appeal, the state court entered final judgment for $455,480. The Ninth Circuit appropriately declined Wilshire’s invitation to take judicial notice of the state court judgment to liquidate the claim against Slack.56

[24]

Consistent with Slack and perhaps showing even more respect for the petition as the cleavage date, in In re Horne,57 the bankruptcy court refused to find a debt liquidated based on postpetition adjudication. In Horne, the Attorney General of Texas claimed that the debtor violated consumer protection statutes by operating a “blast fax” business that transmitted millions of unsolicited facsimiles. After the Chapter 13 petition, a trial took place in district court at which the debtor was found liable and damages were calculated in the precise amount of $459,375. The bankruptcy court determined that the claim was unliquidated based on the following assessment of the difficulty encountered by the district court in calculating damages:

The District Court determined that the Debtor, his co-shareholder and the corporation violated the [Texas Consumer Protection Act] a total of 937,500 times a month from October 5, 2000 to March 15, 2001. The Court calculated the damages at $459,375 based upon a formula it devised. . . . [T]his was no simple matter . . . . The Court had to determine the number of unsolicited faxes mailed; the percentage of those actually received and had to determine the degree of willfulness on the part of the individual defendants to determine the penalties applicable to them. . . . This Court agrees with the Seventh Circuit Court that “if judgment, discretion, or opinion . . . is required to determine the amount of the claim, it is unliquidated.” . . . In this instance, the evidence of application of judicial discretion is clear from the language of the Findings. Simple mathematics alone did not supply the value of the State’s claim . . . the claim was not liquidated or certain on the date of the filing of the petition.58
[25]

In the sauce and gravy department, it should be added that the postpetition period is not hospitable territory in which debtors can enhance eligibility by creating unliquidated or contingent debts. As discussed above,59 a debt that is counted toward Chapter 13 eligibility because it is noncontingent and liquidated at the petition should not be excluded based on postpetition events. For example, in In re Rohl,60 the debtor was ineligible to convert from Chapter 7 to Chapter 13 based on noncontingent, liquidated debts in the Chapter 7 schedules. During the Chapter 7 case, the debtor bought some claims and settled others. At conversion, the debtor argued that these debts had become contingent or unliquidated. The bankruptcy court dispatched this scheme: the settled debts were readily ascertainable in the amounts scheduled at the Chapter 7 petition and did not become unliquidated based on the debtor’s actions during the Chapter 7 case.61

[26]

Contract disputes are generally liquidated debts notwithstanding that the amount of the claim must be computed from the contract or is subject to defenses, counterclaims or setoffs.62 Most ordinary bank loans fall in this category.63

[27]

Guaranties based on a contract—at least when the contract is a “guarantee of payment”—are liquidated because the debtor owes the entire amount of the debt and the contract provides a ready method of calculation.64 A mixed claim against the debtor, sounding in part in fraud and in part breach of contract, becomes liquidated for § 109(e) purposes if the debt can be readily computed based on the rules for calculating contract damages65 or could be unliquidated if the debt cannot easily be sorted or quantified as contract or tort.66

[28]

The liquidated debt limitation can be exceeded even though the amount of debt is not precisely fixed at the petition. For example, it has been held that if the least that would be due a claim holder is in excess of the eligibility limitations, then the debtor is ineligible though the precise amount of debt is unknown.67

[29]

A prepetition judgment or similar adjudication fixing the amount of liability—whether by consent, by default68 or after a trial on the merits—renders the debt liquidated notwithstanding that the debtor has appealed or otherwise disputes the claim.69 One reported decision concludes that the IRS is precluded from arguing that its debt is liquidated when the debtor’s tax liability was determined to be dischargeable in a prior Chapter 7 case.70

[30]

When the debtor acts in bad faith in scheduling a debt or fails to provide “the information necessary to perform the [eligibility] calculation, principles of estoppel should prevent a debtor from discounting the claims for eligibility purposes.”71 Such a result is consistent with the general concept that the court will look primarily to the debtor’s schedules but also may consider the debtor’s good faith if raised in the eligibility objection.72 Of course, if the debtor schedules a debt as liquidated, or specifies an amount that leads to ineligibility, the debtor will be bound by the schedules.73 An objecting creditor may also be bound by its failure to properly raise the issue of liquidation.74


 

1  11 U.S.C. § 109(e).

 

2  See, e.g., Glance v. Carroll (In re Glance), 487 F.3d 317 (6th Cir. June 1, 2007) (Suhrheinrich, Clay, Sutton) (A nonrecourse mortgage on real property owned jointly by the debtor and nonfiling spouse is liquidated because the full amount of the mortgage claim is “readily ascertainable.”); In re Sidebottom, 430 F.3d 893, 901 (7th Cir. Dec. 9, 2005) (Bauer, Wood, Williams) (Although questioning whether amounts of debt “were readily determinable with any precision,” debtor was not eligible for Chapter 13 when simultaneous Chapter 7 is pending with same debts.); Mazzeo v. United States (In re Mazzeo), 131 F.3d 295, 300–05 (2d Cir. Dec. 3, 1997) (Kearse, McLaughlin, Godbold) (“The terms ‘liquidated’ and ‘unliquidated’ generally refer to a claim’s value (and the size of the corresponding debt) and the ease with which that value can be ascertained. . . . [T]he ‘courts have generally held that a debt is “liquidated” . . . where the claim is determinable by reference to an agreement or by a simple computation.’”); In re Knight, 55 F.3d 231, 235 (7th Cir. May 3, 1995) (Coffey, Ripple, Skinner) (“[T]he cases uniformly provide the method for determining whether a debt is liquidated: ‘If the amount of a claim has been ascertained or can readily be calculated, it is liquidated—whether contested or not.’”); De Jounghe v. Mender (In re De Jounghe), 334 B.R. 760 (B.A.P. 1st Cir. Dec. 12, 2005) (Votolato, Deasy, Rosenthal) (If amount is readily calculable, debt is liquidated under Scovis v. Henrichsen (In re Scovis), 249 F.3d 975, 984 (9th Cir. May 11, 2001) (Nelson, Brunetti, Kozinski); disputing liability does not make debt unliquidated.); In re Star, No. 07-13440DWS, 2008 WL 324125, at *4, *5 (Bankr. E.D. Pa. Feb. 1, 2008) (Sigmund) (unpublished) (“If the amount of the claim can be determined, then the debt is liquidated even though debtor may dispute liability or amount,” citing Mazzeo v. United States (In re Mazzeo), 131 F.3d 295, 303–04 (2d Cir. Dec. 3, 1997) (Kearse, McLaughlin, Godbold). “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.”); In re Snell, 227 B.R. 127, 129 (Bankr. S.D. Ohio Apr. 3, 1998) (Sellers) (“readily and precisely determinable”); In re Knize, 210 B.R. 773, 779–80 (Bankr. N.D. Ill. June 17, 1997) (Schmetterer) (“When a debt . . . can be ascertained or readily calculated, it is liquidated for purposes of § 109(e).”).

 

3  In re Lambert, 43 B.R. 913, 921 (Bankr. D. Utah Oct. 22, 1984) (Clark).

 

4  In re Marrama, 345 B.R. 458, 472–73 (Bankr. D. Mass. July 14, 2006) (Hillman) (Debt to bank was liquidated because bank filed proof of claim in Chapter 7 case still pending when new Chapter 13 case was filed and proof of claim contained promissory notes and a breakdown of the charges to which no objection was filed. “[A] claim is considered liquidated where it is calculable by reference to an agreement or by simple computation. . . . The proof of claim . . . contains two promissory notes . . . and a breakdown of the charges . . . . [A]n agreement as to the claim exists which renders the claim liquidated for purposes of eligibility.”); In re Rigdon, 94 B.R. 602 (Bankr. W.D. Mo. Dec. 22, 1988) (Koger). Accord In re Ekeke, 198 B.R. 315, 318 (Bankr. E.D. Mo. June 14, 1996) (Schermer) (Applying In re Knight, 55 F.3d 231 (7th Cir. May 3, 1995) (Coffey, Ripple, Skinner), prepetition tax claims are liquidated because the IRS has made a “prima facie showing of its Proof of Claim.”).

 

5  See § 14.2  Time for Determining Debt and § 16.2  Effect of Defenses and Counterclaims.

 

6  Lamar v. United States, 111 B.R. 327 (D. Nev. Feb. 26, 1990) (Pro).

 

7  In re Thompson, 116 B.R. 610 (Bankr. S.D. Ohio July 3, 1990) (Calhoun).

 

8  Fed. R. Bankr. P. 3001(f); see § 135.1  Timing, Procedure and Evidence Presumption.

 

9  See 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) (Claims of misappropriation of corporate opportunity were unliquidated when debtor objected to creditor’s proof of claim and contested each alleged instance of misappropriation of corporate opportunity. “[A]bsent any formal evidentiary findings, the misappropriation claims were not susceptible to precise determination with the use of simple arithmetic.”); In re Nowakowski, 404 B.R. 789, 792 (Bankr. M.D. Pa. Apr. 15, 2009) (Thomas) (For eligibility purposes, prima facie validity of filed proof of claim does not trigger deeper inquiry than amount of debt scheduled by debtor. “[A]ll the objector did was ask the Court to take judicial notice of hearsay documents filed with this Court . . . . If the Court were to accept the position of the objector that it could and should take into consideration proofs of claim in the Section 109(e) computation, then it would follow, also, that the Court, in order to properly make that computation, would need to go to full, evidentiary hearings on objections to those proofs of claim in order to get a total liquidated amount. . . . The Debtor, on the other hand, offered the Debtor’s testimony that he did not owe the amounts of several proofs of claim, particularly those of the taxing authorities, because of a pre-petition payment made to those taxing authorities.”); In re Rang, No. 01-42029, 2003 WL 25273707 (Bankr. D. Idaho Jan. 27, 2003) (unpublished) (Pappas) (Fraud claim by creditor that alleges loss of exactly $1,070,276.93 is unliquidated because creditor presented no evidence to explain how amount was computed and debtor “vehemently denies” fraud.).

