USCA4 Appeal: 25-1303 Doc: 42 Filed: 04/28/2026 Pg: 1 of 18
PUBLISHED
UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT
No. 25-1303
BOBBY EUGENE GODDARD,
Debtor - Appellant,
v.
MICHAEL BRANDON BURNETT,
Trustee - Appellee.
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NATIONAL ASSOCIATION OF CONSUMER BANKRUPTCY ATTORNEYS; NATIONAL CONSUMER BANKRUPTCY RIGHTS CENTER,
Amici Supporting Appellant.
Appeal from the United States District Court for the Eastern District of North Carolina, at Raleigh. James C. Dever III, District Judge. (5:24-cv-00368-D)
Argued: December 10, 2025 Decided: April 28, 2026
Before NIEMEYER, THACKER, and BERNER, Circuit Judges.
Affirmed by published opinion. Judge Niemeyer wrote the opinion, in which Judge Thacker and Judge Berner joined. USCA4 Appeal: 25-1303 Doc: 42 Filed: 04/28/2026 Pg: 2 of 18
ARGUED: Travis P. Sasser, SASSER LAW FIRM, Cary, North Carolina, for Appellant. Michael Brandon Burnett, OFFICE OF THE CHAPTER 13 TRUSTEE, Raleigh, North Carolina, for Appellee. Richard Preston Cook, RICHARD P. COOK, PLLC, Wilmington, North Carolina, for Amici Curiae. ON BRIEF: Benjamin E. Lovell, OFFICE OF THE CHAPTER 13 TRUSTEE, Raleigh, North Carolina, for Appellee.
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NIEMEYER, Circuit Judge:
Bobby Goddard, Jr., a debtor in a Chapter 13 bankruptcy proceeding, proposed a
plan by which the Trustee would pay off loans on his three luxury vehicles but would pay
unsecured creditors less than 8 cents on the dollar, thus leaving Goddard at the end of the
proceeding with ownership of the vehicles and a discharge of most of his unsecured debt.
Although his plan’s treatment of the unsecured creditors complied technically with
§ 1325(b) of the Bankruptcy Code, the bankruptcy court rejected the plan on the ground
that it was not proposed “in good faith,” as required by § 1325(a)(3). See 11 U.S.C.
§ 1325(a)(3), (b). The court concluded that Goddard’s plan was designed to enable him to
retain luxuries at the expense of unsecured creditors, such that, in proposing it, Goddard
was not making an honest effort to repay his creditors.
Contending that his compliance with § 1325(b) required the bankruptcy court to
accept his plan, Goddard appealed to the district court. The district court, however, ruled
that the bankruptcy court had “properly construed 11 U.S.C. § 1325 and permissibly
rejected Goddard’s Chapter 13 Plan . . . in which Goddard sought to retain three luxury
vehicles at the expense of his creditors.”
Because we conclude that compliance with § 1325(b) did not immunize Goddard’s
plan from the good-faith requirement of § 1325(a) and that the bankruptcy court
permissibly reviewed Goddard’s plan for good-faith compliance with the Bankruptcy Code
and its purposes, we affirm the judgment of the district court, which affirmed the order of
the bankruptcy court rejecting Goddard’s plan.
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I
In September 2023, Bobby Goddard, Jr., a resident of Garner, North Carolina, filed
a Chapter 13 petition in bankruptcy, and Michael B. Burnett was appointed to serve as
Trustee. Goddard’s wife, who lived with him, did not file for bankruptcy.
At the time Goddard filed his petition, he was earning $7,167 per month from his
employment with the Department of Labor, where he was working as a Veteran Employee
Specialist. He was also receiving $2,748 per month as retirement income from the U.S.
Army and $2,353 in disability benefits from the Department of Veterans Affairs. His gross
income was thus $12,268 per month, and his take home income was $9,589. In addition,
Goddard’s wife earned $4,189 per month, taking home $2,285. Goddard’s income placed
him in the above-the-median income status for purposes of Chapter 13.
When he filed his petition, Goddard owned three luxury vehicles, which he had
purchased during the 32 months prior to filing his petition — a 2015 Chevrolet Corvette,
on which he owed $33,865 and was paying $839 per month; a 2021 GMC Sierra 1500, on
which he owed $44,811 and was paying $1,080 per month; and a 2022 Genesis G70, on
which he owed $58,930 and was paying $1,141 per month. Thus, his monthly payments
on the three vehicles totaled roughly $3,060.
