In a published opinion, the Fourth Circuit affirmed the denial of confirmation of an above-median Chapter 13 debtor’s plan that proposed to pay off three recently purchased vehicles while paying unsecured creditors less than eight cents on the dollar. In Goddard v. Burnett, No. 25-1303 (4th Cir. Apr. 28, 2026), the court held that technical compliance with the disposable-income test under Section 1325(b) does not insulate a plan from the separate good-faith requirement of Section 1325(a)(3). This ruling creates a circuit split on this issue with the case of Drummond v. Welsh (In re Welsh), 711 F.3d 1120 (9th Cir. 2013).
[Read more…] about Fourth Circuit Holds Good-Faith Review May Consider Whether Secured Property Is Necessary for Above-Median Chapter 13 DebtorsFourth Circuit Rejects Equitable Mootness in Chapter 13 Plan Confirmation Appeal
In a published opinion, the Fourth Circuit held that a district court erred in dismissing a Chapter 13 debtor’s appeal as equitably moot merely because a later plan had been confirmed and payments had begun. In Cook v. Chapter 13 Trustee, No. 25-1048 (4th Cir. Apr. 13, 2026), the court emphasized that equitable mootness is a narrow, pragmatic doctrine reserved for cases where effective relief is no longer practical or would be inequitable. The court concluded that the doctrine did not apply in a straightforward individual Chapter 13 case involving limited creditors, limited assets, and only prospective relief.
[Read more…] about Fourth Circuit Rejects Equitable Mootness in Chapter 13 Plan Confirmation AppealNCBRC Files Amicus in Seventh Circuit to Protect Payment of Debtor’s Counsel in Chapter 13
The National Consumer Bankruptcy Rights Center (NCBRC), joined by the National Association of Consumer Bankruptcy Attorneys (NACBA) and two standing Chapter 13 trustees (Tracy L. Updike, Chapter 13 Trustee for the Northern District of Indiana and Thomas H. Hooper, Chapter 13 Trustee for the Northern District of Illinois), has filed an amicus brief in the Seventh Circuit in In re City of Chicago, (Falkner & Alayah), Nos. 25-2878 & 25-2879. The brief urges affirmance of confirmation orders that permitted payment of debtor’s counsel before distributions to unsecured creditors. At issue is a sweeping and unprecedented argument by the City of Chicago that, if accepted, would fundamentally alter Chapter 13 practice across the country — and effectively make Chapter 13 relief unavailable to many consumer debtors. The brief was drafted by NCBRC Board Member Thomas Moers Mayer of Herbert Smith Freehills Kramer (US) LLP.
Read more: NCBRC Files Amicus in Seventh Circuit to Protect Payment of Debtor’s Counsel in Chapter 13The Issue
The City argues that in below-median Chapter 13 cases, administrative expenses — including court-approved debtor’s attorney fees — cannot be paid until unsecured creditors first receive three years of “disposable income.” In other words, Chicago contends that debtor’s counsel must wait behind general unsecured creditors for payment. The Bankruptcy Court rejected that argument and confirmed the plans. The City appealed.
Why This Matters
This is not a narrow dispute about plan drafting. The City’s theory would:
- Subordinate administrative expenses to general unsecured claims — something Congress has never done in modern bankruptcy law.
- Conflict directly with §§ 1322(a)(2) and 1326(b), which require payment of administrative expenses and trustee fees.
- Make it economically impossible for many debtors to obtain Chapter 13 counsel unless they could pay all fees up front.
- Threaten the viability of Chapter 13 practice in the Seventh Circuit.
As the amicus brief explains, more than half of Chapter 13 debtors are below-median income. If counsel cannot be paid through the plan in the ordinary course, Chapter 13 relief becomes unattainable for tens of thousands of families seeking to save homes and vehicles.
The Absurd Consequences of Chicago’s Position
Perhaps most strikingly, the City’s theory would also:
- Prevent payment of secured prepetition domestic support obligations during the commitment period.
- Elevate municipal parking fines above support obligations and administrative expenses.
- Allow charitable contributions while prohibiting payment of court-approved attorney fees.
Such results are incompatible with the structure of Chapter 13 and Congress’s clear priority scheme.
Why NCBRC Filed An Amicus Brief
NCBRC regularly files amicus briefs in cases that threaten the structural integrity of consumer bankruptcy practice. This appeal presents exactly that risk.
If administrative expenses cannot be paid in the ordinary course:
- Debtors will be unable to obtain counsel.
- Chapter 13 filings will decline.
- Home-saving reorganizations will become rare.
That is not what Congress enacted, and it is not how Chapter 13 has functioned for decades.
What’s Next
The case is now before the Seventh Circuit. A decision will have significant implications for Chapter 13 practice not only in Illinois, Indiana, and Wisconsin, but potentially nationwide.
NCBRC will continue to monitor developments and provide updates.