 

10  211 B.R. 991 (M.D. Fla. Aug. 21, 1997) (Sharp).

 

11  277 B.R. 464 (Bankr. E.D.N.Y. May 14, 2002) (Bernstein), corrected and superseded by 312 B.R. 214 (Bankr. E.D.N.Y. May 20, 2002) (Bernstein).

 

12  In re Mandarino, 312 B.R. at 219.

 

13  210 B.R. 773 (Bankr. N.D. Ill. June 17, 1997) (Schmetterer).

 

14  See § 135.1  Timing, Procedure and Evidence Presumption.

 

15  See Mazzeo v. United States (In re Mazzeo), 131 F.3d 295, 300–05 (2d Cir. Dec. 3, 1997) (Kearse, McLaughlin, Godbold) (Responsible person liability for withholding taxes of the debtor’s corporation was liquidated because the amount was easily ascertainable from a statute and from the tax returns signed by the debtor. “The terms ‘liquidated’ and ‘unliquidated’ generally refer to a claim’s value (and the size of the corresponding debt) and the ease with which that value can be ascertained. . . . [T]he ‘courts have generally held that a debt is “liquidated” . . . where the claim is determinable by reference to an agreement or by a simple computation.’ . . . Mazzeo’s putative debt to the State in the amount of at least $381,451.99 can readily be ascertained from statutory provisions and from the tax returns filed by [Westfield Financial Corporation].”); United States v. Verdunn, 89 F.3d 799, 802–03 (11th Cir. July 31, 1996) (Kravitch, Carnes, Hill) (“A liquidated debt is that which has been made certain as to amount due by agreement of the parties or by operation of law.”); Kanke v. Adams (In re Adams), 373 B.R. 116, 120–22 (B.A.P. 10th Cir. Aug. 3, 2007) (Bohanon, Cornish, Michael) (“The key factor for determining whether a debt is liquidated or unliquidated is whether the debt is subject to a simple mathematical computation or ascertainable by reference to an agreement. . . . [The creditor made] a proffer of evidence, uncontested by the Debtors . . . that reflected the testimony of Edward T. Hager, a certified public accountant, regarding his investigation into the Probate Estate’s financial records and his resulting report quantifying damages caused by the Debtors. . . . These items . . . are easily quantified by Hager’s report and supporting documents. A simple mathematical computation is all that is needed to fix an amount . . . . [T]hose items are properly deemed liquidated for purposes of deciding whether the Debtors are eligible.”); Hounsom v. United States, 325 B.R. 319, 324, 326 (M.D. Fla. May 13, 2005) (Antoon) (Tax claims for prepetition tax years are liquidated notwithstanding that the debtor disputes the debts and even when IRS has not filed a prepetition notice of deficiency—and notwithstanding that IRS filed several amended proofs of claim after the Chapter 13 petition successively enlarging the amount of the tax debt. Citing United States v. Verdunn, 89 F.3d 799 (11th Cir. July 31, 1996) (Kravitch, Carnes, Hill), tax claims are liquidated because “established Internal Revenue Code criteria” are used to determine the amount of the debt. Whether a statutory notice of deficiency is issued is a factor bearing on whether the debt was liquidated, but “‘[t]his factor is not indispensable to the concept of a liquidated debt . . . there are other ways of demonstrating that a tax debt is liquidated.’” That the IRS filed several amendments to its proof of claim “‘does not necessarily create a dispute over such a claim, or result in a change of status from a liquidated debt to an unliquidated debt.’”); In re Silva, No. 10-60077 CN, 2011 WL 5593040, at *3 (Bankr. N.D. Cal. Nov. 16, 2011) (Novack) (Undersecured portion of debt secured by rental property was liquidated when amount was “ascertainable or calculable with certainty.” Schedules provided value of property and amount of debt, permitting easy calculation of undersecured portion.); In re Moe, No. 09-31218, 2010 WL 1904830 (Bankr. D.N.D. May 11, 2010) (unpublished) (Hill) (Debt for purchase of seed potatoes was liquidated under Barcal v. Laughlin (In re Barcal), 213 B.R. 1008 (B.A.P. 8th Cir. Nov. 14, 1997) (Kressel, Schermer, Scott), since amount of debt was readily calculable or determinable from invoices. Liquidated debts exceeded § 109(e) eligibility limit.); In re Tucker, 345 B.R. 373, 376 (Bankr. M.D. Ala. May 11, 2006) (Williams) (Tax claims for prepetition tax years are liquidated under United States v. Verdunn, 89 F.3d 799 (11th Cir. July 31, 1996) (Kravitch, Carnes, Hill), notwithstanding that the debtor contests liability. “[T]his court is not free to exercise its discretion in determining the amount of the debtor’s tax liability. Instead, the court must apply specific criteria, that is, the Internal Revenue Code, to determine the amount owed.”); In re Doyle, 340 B.R. 381 (Bankr. D. Or. Mar. 21, 2006) (Alley) (Civil penalties assessed against one debtor for violations of state campaign finance laws were liquidated at petition date, and amount made debtors ineligible.); In re Arriaga, Nos. 02-41989, 02-41686, 2003 WL 25273842 (Bankr. D. Idaho Feb. 6, 2003) (unpublished) (Pappas) (Partnership debt is liquidated in partner’s Chapter 13 case because amount of debt arises from a contract and is capable of ready determination; individual partner is jointly and severally liable for full amount of debt of partnership without regard to whether partnership or another partner eventually pays some or all of the debt. Liability of partnership or of other partners concerns responsibility to pay rather than determination of amount owed.); In re Stern, 266 B.R. 322, 326 (Bankr. D. Md. Aug. 13, 2001) (Schneider) (“All of the unsecured debts scheduled by the debtor as ‘unliquidated’ were, in fact, liquidated. All except for the BARCODING.COM debt represented fixed amounts due and owing for services rendered or credit advanced pursuant to contract.”); In re Hendricks, 250 B.R. 415, 419 (Bankr. M.D. Fla. Mar. 28, 2000) (Jennemann) (Attorneys’ fees and credit cards are liquidated debts at the petition. “Liquidation of a claim relates to the amount of the liability, not the existence of liability. If the amount due is ascertainable by agreement of the parties or operation of law, the claim is liquidated.”); In re Tabor, 232 B.R. 85, 89 (Bankr. N.D. Ohio Mar. 29, 1999) (Shea-Stonum) (“Mr. Tabor’s liability under the Notes can be readily determined based on the amount loaned, the accrued interest and any payments made to satisfy the debt. Therefore, for the purpose of assessing Mr. Tabor’s eligibility under § 109(e), the debt to the Schumachers is liquidated.”); In re Snell, 227 B.R. 127, 129 (Bankr. S.D. Ohio Apr. 3, 1998) (Sellers) (State court judgment for $262,248.85 is liquidated and interest which has accrued on that judgment is “readily and precisely determinable” and thus also a liquidated debt rendering the debtor ineligible.); In re Redburn, 193 B.R. 249, 258 (Bankr. W.D. Mich. Feb. 29, 1996) (Gregg) (Liquidated for § 109(e) purposes means “the precise amounts of the debts are readily ascertainable.”); In re Johnson, 191 B.R. 179, 182 (Bankr. D. Ariz. Oct. 5, 1995) (Case) (Liquidated debts are debts “capable of ready computation.”); In re Sitarz, 150 B.R. 710, 725 (Bankr. D. Minn. Feb. 18, 1993) (Kishel) (Claim is liquidated where the debt “‘is capable of ascertainment by reference to an agreement or by simple computation.’” Evidence at trial included an exhibit from a bank detailing check and credit card losses that resulted from the debtor’s fraudulent misconduct as the manager of a business. “The exhibit collates a large number of false VISA charges and unauthorized checks created by the Debtor during his scheme. The totaling of them is a somewhat lengthy process, but it still is a simple one—and it establishes a claim in the amount of approximately $97,000.00.” When added to other unsecured debts, the debtor is not eligible.); In re Michaelsen, 74 B.R. 245 (Bankr. D. Nev. May 13, 1987) (Thompson).

 