In addition, Goddard also had about $84,700 in general unsecured debt, more than
$35,000 of which was attributable to four personal loans he took out between December
2021 and November 2022 — that is, around the time he purchased the three luxury
vehicles. Indeed, Goddard took out one of the loans the day before he purchased the 2022
Genesis G70.
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Because Goddard was an “above-median income debtor” for purposes of Chapter
13 of the Bankruptcy Code, he qualified for the use of a statutory formula known as the
“means test” to calculate his “disposable income,” all of which, should an objection be
made, had to be used to pay unsecured creditors under his Chapter 13 plan. See 11 U.S.C.
§ 1325(b)(1)(B). To calculate disposable income under this means test, Chapter 13 debtors
are required to complete Official Form 122C-2, which directs debtors to add up certain
allowable monthly expenses and then subtract that total from their current monthly income.
Consistent with the Code, the form calls for debtors to use national and local standards to
calculate the amounts that can be deducted from income for certain types of expenses, such
as food, clothing, and utilities. It also specifies that amounts owed for secured debt can be
deducted in full from the debtor’s income. See id. §§ 1325(b)(2)–(3), 707(b)(2)(A)(iii).
Thus, when calculating his disposable income, Goddard was permitted to deduct
from his monthly income his average monthly mortgage payment of $2,543, as well as the
average monthly payments on his three car loans, which he recorded on Official Form
122C-2 as $625 per month for the 2015 Corvette, $756 per month for the 2021 GMC truck,
and $1,140 per month for the 2022 Genesis, for a total of $2,521 per month in car loan
payments. When these amounts for the payment of secured debt, together with the other
allowable expenses, were deducted from his monthly income, the result was a negative
$234. Thus, Goddard reported that he had no disposable income to pay unsecured
creditors.
After making these calculations, Goddard proposed three Chapter 13 plans for
confirmation, amending the original plan twice before the bankruptcy court rejected his
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third plan. In his fourth plan, which is at issue in this appeal, he proposed a 60-month
payment period, during which he would pay directly the amount owed on his mortgage and
pay the Trustee $3,070 per month for two months and then $3,700 per month thereafter for
other debts. From those sums, the Trustee would pay $2,958 per month to the creditors on
the three vehicle loans and then several miscellaneous priority expenses, including a small
pre-petition mortgage arrearage, a claim secured by a lawnmower, a priority unsecured
claim owed to the IRS, Goddard’s base attorneys fees and reimbursement, and Trustee fees.
The Trustee would then pay what was left to the general unsecured creditors, whose
allowed claims totaled $84,700. The Trustee calculated that over the period of the five-
year plan, he would only be able to pay the unsecured creditors roughly $6,500, or 7.7%
of their claims.
In short, under Goddard’s proposed plan, after 60 months, the secured loans on all
Goddard’s vehicles would be paid off, giving Goddard unencumbered ownership of the
three vehicles, but only 7.7% of the unsecured debt would be paid. The remainder of his
unsecured debt — a total of more than $78,000 — would be discharged.
The Trustee objected to Goddard’s proposed Chapter 13 plan, arguing that because
it provided for such a small disbursement to his general unsecured creditors while
permitting him to retain three recently purchased luxury vehicles, the plan had not “been
proposed in good faith,” within the meaning of § 1325(a)(3), and therefore that the
bankruptcy court should deny confirmation. Goddard argued in response, however — as
summarized by the bankruptcy court — that “the good faith analysis of § 1325(a)(3) should
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not be invoked to challenge a debtor’s retention of assets for which expenses are a
permitted deduction on the Chapter 13 means test” under § 1325(b).
Following a hearing, the bankruptcy court agreed with the Trustee. In its
memorandum opinion dated June 14, 2024, the court explained that the Trustee was not
challenging Goddard’s “entitlement under § 1325(b) to claim the deductions related to the
[v]ehicles” on the means test or his “calculation that he ha[d] no monthly disposable
income” for payment of unsecured creditors, as those calculations complied with “the
‘disposable income test’ of § 1325(b)(1)(B).” Nonetheless, the court explained that when
Congress enacted the Bankruptcy Abuse Prevention and Consumer Protection Act
(“BAPCPA”) in 2005, it “left unaltered the good faith requirement of § 1325(a)(3),”
“signif[ying] an intent to maintain the good faith inquiry separate and distinct from the
means test and disposable income inquiry.” Thus, the court concluded that a debtor’s
“technical compliance” with § 1325(b) did not, as a matter of law, obviate the court’s
obligation to “evaluate and determine, pursuant to § 1325(a)(3), whether the Plan ha[d]
been proposed in good faith.” And the court understood the good-faith inquiry to be
“whether or not under the circumstances of the case there ha[d] been an abuse of the
provisions, purpose, or spirit of [the Chapter] in the proposal or plan.” (Quoting Deans v.
