Chapter 13 Jurisdictional Limit

The debt limits in the bankruptcy law continue to be a major restriction to filing chaper 13 bankruptcies. Section 109(e) provides that on the date of filing of the petition, the debtor must have less than $360,475 unsecured debt and less than $1,010,650 in secured debt. This becomes a major problem when the debtor has several properties or attempts to strip second mortgages. A debtor may have too large of a secured debt even though the debtor provides to surrender the properties in the plan. Also, a secured debt that is stripped becomes unsecured debt which can cause a failure of to meet the unsecured jurisdictional limit.

Judge Olson in In re Hinds,2010 Bankr. Lexis 3795, Case No 09-23764, (Bankr. S. D. FL July 20, 2010) rejected an attempt to avoid the chapter 13 jurisdictional limit. This was a Fort Lauderdale chapter 13 bankruptcy case. The debtor attempted to classify secured debt being surrendered as contingent and disputed. The court followed the majority view that merely classifying the debt as disputed does not mean the debt cannot be liquidated to a fixed amount by a definite procedure.

More recently, Judge Ray entered a similar decision in an opinion to be published. In re Strong, Case no 10-10142(November 17, 2010).

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