Bobby Eugene Goddard v. Michael Brandon Burnett

Summary

The Fourth Circuit affirmed the district court’s judgment upholding rejection of a Chapter 13 debtor’s proposed plan. The court held that technical compliance with the Bankruptcy Code’s disposable-income requirement under 11 U.S.C. § 1325(b) does not preclude a separate good-faith inquiry under § 1325(a)(3). It concluded that the bankruptcy court did not clearly err in finding bad faith where the debtor sought to retain three luxury vehicles, pay off their secured loans, and discharge more than $78,000 in unsecured debt.

Holdings

1. A debtor's strict compliance with the means-test and disposable-income requirements of 11 U.S.C. § 1325(b) does not preclude the bankruptcy court from independently determining whether the Chapter 13 plan was proposed in good faith under § 1325(a)(3).
2. The bankruptcy court did not clearly err in finding that Goddard's plan was not proposed in good faith because it would enable him to retain three luxury vehicles, obtain unencumbered ownership of them, and discharge more than $78,000 in unsecured debt while paying only a small dividend to unsecured creditors.

Questions Presented

1. Whether technical compliance with the disposable-income and means-test requirements of 11 U.S.C. § 1325(b) precludes a bankruptcy court from determining under § 1325(a)(3) that a Chapter 13 plan was not proposed in good faith.
2. Whether the bankruptcy court clearly erred in finding that Goddard's plan was not proposed in good faith under the circumstances of his luxury-vehicle purchases, proposed debt treatment, and minimal payment to unsecured creditors.

Disposition

affirmed