O’Donnell, 692 F.2d 968, 972 (4th Cir. 1982)). The court concluded that even where a
debtor proposed contributing all of his disposable income to unsecured creditors, as
required by § 1325(b), the plan could still have been proposed “in bad faith if, when viewed
in the context of the facts of a particular case, the retention of a luxury item suggest[ed]
that the debtor [was] not making an honest effort to repay his or her creditors.” (Quoting
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In re Broder, 607 B.R. 774, 778 (Bankr. D. Me. 2019)). And applying that principle to the
facts of Goddard’s case, the bankruptcy court found that Goddard’s proposal to retain three
luxury vehicles while paying only “a meager projected dividend to general unsecured
creditors” would amount to an abuse of Chapter 13. The court explained that Goddard “did
not support the practical need” for retaining the three vehicles and that, instead, his plan
was an effort “to improve his financial condition at the expense of his unsecured creditors.”
It noted that “[u]nder the terms of the Plan, [Goddard] would emerge from bankruptcy with
three unencumbered vehicles and the discharge of over $78,000 in unsecured debt.” Thus,
in the circumstances presented, the court denied Goddard’s request to confirm his Chapter
13 plan.
Goddard filed a motion with the district court for leave to file an interlocutory
appeal, which the district court granted. The district court then affirmed the bankruptcy
court’s order in a memorandum opinion dated March 13, 2025. It concluded that the
bankruptcy court had “properly construed 11 U.S.C. § 1325 and permissibly rejected
Goddard’s Chapter 13 Plan . . . in which Goddard sought to retain three luxury vehicles at
the expense of his creditors” as not having been proposed in good faith.
From the district court’s judgment dated March 13, 2025, affirming the order of the
bankruptcy court, Goddard filed this appeal. We have jurisdiction under 28 U.S.C.
§ 158(d)(1). See Mort Ranta v. Gorman, 721 F.3d 241, 250 (4th Cir. 2013).
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II
Goddard contends that the bankruptcy court erred in denying confirmation of his
Chapter 13 plan “based on a lack of good faith under § 1325(a)(3),” arguing that it was “an
inappropriate application of § 1325(a)(3) where the plan complied with the disposable
income requirement of § 1325(b).” He maintains that his retention of the vehicles and
minimum payment to unsecured creditors were matters “exclusively governed by the
disposable income calculations of § 1325(b)” and therefore that, since he fully complied
with § 1325(b), the bankruptcy court “abused its discretion and erred as a matter of law by
denying confirmation of the plan.” In essence, he maintains that his compliance with
§ 1325(b) immunized him from the bankruptcy court’s consideration of whether he filed
his plan in good faith under § 1325(a)(3).
Explaining the rationale for his argument, Goddard points out that, prior to 2005,
Chapter 13 debtors were required to devote all their “disposable income” to paying
unsecured creditors, but what constituted “disposable income” was determined on a case-
by-case basis, giving bankruptcy courts discretion over whether expenses were
“reasonably necessary” for the support of the debtor. But with the 2005 changes made by
BAPCPA, Congress removed that discretion from the determination of whether a debtor’s
expenses were reasonably necessary and provided “a bright-line statutory test for debtors
. . . whose income was above the median.” He thus argues that “under BAPCPA’s means
test, bankruptcy judges no longer have discretion to determine which expenses . . . are
reasonably necessary.” (Emphasis added). And it follows, he contends, that a bankruptcy
court cannot find a lack of good faith based on the debtor’s decision to retain certain assets,
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however luxurious they might seem, when the payments for those assets are deemed to be
“reasonably necessary” under § 1325(b). He thus concludes that once it is determined that
he complied with the terms of § 1325(b), his plan’s proposed treatment of assets serving
as collateral for several loans and its minimal payment to unsecured creditors cannot, as a
matter of law, support a finding under § 1325(a)(3) that his plan was not proposed in good
faith.
We conclude that this argument falls short for several reasons.