Briefs
Amicus Brief of NCBRC, NACBA, Trustee Updike & Trustee Hooper
Appellant City of Chicago’s Brief
Appellees/Debtors Brief written by Michael S. Miller of The Semrad Law Firm LLC
NCBRC Urges Supreme Court to Decide Bad Faith Narrowly in Keathley—Without Expanding Disclosure Duties
The National Consumer Bankruptcy Rights Center (NCBRC), joined by the National Consumer Law Center (NCLC) and the National Association of Consumer Bankruptcy Attorneys (NACBA), has filed an amicus curiae brief in Keathley v. Buddy Ayers Construction, Inc., a case now before the United States Supreme Court that could significantly reshape how judicial estoppel is applied in consumer bankruptcy cases. The Court is being asked to decide whether debtors may be barred from pursuing otherwise valid claims based on rigid, punitive presumptions of bad faith—rather than an equitable, fact-specific inquiry—when a claim was not disclosed during a Chapter 13 case.
For debtor’s counsel, the stakes are high: the Court’s decision may determine whether honest mistakes or unsettled disclosure rules can be transformed into case-ending sanctions that benefit civil defendants at the expense of both debtors and creditors.
[Read more…] about NCBRC Urges Supreme Court to Decide Bad Faith Narrowly in Keathley—Without Expanding Disclosure DutiesEleventh Circuit Upholds the Bankruptcy Court’s Discretion to Deny Trustee’s Plan Modification Based on Postpetition PI Proceeds
In Conte v. Hill, No. 24-10264, the U.S. Court of Appeals for the Eleventh Circuit affirmed a bankruptcy court’s order denying a Chapter 13 trustee’s motion to modify two confirmed plans to require turnover of post-confirmation personal injury settlement proceeds. The injuries in both cases occurred post-petition. The Eleventh Circuit affirmed that plan modification remains a discretionary determination for the bankruptcy court.
[Read more…] about Eleventh Circuit Upholds the Bankruptcy Court’s Discretion to Deny Trustee’s Plan Modification Based on Postpetition PI ProceedsFourth Circuit Appeal in Goddard v. Burnett Examines the Role of Good Faith in Paying Secured Debts in Chapter 13 Plans
On July 16, 2025, the National Consumer Bankruptcy Rights Center (NCBRC) and the National Association of Consumer Bankruptcy Attorneys (NACBA) filed a joint amicus brief in the U.S. Court of Appeals for the Fourth Circuit in support of the debtor-appellant in Goddard v. Burnett, Case No. 25-1303. The case presents a critical question about the interaction between the statutory “means test” and the judicially interpreted “good faith” standard in Chapter 13 bankruptcy cases.
[Read more…] about Fourth Circuit Appeal in Goddard v. Burnett Examines the Role of Good Faith in Paying Secured Debts in Chapter 13 PlansNinth Circuit Confirms Right to Cramdown Short-Term Mortgages in Major Win for Chapter 13 Debtors
In a resounding victory for Chapter 13 consumer debtors, the U.S. Court of Appeals for the Ninth Circuit affirmed that a debtor may bifurcate and “cram down” a junior mortgage claim—even when the loan is secured solely by the debtor’s principal residence—so long as the loan matures during the plan term. The opinion in Mission Hen, LLC v. Lee reinforces the flexibility and protective power of Chapter 13 and clarifies an important exception to the Bankruptcy Code’s anti-modification provision.
[Read more…] about Ninth Circuit Confirms Right to Cramdown Short-Term Mortgages in Major Win for Chapter 13 DebtorsDoes Equitable Mootness Prevent Debtors from Appealing Confirmed Chapter 13 Plans?
The Fourth Circuit is set to decide a significant issue in Cook v. Gorman, a case that could determine whether the doctrine of equitable mootness prevents debtors from appealing the confirmation of a Chapter 13 repayment plan. At the heart of the case is whether equitable mootness—commonly used to dismiss appeals in complex Chapter 11 reorganizations—should apply to a straightforward Chapter 13 consumer bankruptcy case.
[Read more…] about Does Equitable Mootness Prevent Debtors from Appealing Confirmed Chapter 13 Plans?Can Debtors Prioritize Retirement Over Creditors? Trustee Seeks Supreme Court Review in In re Saldana
In a move that could have sweeping implications for Chapter 13 bankruptcy cases nationwide, Martha G. Bronitsky, the Chapter 13 Trustee, has filed a petition for certiorari with the Supreme Court in In re Saldana. The case centers on whether voluntary contributions to retirement accounts should be excluded from a debtor’s disposable income calculation. The Ninth Circuit’s decision in In re Saldana sided with the debtor, holding that voluntary retirement contributions are shielded from creditors, a ruling that some argue disrupts the balance between debtor protections and creditor rights under the Bankruptcy Code. Now, the Supreme Court is being asked to step in, potentially impacting thousands of Chapter 13 cases filed each year.
[Read more…] about Can Debtors Prioritize Retirement Over Creditors? Trustee Seeks Supreme Court Review in In re SaldanaEleventh Circuit to Decide Key Issues in Post-Confirmation Plan Modifications
Facts
In In re Conte, the Eleventh Circuit is reviewing a decision from the District Court for the Southern District of Alabama that upheld a bankruptcy court’s denial of a Chapter 13 trustee’s motion to modify confirmed plans based on debtors’ post-confirmation personal injury settlements.
[Read more…] about Eleventh Circuit to Decide Key Issues in Post-Confirmation Plan Modifications