16  Slack v. Wilshire Ins. Co. (In re Slack), 187 F.3d 1070, 1073–74 (9th Cir. Sept. 9, 1999) (Reavley, Alarcon, McKeown) (“This circuit has held that a debt is liquidated for the purposes of calculating eligibility for relief under § 109(e) if the amount of the debt is readily determinable. . . . [W]hether a debt is liquidated ‘turns on whether it is subject to “ready determination and precision in computation of the amount.”’ . . . ‘The definition of “ready determination” turns on the distinction between a simple hearing to determine the amount of a certain debt, and an extensive and contested evidentiary hearing in which substantial evidence may be necessary to establish amounts or liability.’”); Moen v. Hull (In re Hull), 251 B.R. 726, 731 (B.A.P. 9th Cir. July 20, 2000) (Brandt, Perris, Klein) (Patent infringement claim was unliquidated because “there was evidence in the record to support the finding that a trial on the merits would be necessary to liquidate the [plaintiff’s] claim.”); Loya v. Rapp (In re Loya), 123 B.R. 338 (B.A.P. 9th Cir. Feb. 11, 1991) (Ollason, Jones, Perris); FDIC v. Wenberg (In re Wenberg), 94 B.R. 631 (B.A.P. 9th Cir. Dec. 13, 1988) (Mooreman, Volinn, Meyers). Accord United States v. Verdunn, 89 F.3d 799 (11th Cir. July 31, 1996) (Kravitch, Carnes, Hill) (Tax claims are liquidated for eligibility purposes because the amount of the debt is easily ascertainable based on fixed legal standards. “[T]he concept of a liquidated debt relates to the amount of liability, not the existence of liability. . . . Like the relevant state statute in [In re Knight, 55 F.3d 231 (7th Cir. May 3, 1995) (Coffey, Ripple, Skinner)], established Internal Revenue Code criteria were used to calculate Verdunn’s tax debt. Like the demand letter in Knight, the amount of Verdunn’s tax liability was evident from a document, the statutory notice of deficiency. . . . [T]he amount of Verdunn’s $297,000 deficiency was easily ascertainable, i.e., it was computed through the application of fixed legal standards set forth in the tax code. . . . [L]ike the penalties for failing to report traffic offenses in Knight, Verdunn’s federal income tax liabilities and penalties, as asserted, were liquidated unsecured debts to be included in the section 109(e) eligibility calculation.”); In re Knight, 55 F.3d 231, 235 (7th Cir. May 3, 1995) (Coffey, Ripple, Skinner) (Civil penalty of $100 for each failure of a state court judge to report traffic convictions is liquidated. “The fact that Mr. Knight contests this claim does not remove it as a claim under § 109(e) or render it unliquidated. . . . [T]he cases uniformly provide the method for determining whether a debt is liquidated: ‘If the amount of a claim has been ascertained or can readily be calculated, it is liquidated—whether contested or not.’ . . . [I]t is clear that the value of the claim is easily ascertainable. The claim against Mr. Knight was fixed in the State’s demand letter. . . . [U]nder the terms of the state statute, the amount was easily calculated by multiplying 915 . . . by $100.00. . . . Because the amount of liability is easily ascertainable, . . . the State claim should be included in the § 109(e) debt calculation as a liquidated debt.”); Nicholes v. Johnny Appleseed of Wash. (In re Nicholes), 184 B.R. 82, 89–91 (B.A.P. 9th Cir. June 23, 1995) (Russell, Meyers, Jones) (Claims against debtor’s wholly owned corporation may or may not be “liquidated” where the debtor disputes liability; remand is necessary for the bankruptcy court to determine whether computation of the amount due from the debtor personally is a simple matter. “A debt is liquidated if it is capable of ‘ready determination and precision in computation of the amount due.’ . . . The test for ‘ready determination’ is whether the amount due is fixed or certain or otherwise ascertainable by reference to an agreement or by a simple computation. . . . [D]ebts arising from a contract are generally liquidated. . . . [D]ebts based on unlitigated tort and quantum meruit claims are generally unliquidated because damages are not based on a fixed sum. . . . Debts which are merely disputed are presumably included in the § 109(e) limitation calculation. . . . However, the term ‘disputed’ is broad and can encompass either liquidated or unliquidated debts. It can also involve the liability for a claim, the amount of a claim, or both. . . . [C]ourts are divided over whether a debt is unliquidated when there is a dispute as to liability or amount. . . . The issue boils down to whether a dispute over liability or amount precludes the ready determination of a debt. . . . [I]t is the nature of the dispute, and not the existence of the dispute, that makes a claim unliquidated. . . . [S]ome disputed claims cannot be readily determined because they require additional processing by the court. . . . [W]e hold that the fact that a claim is disputed does not per se exclude the claim from the eligibility calculation under § 109(e), since a disputed claim is not necessarily unliquidated. So long as a debt is subject to ready determination and precision in computation of the amount due, then it is considered liquidated and included for eligibility purposes under § 109(e), regardless of any dispute. On the other hand, if the dispute itself makes the claim difficult to ascertain or prevents the ready determination of the amount due, the debt is unliquidated and excluded from the § 109(e) computation.”); Sharp v. Brandman, No. C05-02010 JSW, 2006 WL 3456612 (N.D. Cal. Nov. 29, 2006) (White) (Construing Slack v. Wilshire Insurance Co. (In re Slack), 187 F.3d 1070 (9th Cir. Sept. 9, 1999) (Reavley, Alarcon, McKeown), and California law, consequential damages from breach of contract were not liquidated because it would require a full hearing to determine amount of debt and it was not clear that damages were “probable result” of debtors’ breach of contract.); In re Salazar, 348 B.R. 559, 570 (Bankr. D. Colo. Aug. 15, 2006) (Tallman) (Multi-million-dollar claims for fraud and misrepresentation are unliquidated because there is no agreement or fixed standard for determining damages or losses. Losses on real estate transactions, including lost profits, “are unliquidated claims because the amount of any such claim of loss cannot be determined without a fact finder hearing disputed evidence relating to the value of the property or interest received by the claimant and ultimately making a value determination.”); In re Osborn, 346 B.R. 204, 205–06 (Bankr. N.D. Cal. May 30, 2006) (Jaroslovsky) (Filed claim for $282,393 based on overcharges for design and construction work is an unliquidated debt that does not defeat eligibility. “Perkins’ claim is about as unliquidated as a claim can get; a full trial will have to be held to consider liability, each item of damages, and Osborn’s $107,000.00 counterclaim. The claim is not subject to ready determination and precision in computation of the amount due.”); In re Allen, 241 B.R. 710, 714–16 (Bankr. D. Mont. Dec. 3, 1999) (Peterson) (Ex-spouse’s $3,025,000 claim for assault and battery is “clearly unliquidated and contingent and thus cannot be factored in the eligibility criteria of 11 U.S.C. § 109(e).” Citing Slack v. Wilshire Insurance Co. (In re Slack), 187 F.3d 1070 (9th Cir. Sept. 9, 1999) (Reavley, Alarcon, McKeown), “the disputed debt must be ‘readily ascertainable’ as to amount and ‘[t]he definition of “ready determination” turns on the distinction between a simple hearing to determine the amount of a certain debt, and an extensive and contested evidentiary hearing in which substantial evidence may be necessary to establish amounts or liability.’ . . . Clearly, it would take days of testimony and evidence to establish not only liability but a sum certain, so the test of readily ascertainable simply cannot be met in this case.”); In re Tabor, 232 B.R. 85, 89, 90–91 (Bankr. N.D. Ohio Mar. 29, 1999) (Shea-Stonum) (“Unlike Mr. Tabor, Mrs. Tabor is not a promissor with respect to the Notes and thus her liability to the Schumachers is not subject to ‘ready determination and precision in computation of the amount due.’” A separate claim for “money loaned, . . . for theft . . . for conversion” was not liquidated in either debtor’s case because “[n]o pre-petition judgment had been rendered with respect to the Cummings Claim. As noted by Cummings’ proof of claim, which states that a trial is required for the Cummings Claim to be accurately calculated, the Cummings Claim is not subject to ‘ready determination and precision in computation of the amount due.’”); In re Baird, 228 B.R. 324, 330–31 (Bankr. M.D. Fla. Jan. 7, 1999) (Proctor) (Claim against debtor as officer and controlling shareholder of a corporation alleged to owe $289,820.40 pursuant to civil theft statute is unliquidated. “While not every dispute by a debtor will cause the claim to become unliquidated, the Court finds such a result justified in the instant case. . . . [T]he Court deems the word ‘owe’ most important in its § 109(e) analysis of the present case. . . . There are various situations that may exist in which claims may be filed that a debtor does not ‘owe.’ . . . [U]nlike the present case, the claims in [United States v. Verdunn, 89 F.3d 799 (11th Cir. July 31, 1996) (Kravitch, Carnes, Hill),] and [In re Knight, 55 F.3d 231 (7th Cir. May 3, 1995) (Coffey, Ripple, Skinner),] required no future event to establish the amount ‘owed.’ The case at bar requires a judicial determination to establish the amounts ‘owed,’ if any, by Debtor to IDS. . . . [T]here is an unresolved question of the extent of Debtor’s liability, if any, on IDS’ state court claim. IDS’ claim was not agreed upon nor fixed by operation of law. Debtor disputes both the amount and the underlying liability. Presently, Debtor is not obligated to pay IDS any amount. . . . [F]or a debt to be easily ascertainable it must be capable of ready determination from a simple hearing, rather than an extensive and contested evidentiary hearing in which substantial evidence may be necessary to establish amounts or liability. . . . [T]he disputed amount of liability is related to on-going state court litigation, until such litigation is resolved, the amount ‘owed’ to IDS’ [sic] cannot be readily calculated with any precision or accuracy. . . . [S]ince the amount, if any, of Debtor’s personal liability to IDS has not been established prior to the petition date, IDS’ state court claim will be treated as unliquidated.”); In re Edger, 228 B.R. 772, 775 (Bankr. M.D. Fla. Dec. 1, 1998) (Paskay) (Partial summary judgment that debtor is liable to insurance company which did not determine the amount of debtor’s liability leaves eligibility unresolved. It would be an “intolerable and undue delay on the progress of this Chapter 13 case detrimental to the creditors of the estate” to grant relief from the stay to litigate the amount of the debtor’s liability in state court. Eligibility will be determined by the bankruptcy court after a final evidentiary hearing.); In re Knize, 210 B.R. 773, 779–80 (Bankr. N.D. Ill. June 17, 1997) (Schmetterer) (“Had Debtors offered detailed pleadings and evidence in rebuttal to the Government’s amended claim pertaining to [a business owned by the debtors], an interesting issue would have arisen. . . . When a debt to the IRS can be ascertained or readily calculated, it is liquidated for purposes of § 109(e). . . . Computation of taxes due from an ongoing business could well be a . . . complex task . . . . Certainly the easy calculation of statutory fees in In re Knight [55 F.3d 231 (7th Cir. May 3, 1995) (Coffey, Ripple, Skinner)] is a far cry from computing taxes due on an ongoing business. However, here the assessments based on [the debtors’ business’s operation] were not rebutted by Debtors.”).

 

17  See, e.g., In re Brooks, 216 B.R. 838, 842 (Bankr. N.D. Okla. Jan. 5, 1998) (Michael) (Notwithstanding that debtor “vehemently disputes” the IRS claim, tax debt is liquidated. “Brooks . . . contends that extensive evidentiary hearings will be necessary to determine his liability, if any, for the IRS Claim. Brooks cannot ‘shoehorn’ himself into eligibility under chapter 13 merely by disputing a debt owed to the IRS.” Adopts “majority view” from United States v. Verdunn, 89 F.3d 799 (11th Cir. July 31, 1996) (Kravitch, Carnes, Hill), that a vigorous dispute and need for an evidentiary hearing are not sufficient to render a prepetition tax liability unliquidated.).

