In re Lasker

Frederick P. Corbit Bankruptcy Judge

MEMORANDUM DECISION

The court took under advisement the issue of whether debtors' unsecured debt makes them ineligible for Chapter 13 relief. "An individual qualifies for Chapter 13 relief only if his or her debts do not exceed a certain sum at the time of filing." In re Slack, 187 F.3d 1070, 1073 (9th Cir. 1999), as amended (Sept. 9, 1999). Pursuant to 11 U.S.C. § 109(e), a debtor is ineligible for Chapter 13 relief if the debtor's noncontingent, liquidated, unsecured debts exceed the statutory limit of $383,175.00. However, in In re Scovis, the Ninth Circuit "explicitly state[d] the rule for determining Chapter 13 eligibility under § 109(e)." Scovis v. Henrichsen (In re Scovis), 249 F.3d 975, 982 (9th Cir. 2001). The Scovis court explained that to determine the amount of debt owed by a debtor, the bankruptcy court must look to "debtor's originally filed schedules, checking only to see if the schedules were made in good faith." In re Scovis, 249 F.3d at 982 (emphasis added).

In this case, creditor NatureWorks Organics filed an unsecured claim (Claim No. 4) against debtors in the amount of $1,145,845.47. The amount of the claim would appear to disqualify debtors. However, according to In re Scovis, the total amount of debt this court should take into account, absent an objection to confirmation based on bad faith, is the amount listed on debtors' originally filed schedules. In re Scovis, 249 F.3d at 982. Accordingly, the court finds that debtors' original petition, filed in good faith, lists this claim at $210,350.00 and total unsecured debt of $256,698.72 and this total amount is within the debt limit. Importantly, the court notes that creditor NatureWorks, whose claim potentially pushes debtors over the debt limit, does not object to confirmation of debtors' Chapter 13 Plan (ECF No. 156). Given the lack of objection to confirmation by creditor, and the fact that this court found that debtors filed their schedules in good faith, the court finds debtors' are not disqualified by 11 U.S.C. § 109(e). The court notes that it is making no finding as to the ultimate value or legitimacy of creditor NatureWork's claim.

Based on the foregoing, contemporaneously with memorandum decision, the court will enter an order confirming the Debtors' Chapter 13 Plan.

So Ordered. Dated: September 16th, 2016

/s/ _________

Frederick P. Corbit

Bankruptcy Judge