First, Goddard’s logic is flawed. He argues that because discretion was removed
from the provision calculating disposable income with the means test, the need to consider
good faith was effectively eliminated. To be sure, when BAPCPA’s means test applies,
bankruptcy courts no longer assess, on a case-by-case basis, which of the debtor’s claimed
expenses are reasonable. See Ransom v. FIA Card Servs., N.A., 562 U.S. 61, 65 (2011).
But taking away that discretion does not ensure that all plans that comply with § 1325(b)
were filed in good faith. And it simply does not follow that eliminating discretion in the
means-test calculation thereby eliminated the need for a good-faith assessment of a Chapter
13 plan. The scope of the good-faith requirement is much broader than simply reviewing
the means-test calculation.
Second and similarly, Goddard construes the good-faith requirement far too
narrowly. Its scope is much broader both in geography and in its elements. Foundationally,
the entire bankruptcy process is “an equitable procedure that is available to those who
employ its benefits in good faith.” Herlihy v. DBMP, LLC, 167 F.4th 142, 151 (4th Cir.
2026). Such debtors are given the opportunity for a fresh start through the discharge of
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what can be a considerable amount of debt, while the interests of secured and unsecured
creditors are managed as equitably as possible. Thus, “[w]hen a debtor manipulates the
bankruptcy procedure for some other purpose or steps outside the equitable limitations of
the Bankruptcy Code, his good faith comes into question, placing in doubt any relief he
seeks in bankruptcy.” Id. Consistent with this, “the requirement of good faith permeates
the entire Bankruptcy Code.” Id. (citing, among other sources, In re Premier Auto. Servs.,
492 F.3d 274, 279 (4th Cir. 2007), and Carolin Corp. v. Miller, 886 F.2d 693, 698 (4th Cir.
1989)).
Moreover, the requirement of good faith is explicitly imposed by the text of the
Bankruptcy Code in various chapters, including, as relevant here, for all plans filed under
Chapter 13. See 11 U.S.C. §§ 1321, 1325(a)(3). Specifically, § 1325(a)(3) provides that
the court shall confirm the debtor’s plan if, among other requirements, it “has been
proposed in good faith and not by any means forbidden by law.” Thus, a bankruptcy court
is required to find that the debtor has proposed the Chapter 13 plan in good faith before it
may confirm it.
Third, the concept of good faith is not fulfilled simply through technical compliance
with the Bankruptcy Code’s provisions. We have long recognized that “the basic inquiry”
when assessing whether a plan has been proposed in good faith is “whether or not under
the circumstances of the case there has been an abuse of the provisions, purpose, or spirit
of the Chapter in the proposal or plan.” Deans v. O’Donnell, 692 F.2d 968, 972 (4th Cir.
1982) (emphasis added) (cleaned up). Thus, while compliance with the Bankruptcy Code’s
provisions may be required to show good faith, good faith reaches beyond mere compliance
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to assess whether a proposed plan, even if in technical compliance, would nonetheless
abuse the provision’s purposes or violate the spirit of Chapter 13 or the Bankruptcy Code
more broadly. For instance, in discussing the good-faith requirement, we have observed
that “Congress never intended . . . [for] Chapter 13 [to] serve as a haven for debtors who
wish to receive a discharge of unsecured debts without making an honest effort to pay those
debts.” Id. (emphasis added). That inquiry is far broader than simply determining whether
a debtor complies with the text of a provision, such as § 1325(b).
Fourth, as a matter of statutory interpretation, BAPCPA did not eliminate the
requirement that a Chapter 13 plan be proposed in good faith. Rather, the 2005 Act was
enacted to confirm a good-faith filing — “to help ensure that debtors who can pay creditors
do pay them.” Ransom, 562 U.S. at 64. The good-faith requirement was thus deliberately
left in Chapter 13 — despite the elimination of discretion within the means-test provision
— as an equitable overlay to preclude, among other things, plans that would serve as a
“haven for debtors . . . to receive a discharge of unsecured debts without making an honest
effort to pay those debts.” Deans, 692 F.2d at 972; 11 U.S.C. § 1325(a)(3).
Fifth, and again as a matter of statutory interpretation, § 1325(a)(1) requires every
Chapter 13 plan to comply with all the provisions of Chapter 13, not only § 1325(b)’s
disposable income requirement. See 11 U.S.C. § 1325(a)(1) (making “compli[ance] with
the provisions of this chapter and with the other applicable provisions of this title” a
separate, additional requirement for plan confirmation). This further rebuts any argument
that a plan’s compliance with § 1325(b) precludes a finding that its proposal was not in
good faith under § 1325(a)(3).
