Court Rejects City of Chicago’s Bid to Subordinate Attorney’s Fees to General Unsecured Claims
In a published opinion, the Seventh Circuit affirmed the confirmation of two below-median Chapter 13 plans that provided for payment of the debtor’s attorney fees ahead of distributions to nonpriority unsecured creditors. In In re Falkner, Nos. 25-2878 & 25-2879 (7th Cir. June 10, 2026), the court rejected the City of Chicago’s sweeping argument that 11 U.S.C. § 1325(b)(1)(B) bars payment of attorneys’ fees during the commitment period until unsecured creditors first receive all of a debtor’s projected disposable income. Writing for a unanimous panel, Judge Scudder held that the Bankruptcy Code as a whole—and decades of settled practice—foreclose the City’s reading. NCBRC and NACBA, joined by two standing Chapter 13 trustees, had filed an amicus brief urging affirmance.
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