 

18  In re Hughes, 98 B.R. 784 (Bankr. S.D. Ohio Mar. 17, 1989) (Clark).

 

19  In re Lewis, 157 B.R. 253 (Bankr. E.D. Va. Aug. 9, 1993) (Bonney). Accord In re Sitarz, 150 B.R. 710 (Bankr. D. Minn. Feb. 18, 1993) (Kishel) (Claim against the debtor for fraudulent misconduct as the manager of a business is liquidated where the evidence at trial included an exhibit from a bank detailing check and credit card losses caused by the debtor. Although the exhibit collected a large number of false credit card charges and unauthorized checks, the totaling of the exhibit was a simple matter of mathematics.).

 

20  Barcal v. Laughlin (In re Barcal), 213 B.R. 1008, 1013–14 (B.A.P. 8th Cir. Nov. 14, 1997) (Kressel, Schermer, Scott). Accord In re McGarry, 230 B.R. 272, 275 (Bankr. W.D. Pa. Feb. 25, 1999) (Bentz) (Claims for fraud and misrepresentation in connection with the sale of securities are liquidated. “‘[T]he key factor in distinguishing liquidated from unliquidated claims is . . . whether the process for determining the claim is fixed, certain, or otherwise determined by a specific standard.’ . . . ‘[T]he Plaintiff may recover the difference between what the Plaintiff intended to pay for the securities and their actual value at the time of purchase.’ . . . We acknowledge that such calculations may be time-consuming and difficult, but the amount of the claims is determined by reference to a specific standard and, therefore, for purposes of determining eligibility for Chapter 13 relief, the claims must be counted as liquidated.”).

 

21  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?.

 

22  That is, unless there is an interest in property of the estate to secure the debt. See Johnson v. Home State Bank, 501 U.S. 78, 111 S. Ct. 2150, 115 L. Ed. 2d 66 (June 10, 1991).

 

23  See United States v. Verdunn, 89 F.3d 799, 802 (11th Cir. July 31, 1996) (Kravitch, Carnes, Hill) (“[T]he concept of a liquidated debt relates to the amount of liability, not the existence of liability.”); In re Tucker, 345 B.R. 373, 376 (Bankr. M.D. Ala. May 11, 2006) (Williams) (Tax claims for prepetition tax years are liquidated under United States v. Verdunn, 89 F.3d 799 (11th Cir. July 31, 1996) (Kravitch, Carnes, Hill), notwithstanding that the debtor contests liability. “Although the concept of liquidated debt focuses upon the amount—not the existence—of liability, the amount and existence of liability are themselves related concepts. . . . The relationship between these two concepts makes the analysis here somewhat circular. Nevertheless, the court cannot distinguish the case at bar from Verdunn. . . . [T]his court is not free to exercise its discretion in determining the amount of the debtor’s tax liability. Instead, the court must apply specific criteria, that is, the Internal Revenue Code, to determine the amount owed.”); In re Vaughn, 276 B.R. 323, 326 (Bankr. D.N.H. Apr. 5, 2002) (Vaughn) (Claims for fraud, RICO and breach of contract are liquidated notwithstanding that debtor disputes liability. “Although the Debtor disputes whether he is liable on his unsecured debts stemming from the Michigan and Ohio law suits, the issue of whether a debtor is liable for a particular debt is separate from whether that debt is liquidated as of the filing date for purposes of § 109(e).”); In re Wiencko, 275 B.R. 772, 778 (Bankr. W.D. Va. Apr. 3, 2002) (Krumm) (“Liquidation bears on the amount of liability not whether liability exists.”); In re Mitchell, 255 B.R. 345, 360 (Bankr. D. Mass. Nov. 15, 2000) (Feeney) (“[T]he amount[s] of [the plaintiff’s claims] are readily calculable. Therefore, the claims are liquidated, regardless of whether the Debtors dispute the liability. This Court specifically rejects the reasoning of the court in [In re Lambert, 43 B.R. 913 (Bankr. D. Utah Oct. 22, 1984) (Clark),] as it represents a discredited minority view.”); In re Pulliam, 90 B.R. 241 (Bankr. N.D. Tex. June 21, 1988) (Felsenthal) (In re Lambert, 43 B.R. 913 (Bankr. D. Utah Oct. 22, 1984) (Clark), and In re Burgat, 68 B.R. 408 (Bankr. D. Colo. 1986), are “based on erroneous definitions of . . . ‘claim’ and ‘debt.’ . . . The Lambert court . . . incorrectly concluded that a good faith dispute makes a debt unliquidated. . . . It is the character of the debt and not of any defense that determines whether a debt is liquidated. . . . A guaranty is . . . inherently liquidated . . . because the amount owed can be determined from the promissory note and supporting documents. . . . The fact that [the debtor] disputes his liability is inconsequential.”).

 

24  Kanke v. Adams (In re Adams), 373 B.R. 116, 120–22 (B.A.P. 10th Cir. Aug. 3, 2007) (Bohanon, Cornish, Michael) (Claims for embezzlement and misappropriation of business opportunities from a probate estate are liquidated notwithstanding that debtor disputes liability; amount of embezzlement debt is readily ascertainable based on testimony from certified public accountant who investigated financial records of estate. Loss of business caused by debtor’s breach of fiduciary duty was unliquidated because “damages were subject to the exercise of discretion.” Damages were doubled under Wyoming law. “The amount of debt is readily determinable only if the process of determining the claim is fixed, certain, or otherwise determined by a specific standard. . . . [T]he overwhelming body of precedent holds that a dispute regarding liability on a claim is insufficient to render a claim unliquidated. . . . The key factor for determining whether a debt is liquidated or unliquidated is whether the debt is subject to a simple mathematical computation or ascertainable by reference to an agreement. . . . At the confirmation hearing, the Appellant made a proffer of evidence, uncontested by the Debtors . . . that reflected the testimony of Edward T. Hager, a certified public accountant, regarding his investigation into the Probate Estate’s financial records and his resulting report quantifying damages caused by the Debtors. . . . These items . . . are easily quantified by Hager’s report and supporting documents. A simple mathematical computation is all that is needed to fix an amount . . . . [T]hose items are properly deemed liquidated for purposes of deciding whether the Debtors are eligible.”).

 

25  187 F.3d 1070 (9th Cir. Sept. 9, 1999) (Reavley, Alarcon, McKeown).

 

26  Slack v. Wilshire Ins. Co. (In re Slack), 187 F.3d at 1073–75. See also In re Smith, 325 B.R. 498, 504, 505, 506 (Bankr. D.N.H. Apr. 15, 2005) (Deasy) (“A claim is ‘liquidated’ if it is subject to ready determination and precision in computation of the amount due. . . . The issue of whether a debtor is liable for a particular debt is separate from whether that debt is liquidated as of the filing date for the purposes of section 109(e).” Claim of Plymouth Village Water & Sewage District that the debtor’s business violated state law by disposing of hazardous dry cleaning waste without a permit was liquidated because the amount was easily determined from actual prepetition cleanup costs incurred by the District. “The Debtors’ obligations to the District arise primarily under the provisions of [state law], which imposes strict liability for costs directly or indirectly resulting from a violation of specified hazardous waste laws. The Debtors’ liability to the District is based upon actual costs, therefore the obligation will, of necessity, be a liquidated claim because it can be readily determined with precision through simple arithmetic computation.” The debtors’ obligation to the state of New Hampshire is not liquidated because it is based entirely on civil penalties that have not yet been determined and with respect to which some discretion must be exercised by the state. “[T]he determination of the penalty in the context of the penalty matrix is an exercise in discretion and is not subject to ready determination and precision in computation of the amount due. . . . [T]he actual amount of the penalty is dependent upon the exercise of discretion. Although the amount of the penalty is limited by the New Hampshire statute, there is a range of possible outcomes dependent on a discretionary determination of the seriousness of the violations then applied to the penalty matrix.”).

 

27  274 B.R. 867 (B.A.P. 9th Cir. Mar. 13, 2002) (Perris, Brandt, Klein).

 

28  See § 15.1  What Is Noncontingent Debt? and § 15.6  Are Claims through and against Debtor’s Corporation Contingent?.

 

29  Ho v. Dowell (In re Ho), 274 B.R. at 874–75.

 

30  11 U.S.C. § 101(5)(A).

 

31  See § 14.1  Dollar Amounts and § 15.1  What Is Noncontingent Debt?.

 

32  See Pennsylvania Dep’t of Pub. Welfare v. Davenport, 495 U.S. 552, 564, 110 S. Ct. 2126, 2133, 109 L. Ed. 2d 588 (May 29, 1990) (Congress adopted “the ‘broadest possible’ definition of ‘debt’ in § 101(11).”); Kelly v. Robinson, 479 U.S. 36, 50 n.12, 107 S. Ct. 353, 361 n.12, 93 L. Ed. 2d 216 (Nov. 12, 1986) (“[T]he Code’s definition of ‘debt’ is broadly drafted . . . the legislative history, as well as the Code’s various priority and dischargeability provisions, supports a broad reading of the definition.”).

