No. In a recent Illinois case, the court held that the Chapter 13 debt limits were determined by schedules filed in good faith, not by amount of thecreditor’s proof of claims.
If your secured debts (mortgages and liens) add up to more that $1,184,200, or your unsecured debts add up to more than $394,725, Chapter 13 may not be available to you; you may have to file a Chapter 11 proceeding.
While the Seventh Circuit Court of Appeals had never addressed the proper method for deciding eligibility for Chapter 13, the majority rule is that eligibility depends entirely on the amounts shown in the debtor’s schedules; other evidence is considered only to ensure that the schedules were prepared in good faith.
In this recent case, the debtor’s unsecured debt satisfied the Chapter 13 debt limit even though there was a conflict between the debtor’s scheduling of a second mortgage debt (that counted as unsecured debt due to a lack of equity to support the second mortgage lien) at $199,050 while the holder of the second mortgage filed a proof of claim for $441,522—to which the debtors objected.
The court reasoned that there was no contention that the debtors filed their schedules in “bad faith.” Because eligibility is determined as of the petition date, post-petition events — including allowed claims, filed claims, or treatment of claims in a confirmed Chapter 13 plan—were irrelevant, rendering the creditor’s proof of claim “out of bounds.”
In re Allegretti, 582 B.R. 735 (Bankr. N.D. Ill., Jan. 22, 2018)