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
Eleventh 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 PlansCan 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 ModificationsNinth Circuit Clarifies Disposable Income Exclusions for Chapter 13 Debtors Concerning Voluntary Contributions to Retirement Plans
Facts
Jorden Marie Saldana, a surgical technician earning approximately $101,776 annually, filed for Chapter 13 bankruptcy to reorganize her finances and address over $64,000 in unpaid taxes and unsecured debts. In calculating her disposable income, Saldana excluded $747 per month in voluntary contributions to her employer-managed retirement plan.
The Chapter 13 trustee objected, arguing that voluntary retirement contributions constitute disposable income under the Bankruptcy Code and must be applied to repay creditors. The bankruptcy court agreed, sustaining the trustee’s objection and requiring Saldana to adjust her Chapter 13 plan. Saldana appealed to the district court, which affirmed the bankruptcy court’s decision. Saldana then appealed to the Ninth Circuit.
Analysis
The Ninth Circuit reversed the lower courts, holding that voluntary contributions to employer-managed retirement plans are excluded from disposable income under Chapter 13. The court relied on the “hanging paragraph” in 11 U.S.C. § 541(b)(7), which explicitly states that such contributions “shall not constitute disposable income as defined in section 1325(b)(2).”
The Ninth Circuit emphasized that the statutory language is unambiguous, allowing Chapter 13 debtors to exclude any amount of voluntary contributions to qualified retirement plans from their disposable income calculations. This interpretation aligns with Congress’s intent in the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005, which sought to protect retirement savings while encouraging Chapter 13 reorganizations.
The court rejected alternative interpretations that would limit the exclusion to pre-petition contributions or cap it based on historical contribution levels. It also dismissed concerns about debtor abuse, noting that Chapter 13’s good faith requirements and other safeguards adequately address potential misuse of the exclusion.
Conclusion
The Ninth Circuit’s decision in In re Saldana reinforces the broad protections for retirement contributions in Chapter 13 bankruptcy cases. By excluding voluntary contributions from disposable income, the ruling encourages debtors to maintain long-term financial stability while reorganizing their debts.
NCBRC and NACBA filed an amici brief in support of the debtor
Debtor’s Right to Propose Chapter 13 Plans Affirmed by Fourth Circuit: Flexibility Over Local Form Defaults
Holding
The Fourth Circuit Court of Appeals reversed the district court’s decision, holding that Sheila Ann Trantham had standing to appeal the bankruptcy court’s ruling and that the bankruptcy court erred in denying confirmation of her Chapter 13 plan based on a local form’s vesting provision. The court affirmed that a debtor has the right to propose a Chapter 13 plan with provisions that may deviate from local form defaults, provided they comply with the Bankruptcy Code.
Facts
Sheila Ann Trantham filed for Chapter 13 bankruptcy and proposed a plan that included a provision for the property of the estate to vest in her upon plan confirmation. The bankruptcy court, however, required adherence to the local form plan, which mandated that property vest only upon the entry of the final decree. Trantham’s plan was rejected by both the bankruptcy court and the district court, leading to her appeal.
Analysis
The Fourth Circuit first addressed the issue of standing, analyzing whether Trantham had the constitutional standing to appeal. The court found that Trantham suffered an injury in fact because the bankruptcy court’s requirement to adhere to the local form plan increased her procedural burdens and restricted her control over her property. Specifically, under the local form, her property remained encumbered by creditor claims and required court approval for certain actions, such as selling property, which resulted in tangible harms including the potential for increased costs and procedural delays. The court further held that Trantham was not required to meet the “person aggrieved” standard of prudential standing, as she was the party directly involved and affected by the bankruptcy court’s decision.
The court then focused on the debtor’s right to propose a Chapter 13 plan. The Fourth Circuit emphasized that the Bankruptcy Code grants debtors significant flexibility in designing their repayment plans, including the timing of when property vests in the debtor. The court criticized the bankruptcy court’s mandatory application of the local form’s vesting provision, arguing that it improperly constrained the debtor’s substantive right under the Bankruptcy Code to propose a plan. The court underscored that while local forms can promote efficiency, they must not abridge, modify, or enlarge the substantive rights provided by the Bankruptcy Code. The court ruled that Trantham’s plan, which called for vesting at confirmation, was permissible under the Code and should not have been rejected solely because it deviated from the local form’s default provision. The court concluded that the bankruptcy court’s decision to require adherence to the local form’s vesting schedule without considering the specifics of Trantham’s plan violated her rights under the Bankruptcy Code.
Conclusion
The Fourth Circuit reversed the district court’s ruling and remanded the case for further proceedings, instructing that Trantham’s plan should be assessed based on its compliance with the Bankruptcy Code, rather than on adherence to the local form’s default provisions.
NACBA and NCBRC submitted an amicus brief authored by Richard Cook, who also participated in the oral arguments. Additionally, NCBRC conducted a moot court session to prepare Appellant and Amici’s counsel for the oral arguments.
Trantham v. Tate 4th Cir Opinion rev dist court
9th Circuit to Address Whether a Debtor May Deduct Voluntary Retirement Deductions to Determine Disposable Income
The Ninth Circuit Court of Appeals has agreed to hear an appeal whether the bankruptcy court erred in ruling that a Chapter 13 debtor, in calculating projected disposable income, is not permitted to deduct the amount of voluntary retirement plan contributions even where the debtor was making the contributions prepetition. The debtor’s appeal from adverse decisions below.