 

33  See also In re Arcella-Coffman, 318 B.R. 463, 467–73 (Bankr. N.D. Ind. Dec. 8, 2004) (Klingeberger) (Determining whether a debt is liquidated for § 109(e) purposes includes consideration of both liability and amount. “[A] ‘claim’ is a ‘right to payment’, whether or not the debtor has been determined to be ‘liable’ with respect to the asserted ‘right to payment’. . . . As stated in § 101(12), it is liability of the debtor with respect to a claim that causes a ‘claim’ to become a ‘debt’. There must therefore be some threshold determination of the debtor’s probable liability on a ‘claim’ before a claim can become a ‘debt’ for the purposes of § 109(e). . . . [F]ocus on damages totally ignores the definition of ‘debt’ in 11 U.S.C. § 101(12), which requires not only the assertion of a ‘claim’ by the creditor, but also ‘liability’ of the debtor with respect to the asserted right to payment. . . . The eligibility of a Chapter 13 debtor is not determined by the amount of ‘claims’; it is determined by the amount of ‘debts’. In a legal proceeding to actually ‘liquidate’ a claim, one does not get to the damage determination until the threshold issue of liability has been determined adversely to the defendant. . . . [I]t simply cannot have been Congress’ intent that § 109(e) debt ceiling determinations are to be made by assuming that a debtor is liable on any, and every, claim asserted by a creditor, or on every ‘claim’ stated in a debtor’s schedules which the debtor denotes as being merely ‘disputed’. . . . ‘[T]he question whether a debt is liquidated turns on whether it is subject to “ready determination and precision in computation of the amount due.”’ (citations omitted) [emphasis supplied]. Properly understood, this test has two components: ready determination, which focuses on the debtor’s liability on a claim, and precision in computation of the amount due, which focuses on the monetary award . . . . A debt is subject to ‘ready determination and precision in computation’ if the debtor’s liability and the amount due can ‘be readily ascertained either by reference to an agreement or through simple mathematics’. If a factfinder must rely upon its judgment to establish liability, or to compute an appropriate amount to compensate for past or future injury, then the debt will be ‘unliquidated’. Because the determination of both liability and damages ordinarily requires the exercise of judgment by the factfinder, claims based on tort and on quantum meruit are generally unliquidated . . . . To be ‘liquidated’, both liability on a claim, and the amount of the debt once liability is established, must be capable of being determined in a relatively simple hearing, and must not require an extended evidentiary hearing for their determination.”).

 

34  See § 157.1  Broadest Discharge Available and § 158.5  Claims Not Provided for by the Plan or Disallowed under § 502.

 

35  See, e.g., 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) (Citing Scovis v. Henrichsen (In re Scovis), 249 F.3d 975 (9th Cir. May 11, 2001) (Nelson, Brunetti, Kozinski), and Slack v. Wilshire Insurance Co. (In re Slack), 187 F.3d 1070 (9th Cir. Sept. 9, 1999) (Reavley, Alarcon, McKeown), that debtor disputes liability imposed by Gibraltar court based on findings that the debtor participated in a fraudulent lawsuit does not exclude the debt from eligibility calculation. Defendants in Gibraltar lawsuit alleged that the debtor participated in bad-faith litigation, forged documents and presented false evidence. Five days before Gibraltar court was to hear these claims, debtor filed Chapter 13 in the Eastern District of California. Debtor listed Gibraltar claims as disputed and of no value. A week after Chapter 13 filing, Gibraltar court found debtor liable and awarded more than a million dollars. “‘[I]f the amount of the creditor’s claim at the time of the filing [sic] the petition is ascertainable with certainty, a dispute regarding liability will not render a debt unliquidated. Even if a debtor disputes the existence of liability, if the amount of the debt is calculable with certainty, then it is liquidated for purposes of § 109(e).’ . . . [E]ven if Sullivan disputed liability . . . the amount demanded and awarded by the Gibraltar court was known by Sullivan at the time of his bankruptcy filing, and thus, he was obligated to list it on his schedules.”); In re Fredricksen, 325 B.R. 302, 307, 309 (Bankr. D. Or. Apr. 11, 2005) (withdrawn from publication) (Debtor was ineligible for Chapter 13 relief when IRS issued notices of deficiency for $5,300,000 notwithstanding debtor’s assertion of innocent spouse defense. “The fact that debtor may be relieved of liability at some future time pursuant to 26 U.S.C. § 6015 does not render the tax debt unliquidated for purposes of § 109(e). . . . First, the determination of whether a debtor has debt in excess of the limits established in § 109(e) is made as of the petition date. Post-petition events are irrelevant. . . . Debtor had not even asserted the innocent spouse defense on the petition date. Second, the fact that debtor has a potential defense to liability does not render the tax debt unliquidated.” Court followed Slack v. Wilshire Insurance Co. (In re Slack), 187 F.3d 1070 (9th Cir. Sept. 9, 1999) (Reavley, Alarcon, McKeown), and distinguished limitations on Slack found in In re Ho, 274 B.R. 867 (B.A.P. 9th Cir. Mar. 13, 2002) (Perris, Brandt, Klein), because the debtor had filed the tax return and the debtor’s liability for the tax debt was not as “far fetched” as it was in Ho. “The general rule that disputes as to a debtor’s liability for a debt do not render that debt unliquidated applies in this case.” Further, the issuance of the notice of deficiency by the IRS demonstrated that the liability was readily determinable so as to render the debt liquidated. Although the issuance of a prepetition notice of deficiency does not per se liquidate a tax debt, “it does play a role in determining whether the amount of a tax debt is subject to ready determination and thus liquidated.”); In re Huelbig, 299 B.R. 721, 723 (Bankr. D.R.I. Oct. 1, 2003) (Votolato) (“I decline the Debtors’ invitation to adopt the 9th Circuit BAP approach [in Ho v. Dowell (In re Ho), 274 B.R. 867 (B.A.P. 9th Cir. Mar. 13, 2002) (Perris, Brandt, Klein),] and to take into account the issue of liability in determining whether or not this claim is liquidated. Considering liability in this context has been widely criticized.”); In re Rohl, 298 B.R. 95, 103 (Bankr. E.D. Mich. Sept. 3, 2003) (Shefferly) (Prepetition debts are not rendered unliquidated by disputing liability. “‘[E]very circuit and nearly every other court required to decide the issue has held that a claim is liquidated if its value can be readily ascertained whether or not the debtor’s underlying legal liability on that claim is in dispute.’”). See also § 17.1  Disputed Debts.

 

36  See In re Stern, 266 B.R. 322, 326 (Bankr. D. Md. Aug. 13, 2001) (Schneider) (“The BARCODING.COM claim sounded in tort but was liquidated by a prepetition state court judgment based upon fraud.”).

 

37  See, e.g., NCI Bldg. Sys., L.P. v. Harkness (In re Harkness), No. 4:05-CV-402-A, 2005 WL 2037362, at *2 (N.D. Tex. Aug. 18, 2005) (unpublished) (McBryde) (“[D]ebts based on tort are generally unliquidated until resolved by judicial decree or otherwise, because the plaintiff’s damages are not fixed,” citing Denham v. Shellman Grain Elevator, Inc., 444 F.2d 1376, 1380 (5th Cir. July 2, 1971) (Thornberry, Morgan, Clark). Claim for debtor’s misappropriation of corporate assets is unliquidated, with no determination of liability or debt in pending state court action.); In re Barajas, No. 06-10598-B-13, 2006 WL 3254483 (Bankr. E.D. Cal. Nov. 8, 2006) (unpublished) (Lee) (Car accident was unliquidated claim under Slack v. Wilshire Insurance Co. (In re Slack), 187 F.3d 1070 (9th Cir. Sept. 9, 1999) (Reavley, Alarcon, McKeown), when Chapter 13 petition was filed before state court decision and there was no evidence before bankruptcy court from which amount of damages could be ascertained.).

 

38  In re McGovern, 122 B.R. 712, 717 (Bankr. N.D. Ind. Jan. 26, 1990) (Grant). Accord In re Guzman, No. 10-10169-8-JRL, 2011 WL 5909522, at *4 (Bankr. E.D.N.C. May 31, 2011) (Leonard) (Subrogation claim of workers’ compensation provider, arising out of prepetition automobile accident, was liquidated; even though debt arose from tortious conduct, amount of claim was easily ascertainable by calculation of medical bills and expenses incurred by injured party and paid by workers’ compensation provider. Although subrogation complaint had not been adjudicated in state court, “success of the complaint or the existence of subsequent counterclaims does not bear on the classification of the claim as liquidated. Rather, the aggregate amount of the unsecured claim is certain and can be ascertained through a simple computation of all of the expenses incurred without the need for an extensive hearing.” Unsecured claim of $552,000 exceeded debt limit, making debtor ineligible.); In re Perez, 400 B.R. 879 (Bankr. S.D. Fla. Sept. 18, 2008) (Isicoff) (Debt for misappropriation by creation of false invoices is liquidated, based on sworn testimony before state court and prepetition demand letters sent to debtor. In state court, debtor did not dispute amount received from creditor and state statute entitled creditor to treble damages.); In re Huelbig, 299 B.R. 721, 723–24 (Bankr. D.R.I. Oct. 1, 2003) (Votolato) (Insurance claim is liquidated based on “ready computation” from evidence submitted by insurance company. “Allstate has appended to its proof of claim a list of checks which were funds paid on putative fraudulent claims . . . . Allstate argues that the dollar amount of its claim may be calculated by simple arithmetic. . . . [T]he claim is liquidated, . . . it should be counted in determining the Debtors’ eligibility for Chapter 13.”); In re Lewis, 157 B.R. 253 (Bankr. E.D. Va. Aug. 9, 1993) (Bonney) (Claim for sales of motor vehicles out-of-trust by debtor’s corporation is liquidated in the debtor’s individual Chapter 13 case because an exhibit was admitted from which the amount of the sales out-of-trust could be determined with certainty.); In re Sitarz, 150 B.R. 710 (Bankr. D. Minn. Feb. 18, 1993) (Kishel) (Claim for fraudulent misconduct as the manager of a business is liquidated because the debt is capable of easy computation from an exhibit offered at trial. The exhibit was a compilation of a large number of false credit card charges and unauthorized checks written by the debtor. Totaling the amounts on the exhibit was a lengthy process but a simple matter of computation.). See In re Jordan, 166 B.R. 201, 202 (Bankr. D. Me. Feb. 14, 1994) (Goodman) (Claim that the debtor misappropriated approximately $280,000 from a former employer is liquidated where the debtor scheduled the former employer with a “disputed” claim in the amount of $280,000 and the former employer filed a proof of claim in the amount of $288,295.74. “[T]he existence of a dispute over either the underlying liability or the amount of a debt does not automatically render the debt either contingent or unliquidated. . . . [The former employer’s] claim is noncontingent and liquidated because all events giving rise to liability occurred pre-petition and the amount of the debt can be calculated.”).

 

39  In re Ristic, 142 B.R. 856, 862 (Bankr. E.D. Wis. July 6, 1992) (Shapiro). The Ristic court may have been influenced by the fact that an insurance company paid $124,482 on account of the debtor’s arson and thus it was arguable that the insurance company’s claim against the debtor was liquidated at least to the extent of the amount already paid by the insurance company.

