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#1959

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF KANSAS







In Re:

RICHARD LEE KAUFMAN, JUDY LOUISE KAUFMAN,

DEBTOR(S)

NO. 93-41503-13

CHAPTER 13

ORDER ON MOTION TO DISMISS

This matter is before the Court on creditor Humboldt National Bank's motion to dismiss on the ground the debtors have debts exceeding the chapter 13 eligibility limits set by 11 U.S.C.A. §109(e). Humbold National Bank (HNB) appears by counsel Martin R. Ufford. The debtors appear by counsel Jan Hamilton. The Court has reviewed the relevant pleadings and is now ready to rule.

Section 109(e) of the Bankruptcy Code provides, among other things, that a married couple may be joint debtors under chapter 13 only if on the date of the filing they owe "noncontingent, liquidated, unsecured debts that aggregate less than $100,000." In their schedules, the debtors listed their liability to HNB as $300,000 but designated it as "unliquidated and disputed." Citing a number of cases, HNB contends the debt is "liquidated" because it is capable of being calculated mathematically, and the fact the debtors may be able to raise potentially meritorious affirmative defenses or counterclaims does not prevent the debt from counting or reduce its amount for purposes of §109(e). Citing contrary cases, the debtors contend their defenses or counterclaims do prevent the debt from counting. After reviewing the cases, the Court concludes it must agree with HNB's position concerning the proper construction of §109(e). Examples of cases reaching the same conclusion are In re McGovern, 122 B.R. 712 (Bankr.N.D. Ind. 1989) and In re Lamar, 111 B.R. 327 (D.Nev. 1990). It is true that by using the word "debt" rather than "claim" in §109(e) and defining "debt" in §101(12) to mean "liability on a claim," Congress left room for a reasonable argument that a dispute concerning the debtors' actual liability on an alleged debt might mean the debt should not be counted under §109(e). However, the Court believes the better view is that Congress could easily have included the word "undisputed" in specifying what "debts" should be counted in determining eligibility for chapter 13, as it did in defining "claim" under §101(5), but chose not to.

The Court's conclusion that the debtors are not eligible for chapter 13 does not mean that this case must be dismissed. Instead, the Court will give them until December 10, 1993, to convert the case to another chapter under the Bankruptcy Code, or the case will be dismissed.

IT IS SO ORDERED.

Dated at Topeka, Kansas, this _____ day of November, 1993.











__________________________________

JAMES A. PUSATERI

CHIEF BANKRUPTCY JUDGE

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