This matter is before the Court upon the Motion to Convert or Dismiss filed in this chapter 13 proceeding on April 25, 1997 by the Natural Resources and Environmental Protection Cabinet of the Commonwealth of Kentucky (Cabinet or Secretary). The Cabinet also filed an Objection to Confirmation and alleges bad faith on the part of the debtors in filing the proceeding and that the unsecured indebtedness of the debtors exceeds the statutory limit of $250,000 set forth in 11 U.S.C. '109(e). The debtors respond by contending that the obligations to the Cabinet, except for one that had been reduced to judgment in the Franklin Circuit Court prior to the filing of the petition, are not liquidated and thus do not come within the parameters of 11 U.S.C. '109(e).

It is undisputed that, as of the time of filing of the petition, one of the civil penalties assessed by the Secretary of the Cabinet had been reduced to judgment in the amount of $83,333 plus interest. This amount was included in the debtors= schedules as an unsecured claim and the total of unsecured claims in the debtors= schedules was $233,405.21. Thus, any further valid non-contingent, liquidated unsecured claims which exceed approximately $16,600 would, if existing upon the date of filing of the petition, render the debtors ineligible for relief under Chapter 13.

The penalties assessed by the Secretary of the Cabinet pursuant to Kentucky law will, if they constitute liquidated debts, render these debtors ineligible since those amounts far exceed the other unsecured indebtedness of the debtors herein. The fact that the debts in question are penalties assessed by a state agency under state law does not render the amounts assessed Aunliquidated@. Matter of Knight, 55 F.3d. 231 (7th Cir. 1995). Further, the fact that the debtors dispute their liability for the amounts does not cause the debts to be regarded as unliquidated. In re Nicholes, 184 B.R. 82 (9th Cir. BAP 1995). Debts are liquidated so long as they are capable of being ascertained by reference to an agreement or simple computation. In re Wenberg, 94 B.R. 631 (9th Cir. BAP 1988). The record makes clear in this case that the sums assessed by the Secretary against the debtors as of the date of filing of the petition far exceed the $250,000 limit for unsecured debt and meet the criteria set out above as being non-contingent and liquidated.