 

40  In re Faulhaber, 269 B.R. 348, 354–55 (Bankr. W.D. Mich. Nov. 7, 2001) (Hughes) (Claim for churning a securities account is liquidated because “out of pocket” rule for measure of damages is easily applied. “[T]he generally accepted definition of a liquidated debt is a debt which is ‘readily ascertainable.’ . . . The Ellsworths’ claim for churning meets this definition. . . . [The] Ellsworths’ damages can be readily ascertained by comparing the available market prices for the securities in question on the relevant dates. . . . The broad consensus among these courts is that the debtor’s liability is irrelevant to the determination of whether a debt is liquidated or not. . . . [A] liquidated debt is any debt which is reasonably ascertainable as to amount regardless of whether the debtor’s underlying liability is in dispute.”).

 

41  In re Hustwaite, 136 B.R. 853 (Bankr. D. Or. Oct. 29, 1991) (Hess) (Damages for alleged sexual abuse by the debtor are unliquidated and excluded from the eligibility calculation. Although debtor admits that the victim incurred medical bills of $159,913.77, debtor denies liability, and determining whether the debtor is liable would require an extensive hearing. “[A] claim is ‘liquidated’ under § 109(e) only if it is capable of ready determination. A claim is capable of ready determination if the debtor’s liability and the amount of the claim can be determined on the basis of the agreed upon facts without the need for an evidentiary hearing. Any disagreement as to liability or amount which is asserted to render a claim unliquidated must not be frivolous nor can the disagreement be solely one of law as opposed to fact. . . . [T]o the extent liability is admitted, the claim is liquidated at least in that amount. . . . [W]here the credibility of the witnesses will be decisive, it is apparent that a court could not determine the existence of liability without an evidentiary hearing. . . . [S]uch a hearing will be complicated and lengthy. Therefore, . . . the debt is not liquidated . . . .”). Accord Mendoza v. Curry (In re Duque), No. CC-05-1069-MaMcB, 2005 WL 6960181, at *7 (B.A.P. 9th Cir. Dec. 30, 2005) (unpublished) (Marlar, McManus, Brandt) (Tort claim for spousal assault and battery was unliquidated at the petition because it would require extensive hearing to determine liability and amount of damages. “Ninth Circuit law [has] not removed any and all issues of liability from the determination of whether a debt is liquidated or unliquidated.”); Moen v. Hull (In re Hull), 251 B.R. 726, 731 (B.A.P. 9th Cir. July 20, 2000) (Brandt, Perris, Klein) (Claim of plaintiff in patent infringement litigation was unliquidated when liability had been determined but not damages: “there was evidence in the record to support the finding that a trial on the merits would be necessary to liquidate the [plaintiff’s] claim.”); NCI Bldg. Sys., L.P. v. Harkness (In re Harkness), No. 4:05-CV-402-A, 2005 WL 2037362, at *2 (N.D. Tex. Aug. 18, 2005) (unpublished) (McBryde) (Under Fifth Circuit authority (citing Denham v. Shellman Grain Elevator, Inc., 444 F.2d 1376 (5th Cir. July 2, 1971) (Thornberry, Morgan, Clark)), “debts based on tort are generally unliquidated until resolved by judicial decree or otherwise, because the plaintiff’s damages are not fixed.” Claim for debtor’s misappropriation of corporate assets is unliquidated, with no determination of liability or debt in pending state court action.); In re Sugg, No. 14-60619-fra13, 2014 WL 3671421 (Bankr. D. Or. July 22, 2014) (Alley) (Breach of fiduciary duty claims were not liquidated for eligibility purposes.); In re Cunningham, 490 B.R. 152 (Bankr. D. Mass. Apr. 12, 2013) (Feeney) (Damages in pending district court suit for breach of fiduciary duty and fraud were not liquidated at commencement of Chapter 13 case. Damages were subject to further action by district judge and not readily ascertainable from schedules or district court record.); In re Lapin, 302 B.R. 184 (Bankr. S.D. Tex. Sept. 3, 2003) (Steen) (Securities fraud and Ponzi scheme claims in excess of $100 million are “unliquidated fraud claims” and are not counted toward eligibility.); In re Allen, 241 B.R. 710, 714 (Bankr. D. Mont. Dec. 3, 1999) (Peterson) (Ex-spouse’s $3,025,000 claim for assault and battery is “clearly unliquidated and contingent and thus cannot be factored in the eligibility criteria of 11 U.S.C. § 109(e).”); In re Solomon, 166 B.R. 832, 838 (Bankr. D. Md. Apr. 20, 1994) (Derby) (Lawsuits by former patients against doctor for improper sexual conduct are contingent and/or unliquidated notwithstanding that the plaintiffs have filed claims that aggregate more than $160,000 to which the debtor has not objected. “Section 109(e) requires the determination whether a claim is contingent or unliquidated to be made ‘on the date of the filing of the petition.’ . . . On the date of filing, the state tort claims had not been reduced to judgment, and debtor had not admitted an amount was due to the Creditors. . . . Debtor’s pronouncement that he would not object to the Creditors’ claims in this case, thus allowing them to stand deemed allowed for purposes of his plan, did not retroactively liquidate the claims as of commencement of the case.”), rev’d on other grounds, 67 F.3d 1128 (4th Cir. Oct. 23, 1995) (Widener, Wilkinson, Michael).

 

42  Loya v. Rapp (In re Loya), 123 B.R. 338 (B.A.P. 9th Cir. Feb. 11, 1991) (Ollason, Jones, Perris).

 

43  That a claim is barred by an applicable nonbankruptcy statute of limitations is a ground for disallowance of the claim under 11 U.S.C. § 502(b)(1).

 

44  See 11 U.S.C. § 109(e). See § 14.1  Dollar Amounts, § 14.2  Time for Determining Debt and § 16.2  Effect of Defenses and Counterclaims.

 

45  See § 16.2  Effect of Defenses and Counterclaims.

 

46  See § 14.2  Time for Determining Debt.

 

47  143 F.3d 623 (1st Cir. May 13, 1998) (Boudin, Bownes, Cyr).

 

48  Elliott v. Papatones (In re Papatones), 143 F.3d at 625.

 

49  Elliott v. Papatones (In re Papatones), 143 F.3d at 626.

 

50  See also In re Teague, 101 B.R. 57 (Bankr. W.D. Ark. Apr. 16, 1989) (Russell) (Notwithstanding that arbitration award was rendered after the petition, the amount awarded by the arbitration panel was appropriately used to liquidate a disputed claim for eligibility purposes.).

 

51  191 B.R. 179 (Bankr. D. Ariz. Oct. 5, 1995) (Case).

 

52  In re Johnson, 191 B.R. at 182 (emphasis added).

 

53  In re Johnson, 191 B.R. at 182.

 

54  See In re Leggett, 335 B.R. 227 (Bankr. N.D. Ga. Apr. 19, 2005) (Bonapfel) (Disputed debt is liquidated when amount was determined by prior court, but debtor’s liability on $1.9 million debt must be determined since eligibility hinges upon actual liability. Stay is lifted to permit liability litigation in district court.). Compare In re Brown, No. 6:05-bk-15294-ABB, 2006 WL 2374641, at *2 (Bankr. M.D. Fla. June 23, 2006) (unpublished) (Briskman) (Fraud and RICO claims for submitting fraudulent medical reports are unliquidated because there has been no determination of the debtor’s liability or of the amount of the debt in pending district court litigation. State Farm timely filed a proof of claim for $5,466,366.72 based on fraudulent invoices for unnecessary medical tests on accident victims. Civil action was pending in district court. “There has been no determination as to whether the Debtor is indebted to State Farm in any amount. The automatic stay has not been lifted in this case, nor has stay relief been requested, for the determination of the issues of liability and indebtedness in the District Court Litigation. State Farm’s debt, on the Petition Date, had not been made certain as to the amount due by either agreement of the parties or operation of law. The amount of State Farm’s debt is not easily ascertainable through the application of a fixed legal standard nor is it evident from a statutory notice.”).

 

55  See above in this section, and see § 14.2  Time for Determining Debt.

 

56  But see Guastella v. Hampton (In re Guastella), 341 B.R. 908 (B.A.P. 9th Cir. Apr. 11, 2006) (Lee, Marlar, Pappas) (Prepetition “tentative” judgment was liquidated debt because tentative decision by state court indicated that debtor was also personally liable, and dispute of that liability did not render debt unliquidated when amount was easily ascertainable from tentative judgment.).

 

57  277 B.R. 320 (Bankr. E.D. Tex. Mar. 12, 2002) (Sharp).

 

58  In re Horne, 277 B.R. at 323–26. See also In re Smith, 365 B.R. 770 (Bankr. S.D. Ohio Feb. 12, 2007) (Hoffman) (Applying “readily-determinable test,” debtor’s liability to Securities and Exchange Commission was determined prebankruptcy, but debt was unliquidated on filing date notwithstanding postpetition district court judgment for $2,294,197.72. Not bad faith to schedule debt amount as unknown.).

 

59  See § 14.2  Time for Determining Debt.

 

60  298 B.R. 95 (Bankr. E.D. Mich. Sept. 3, 2003) (Shefferly).

 

61  Compare Shrenger v. Evans (In re Evans), No. 06-35350, 2007 WL 3267999, at *1 (9th Cir. Nov. 6, 2007) (unpublished) (Gould, Paez, Strom) (Looking to conversion date to determine eligibility, state court litigation was not liquidated because “the amount of the debt was not readily determinable” at the time of conversion from Chapter 7 to Chapter 13.). See § 14.2  Time for Determining Debt for discussion of timing of eligibility determination.

