Bobby Goddard v. Michael Burnett
Split Score
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Case Summary
Disposition
Affirmed
The Fourth Circuit held that a Chapter 13 debtor’s compliance with the means-test provisions of §1325(b) does not shield his plan from the separate requirement that it be proposed in good faith under §1325(a)(3). Affirming the district and bankruptcy courts, the panel ruled that Bobby Goddard’s plan—allowing him to keep three luxury vehicles while paying unsecured creditors less than 8%—was properly rejected for lack of good faith.
Circuit Split Identified
Legal Issue
Whether a Chapter 13 debtor’s technical compliance with 11 U.S.C. §1325(b)’s disposable-income (means-test) provision prevents a bankruptcy court from denying confirmation of the plan under §1325(a)(3)’s good-faith requirement when the debtor seeks to retain luxury collateral.
Circuit Positions
Compliance with §1325(b) forecloses inquiry into payments on secured collateral when assessing good faith under §1325(a)(3); confirmation cannot be denied on that ground.
Compliance with §1325(b) does not immunize a plan from §1325(a)(3); courts may deny confirmation if retention of luxury collateral shows lack of good faith.
Conflict Summary
The Ninth Circuit (Welsh) interprets BAPCPA to strip bankruptcy courts of discretion to scrutinize secured-debt payments once the means test is satisfied, holding that such payments cannot form the basis of a good-faith objection. The Fourth Circuit in this opinion holds the opposite: even if the plan satisfies §1325(b), courts must still examine the debtor’s motives and may deny confirmation if retention of luxury items shows an abuse of the spirit or purpose of Chapter 13.