 

62  See Nicholes v. Johnny Appleseed of Wash. (In re Nicholes), 184 B.R. 82, 89–91 (B.A.P. 9th Cir. June 23, 1995) (Russell, Meyers, Jones) (“[D]ebts arising from a contract are generally liquidated.”); In re Stern, 266 B.R. 322, 326 (Bankr. D. Md. Aug. 13, 2001) (Schneider) (“All of the unsecured debts scheduled by the debtor as ‘unliquidated’ were, in fact, liquidated. All except for the BARCODING.COM debt represented fixed amounts due and owing for services rendered or credit advanced pursuant to contract.”); In re Hendricks, 250 B.R. 415 (Bankr. M.D. Fla. Mar. 28, 2000) (Jennemann) (Attorneys’ fees and credit cards are liquidated because the amount due can be determined from the agreement of the parties.); In re Pennypacker, 115 B.R. 504 (Bankr. E.D. Pa. June 26, 1990) (Twardowski) (Contract debts for goods or services are liquidated notwithstanding that the debtor disputes the debts. “[W]e agree with the . . . majority of courts . . . that a debt is liquidated if the amount due can be determined with sufficient precision and that debts of a contractual nature, even though disputed, are liquidated within the meaning of § 109(e).”); In re Burgat, 68 B.R. 408 (Bankr. D. Colo. Dec. 30, 1986) (Matheson); Vaughn v. Central Bank of the S. (In re Vaughn), 36 B.R. 935 (N.D. Ala. Feb. 3, 1984) (Acker), aff’d, 741 F.2d 1383 (11th Cir. Aug. 15, 1984) (Table). See also Cedar v. Byrd, No. CIV-F-04-6155 AWI, 2006 WL 845751 (E.D. Cal. Mar. 30, 2006) (unpublished) (Ishii) ($800,000 proof of claim for breach of contract and emotional distress was preclusively determined to be unliquidated in related Chapter 13 case for debtor’s partner; confirmation of partner’s Chapter 13 plan precludes litigation of eligibility in debtor’s subsequent Chapter 13 case in which same eligibility challenge was raised.). See also § 16.2  Effect of Defenses and Counterclaims.

 

63  See, e.g., In re Prawer, No. 14-bk-523, 2014 WL 4748334, at *2 (Bankr. N.D. Ill. Sept. 23, 2014) (Schmetterer) (“A bank loan, even when the value of the underlying security is disputable, is a liquidated debt for purposes of § 109(e).”).

 

64  See In re Stebbins, No. 8-14-73357-las, 2015 WL 792095, at *6–*7 (Bankr. E.D.N.Y. Feb. 24, 2015) (Scarcella) (Guaranty is liquidated because “guaranty of payment” means debtor owes full amount of debt without regard to lender’s efforts to collect from principal or by foreclosure. “A debt is ‘liquidated’ where the claim can be readily determined by reference to an agreement or simple mathematical computation. . . . There is no question that Stebbins’ obligation to AHL is liquidated because the amount of the debt is readily ascertainable by both the Judgment itself and a mathematical computation which, at any point in time, allows the parties to arrive at the exact amount due from [the principal] and consequently, from Stebbins under the Guaranty. . . . The amount of the liability was readily ascertainable at any time based upon the written contracts . . . . [T]he existence of a dispute over the underlying amount of a debt does not automatically render the debt either contingent or unliquidated.”); In re Croney, No. 11-10836, 2011 WL 1656371 (Bankr. W.D. Wash. May 2, 2011) (Overstreet) (Under Washington law, guaranty without limitation or condition was absolute or unconditional and guarantor was liable for full amount on default of primary obligor; guaranty was noncontingent, liquidated claim, exceeding unsecured debt limits.); In re Saunders, 440 B.R. 336, 344 (Bankr. E.D. Pa. Sept. 7, 2006) (Fehling) (Debt on guaranty was liquidated because debt “can be clearly and easily determined with precision by referring either to the proof of claim filed by Sovereign . . . or to Debtors’ Schedules.”).

 

65  See In re Vaughn, 276 B.R. 323, 326 (Bankr. D.N.H. Apr. 5, 2002) (Vaughn) (Claims for fraud, RICO and breach of contract are liquidated when contract damages are easily ascertainable. “[S]ince the underlying matter involves a contract dispute, there is a readily determinable figure relating to the value of what was delivered to the plaintiffs in the pending litigation and what they should have received as a result of the bargain struck with the defendants. . . . [P]laintiffs agreed to purchase coins and those plaintiffs did not receive all of their coins and are now collectively alleging violations of RICO, fraud and conspiracy. The difference between the bargain and what was received on that bargain are the amounts listed in the Debtor’s schedules. . . . [T]his figure . . . exceeds the debt limitation in § 109(e).”). See also Cedar v. Byrd, No. CIV-F-04-6155 AWI, 2006 WL 845751 (E.D. Cal. Mar. 30, 2006) (unpublished) (Ishii) ($800,000 proof of claim for breach of contract and emotional distress was preclusively determined to be unliquidated in related Chapter 13 case for debtor’s partner; confirmation of partner’s Chapter 13 plan precludes litigation of eligibility in debtor’s subsequent Chapter 13 case in which same eligibility challenge was raised.).

 

66  See, e.g., In re Rottiers, 450 B.R. 208 (Bankr. D.N.M. Apr. 12, 2011) (Starzynski) (Contract claims for sale of defective equipment and tort claims for stealing business opportunities and clients were unliquidated. Trial would be required to determine if claims arose out of warranty or tort and then to determine amount of damages, such as lost profits.).

 

67  See Geary v. United States (In re Geary), Nos. 02-55433, C.D. No. CV-01-03736-SVW, 2003 WL 68080, at *2 (9th Cir. Jan. 8, 2003) (unpublished) (Reinhardt, O’Scannlain, Paez) (“When both parties stipulate that a debt exceeds the statutory limit, it is simply immaterial for purposes of § 109(e) that they disagree on the precise amount. Therefore, because it is ‘readily determinable’ that Geary’s tax debt at the time of filing was in excess of the statutory limit, we hold that her debt was liquidated within the meaning of § 109(e).”); In re Buis, 337 B.R. 243, 250 (Bankr. N.D. Fla. Jan. 11, 2006) (Killian) (Although not yet determined in amount, debt for attorney fees was liquidated, and debtors were ineligible based on prebankruptcy judgment under Florida’s Unfair and Deceptive Trade Practices Act. Attorney fees are liquidated since they are capable of determination under fixed legal standards. Subsequent to petition, district court awarded attorney’s fees of $238,282.89. At petition, fees were “not dependent on the future exercise of unrestricted discretion, and the debt for attorney’s fees is therefore liquidated.” It was “inconceivable that [district court] would find a reasonable amount to be less than the $32,748.36 difference between the amount of the other unsecured debt and the § 109(e) eligibility amount, especially given that the debtors’ own attorney’s fees in defending the action . . . total over $180,000.”); In re Visser, 232 B.R. 362, 364 (Bankr. N.D. Tex. Mar. 23, 1999) (McGuire) (Claims for misappropriation are liquidated because debtor admitted misappropriation of at least $240,000 and insurance company paid $225,000 on account of debtor’s misappropriation. “‘A debt is liquidated if the amount due and the date on which it was due are fixed or certain, or when they are ascertainable by reference to (1) an agreement or (2) [ ] a simple mathematical formula.’”); In re Troyer, 24 B.R. 727 (Bankr. N.D. Ohio Nov. 12, 1982) (White) (Debtor admitted to liability for conversion of assets that were worth at least $100,000. Debtor fails $100,000 unsecured debt limitation even though the precise amount of the debt is unknown.). Accord In re Johnson, 191 B.R. 179 (Bankr. D. Ariz. Oct. 5, 1995) (Case), and In re Johnson, 191 B.R. 184 (Bankr. D. Ariz. Jan. 12, 1996) (Case) (After the grant of relief from the stay, state court entered summary judgment in favor of a claim holder in the amount of “at least $175,000”; when combined with other unsecured claims, the debt limitation in § 109(e) is exceeded and the debtor is not eligible for Chapter 13 relief.); In re Harbaugh, 153 B.R. 54 (Bankr. D. Idaho Mar. 24, 1993) (Hagan) (Citing Loya v. Rapp (In re Loya), 123 B.R. 338 (B.A.P. 9th Cir. Feb. 11, 1991) (Ollason, Jones, Perris), tax claims are liquidated to the extent that the debtor does not contest the amount of actual tax liability. Where the determination of how much the debtor owes in taxes “cannot be made without an evidentiary hearing,” the amounts in contest are unliquidated and are not counted toward Chapter 13 eligibility. Counting the amounts that the debtors admit liability for and subtracting the amounts that could only be determined after an evidentiary hearing, the debtors have unsecured, noncontingent, liquidated debt of $101,243.26 and thus are not eligible for Chapter 13.); In re Ristic, 142 B.R. 856 (Bankr. E.D. Wis. July 6, 1992) (Shapiro) (Damages for burglary and arson are liquidated for eligibility purposes where insurance company paid $124,482 on account of the debtor’s arson.); In re Furey, 31 B.R. 495 (Bankr. E.D. Pa. July 14, 1983) (Goldhaber). But see In re Hustwaite, 136 B.R. 853 (Bankr. D. Or. Oct. 29, 1991) (Hess) (Damages for alleged sexual abuse by the debtor are unliquidated and excluded from the eligibility calculation, notwithstanding that the debtor admits that the victim incurred medical bills of $159,913. The debtor denied liability, and determining the extent of the debtor’s liability would require an extensive hearing.); In re Bush, 120 B.R. 403 (Bankr. E.D. Tex. Sept. 28, 1990) (Sharp) (Civil liability for embezzlement is unliquidated notwithstanding debtor’s plea of guilty to charge of embezzling in excess of $100,000. “Without a final judgment, [the debtor’s] plea of guilty to embezzlement will not suffice to liquidate the claim.”); In re Belt, 106 B.R. 553 (Bankr. N.D. Ind. Aug. 28, 1989) (Dees) (Tort claim for driving while intoxicated is unliquidated notwithstanding that debtor admitted in the schedules or in testimony that the victim’s claim exceeded $100,000. “While for whatever reason the debtor may believe that creditor’s claim is so valued, his valuation is not the result of an easy determination and precise computation or based on any mathematical certainty.”).

 

68  Default judgments may or may not have collateral estoppel effect, depending on state law and the extent to which the default judgment is considered “actually litigated.” But determining whether a debt is “liquidated” for eligibility purposes in a Chapter 13 case when there is a prepetition state court default judgment is not necessarily measured by the same principles as full faith and credit for a default judgment. A default judgment may be “readily ascertainable” as to amount notwithstanding that the judgment would not be preclusive. Put another way, the statutory notion of “liquidated” in § 109(e) of the Bankruptcy Code is broader and less demanding than the judge-made preclusion principle we call collateral estoppel.

 

69  See Slack v. Wilshire Ins. Co. (In re Slack), 187 F.3d 1070 (9th Cir. Sept. 9, 1999) (Reavley, Alarcon, McKeown) (Debtor is ineligible based on stipulated actual damages of $255,954 notwithstanding that debtor disputes liability.); Lindsey v. Cohen (In re Lindsey), No. CC-08-1287-PaDMk, 2009 WL 7751414 (B.A.P. 9th Cir. May 14, 2009) (unpublished) (Pappas, Dunn, Markell) (Prepetition district court judgment for unpaid federal income tax liability of $9,559,587 was liquidated and rendered debtors ineligible. Amount of debt is readily ascertainable based on the judgment.); United States v. Ahmed (In re Ahmed), 362 B.R. 445 (C.D. Cal. Nov. 13, 2006) (Fischer) (Debtor is ineligible due to $2.3 million liquidated tax debt. IRS’s prebankruptcy assessment established liability with same force as judgment.); In re Heleva, Nos. CIV. A. 00-3434, 98-20358, 2001 WL 1176394, at *2 (E.D. Pa. Oct. 2, 2001) (unpublished) (Waldman) (Confessed judgment based on debtor’s guaranty was liquidated because “[a] debt is liquidated if ‘the value of the claim is easily ascertainable.’ . . . Ford obtained a judgment in the amount of $947,466.98, making the value of the claim easily ascertainable.”); In re Miloszar, 238 B.R. 266 (D.N.J. July 27, 1999) (Irenas) ($1.25 million prepetition default judgment is liquidated because the judgment fixes the debt by operation of law. That the debtor disputes the claim does not overcome that the state court judgment is entitled to full faith and credit for eligibility purposes.); In re Wentz, No. 14-21415, 2014 WL 5791564 (Bankr. E.D. Ky. Nov. 6, 2014) (Wise) (State court judgment made it simple to calculate amount owed and to determine ineligibility under § 109(e).); JL Beverage Co. v. Metheny (In re Metheny), No. 14-30462DM, 2014 WL 5350810, at *2 (Bankr. N.D. Cal. Oct. 21, 2014) (Montali) (State court judgment was liquidated and noncontingent; “amount of the debt is ‘readily ascertainable’ from the judgment itself, even if debtor disputes that amount.”); In re Yuen, No. 13-30249-H3-13, 2013 WL 5567266, at *2 (Bankr. S.D. Tex. Oct. 9, 2013) (Paul) (Appeal of judgment does not make debt unliquidated or contingent for § 109(e) purposes. “[T]hat a judgment is on appeal does not make the debt contingent or unliquidated. A judgment on appeal represents a liability which is fixed and noncontingent and remains a final, enforceable judgment until it is reversed, if ever, on appeal.”); In re Frederick, No. 11-31435, 2011 WL 5908957 (Bankr. E.D. Mich. Nov. 14, 2011) (Opperman) (Self-serving affidavit challenging validity of SEC consent judgment did not render debt unliquidated. At filing, amount of consent judgment arising from violations of securities law was known.); In re De La Hoz, 451 B.R. 192 (Bankr. M.D. Fla. May 5, 2011) (Adams) (Final state court judgments were liquidated in amount. Under majority view, debtor’s designation of virtually all scheduled claims as contingent or unliquidated raised good-faith issue, permitting court to look beyond schedules to determine liquidated status.); In re Scott, No. 06-80176-G3-13, 2006 WL 3166841, at *2 (Bankr. S.D. Tex. Nov. 1, 2006) (unpublished) (Clark) (Prepetition judgment for $605,750 is liquidated debt notwithstanding that judgment is on appeal. “King’s claim was liquidated as of the petition date as the amount was readily determinable by the state court judgment.”); In re Monroe, 282 B.R. 219, 223 (Bankr. D. Ariz. Aug. 8, 2002) (Haines) (“The Monroes’ debt is readily ascertainable because a jury already heard the case, determined the award amount, and was affirmed on appeal by the Seventh Circuit.”); In re Wiencko, 275 B.R. 772, 778–79 (Bankr. W.D. Va. Apr. 3, 2002) (Krumm) (Debt is liquidated based on prebankruptcy provisional decree by state court notwithstanding that decree might be modified on post-trial motions. “It does not appear that the distinction between liquidated and unliquidated debts turn[s] on the finality of a judgment award, nor does it depend on the existence or the extent of a dispute. . . . Liquidation bears on the amount of liability not whether liability exists. . . . [L]itigation in the state court has defined the amount of the debt; therefore, the debt appears to be liquidated under both the ‘readily determinable’ and ‘readily ascertainable’ standards. . . . Only the slightest modicum of effort is required to determine the amount of debt; indeed, the court need only survey the money judgment which was figured down to the penny. It is also sufficient under § 109(e) that the debt is based on a non-final adjudication . . . . [M]erely because the amount of the debt was potentially changeable by operation of post-trial motions does not make the debt unliquidated. . . . If appellate review does not affect the liquidity of a claim, the potential for modification at the trial level should not affect liquidity either.”); In re Reader, 274 B.R. 893, 897–99 (Bankr. D. Colo. Mar. 26, 2002) (Brown) (Claim for misappropriation from probate estate is liquidated based on prebankruptcy report of Special Master showing that $270,527.43 was inappropriately transferred by the debtor. Although Special Master’s Report was “not conclusive as to the amount of this claim or its validity . . . it meets the good faith, facial test. . . . [T]he amount of the claim can be readily determined based on the extensive findings by the Special Master.”); In re Stern, 266 B.R. 322, 326 (Bankr. D. Md. Aug. 13, 2001) (Schneider) (“The BARCODING.COM claim sounded in tort but was liquidated by a prepetition state court judgment based upon fraud.”); In re Mitchell, 255 B.R. 345, 360 (Bankr. D. Mass. Nov. 15, 2000) (Feeney) (Debtors are ineligible based on $275,000 prepetition state court judgment notwithstanding that judgment is on appeal and would not be entitled to res judicata effect under California law.); In re Snell, 227 B.R. 127, 128–29 (Bankr. S.D. Ohio Apr. 3, 1998) (Sellers) (Prepetition state court judgment that was not appealed liquidates the claim against the debtor notwithstanding pending Rule 60 challenge to that judgment. “A debt is ‘liquidated’ if its amount is readily and precisely determinable. Conversely, a debt is ‘unliquidated’ if there is a substantial dispute regarding liability or amount. . . . The Cuervos have a final judgment . . . . That judgment was not appealed. Further, the judgment is specific to the amount awarded. Interest which has accrued on the judgment is readily and precisely determinable. Accordingly, the debtor’s obligation to the Cuervos is liquidated.”); In re Redburn, 193 B.R. 249 (Bankr. W.D. Mich. Feb. 29, 1996) (Gregg) (Claims that are the subject of nondischargeability litigation in a simultaneously pending Chapter 7 case are “liquidated” for § 109(e) purposes because a prepetition stipulated judgment against the debtor fixed the claims in amount.); In re Crescenzi, 53 B.R. 374 (Bankr. S.D.N.Y. Sept. 30, 1985) (Abram), aff’d, 69 B.R. 64 (S.D.N.Y. Dec. 4, 1986) (Haight). See also § 17.1  Disputed Debts.

 

70  In re Weiss, 251 B.R. 453, 466 (Bankr. E.D. Pa. Aug. 9, 2000) (Scholl) (IRS “should be foreclosed” from arguing that it has a liquidated claim for taxes determined to be dischargeable in the debtor’s prior Chapter 7 case. “Debtor’s liability for tax year 1986 and 1987 . . . was easily ascertainable and derived from a specific standard, it was also already determined in Weiss I that the Debtor’s liability for tax years 1986 and 1987 was dischargeable. . . . [T]he debt limitation question, in doubtful cases, should be resolved by our first making a determination regarding the validity of any questionable claim. Here, where we already held, in Weiss I, that the claims arising from tax years 1986 and 1987 claims were dischargeable, the IRS should be foreclosed from arguing with us that it has a ‘liquidated’ claim for these amounts.”).

 

71  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) (Wage claims of employees of debtor’s corporation are liquidated. “The wage debts claims would be subject to ready determination and precise computation, merely multiplying the hours worked by the appropriate rate, except for the fact that Nelson has herself steadfastly refused to supply the claimants with the necessary information. Where the debtor herself withholds the information necessary to perform the calculation, principles of estoppel should prevent a debtor from discounting the claims for eligibility purposes.”).

 

72  See § 14.3  Use of Statements and Schedules in Eligibility Calculations. See, e.g., In re Star, No. 07-13440DWS, 2008 WL 324125, at *4, *5 (Bankr. E.D. Pa. Feb. 1, 2008) (unpublished) (Sigmund) (Although court should look primarily to debtor’s schedules to determine eligibility, “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. . . . 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.”).

 

73  See In re Murphy, 374 B.R. 73, 77 (Bankr. W.D.N.Y. Aug. 29, 2007) (Ninfo) (Debt for prepetition legal services was liquidated “because the amount of the Debt was clearly set forth and itemized in detail on the Invoice, and it was in the same amount as set forth on the Debtor’s Schedule F.”).

 

74  See In re Montana, No. 06-42428 EDJ, 2008 WL 733813 (Bankr. N.D. Cal. Mar. 18, 2008) (Jellen) (Motion to dismiss for ineligibility is denied when debtors scheduled claim as unliquidated and disputed, and creditor did not contest that claim was unliquidated.).