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Sixth and finally, the structure of the means test itself demonstrates that good faith
remains a separate, independent requirement. Specifically, § 1325(b)(3) does not state
categorically that the deductions permitted under § 707(b)(2) are to be deemed “reasonably
necessary” expenses for all purposes. Rather, the means test is a tool used to determine
the debtor’s “disposable income” “[f]or purposes of this subsection” — i.e., for purposes
of applying § 1325(b), rather than all of § 1325. 11 U.S.C. § 1325(b)(2) (emphasis added).
Thus, by its own terms, the fact that § 1325(b)(3) treats all of the debtor’s monthly secured
debt payments as part of the “[a]mounts reasonably necessary to be expended” when
calculating disposable income under § 1325(b) does not mean that bankruptcy courts may
not question the debtor’s decision to retain assets serving as collateral for those secured
loans when assessing, under § 1325(a)(3), whether the plan has been proposed in good
This conclusion finds support also in the broader structure of § 707(b), from which
§ 1325(b) borrows the means test. Specifically, § 707(b)(1) authorizes bankruptcy courts
to dismiss a Chapter 7 case or, with the debtor’s consent, convert it to one under Chapter
11 or Chapter 13 “if it finds that the granting of relief would be an abuse of the provisions
of this chapter.” 11 U.S.C. § 707(b)(1). Section 707(b)(2)(A) then provides that “the court
shall presume abuse exists” based on application of a mechanical test, id. § 707(b)(2)(A)(i)
(emphasis added), while subparagraph (B) of § 707(b)(2) specifies how that “presumption
of abuse may . . . be rebutted,” id. § 707(b)(2)(B)(i). Both provisions then work in tandem
with § 707(b)(3), which provides that when “considering under paragraph (1) whether the
granting of relief would be an abuse of the provisions of this chapter,” either “in a case in
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which the presumption [of abuse] does not arise” or where that presumption “is rebutted,”
the bankruptcy court “shall consider” “whether the debtor filed the petition in bad faith” or
whether “the totality of the circumstances . . . of the debtor’s financial situation
demonstrates abuse.” Id. § 707(b)(3) (emphasis added). Accordingly, the fact that the
means test of § 707(b)(2) operates in tandem with the broad, holistic test specified in
§ 707(b)(3) dramatically undercuts Goddard’s argument that by incorporating the means-
test portion of § 707(b)(2) into § 1325(b), Congress limited the factors that bankruptcy
courts may consider when assessing, under § 1325(a)(3), whether the plan has been
proposed in good faith. Rather, just as the precise formula in § 707(b)(2) and the broader,
equitable analysis in § 707(b)(3) complement each other, so too do § 1325(b) and
§ 1325(a)(3).
For all these reasons, we reject the legal notion that strict compliance with § 1325(b)
somehow precludes the bankruptcy court from considering whether the debtor’s Chapter
13 plan was proposed in good faith, as required by § 1325(a)(3). Instead, bankruptcy courts
remain charged with considering, under all the circumstances, whether the debtor’s
proposed plan would amount to “an abuse of the provisions, purpose, or spirit of the
Chapter.” Deans, 692 F.2d at 972 (cleaned up).
By contrast, under Goddard’s reading of the Bankruptcy Code, a debtor could, for
example, devise a scheme to buy a $100,000 painting for one-third of the price, sticking
the other two-thirds to an unsecured creditor by strictly complying with § 1325(b). The
debtor would borrow two-thirds of the cost with an unsecured loan and finance one-third
with a secured loan. Thereafter, he would rely on § 1325(b) within a Chapter 13 proceeding
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to pay off the one-third secured loan and lower his “disposable income” to zero, allowing
him to discharge the two-thirds unsecured loan. His intent all along would have been to
acquire unencumbered ownership of the expensive painting for one-third of its cost. While
the debtor would have complied strictly with § 1325(b) to do so, he would have acted in
bad faith by taking advantage of § 1325(b) to his own benefit and at the calculated expense
of his unsecured creditor. Yet, the Bankruptcy Code was designed for more benign conduct
— to give a debtor making a good-faith effort to repay his debt a new start while at the
same time protecting his creditors.
Nonetheless, Goddard maintains that the Ninth Circuit’s decision in Drummond v.
Welsh (In re Welsh), 711 F.3d 1120 (9th Cir. 2013), supports his position, and perhaps it
does. Welsh held that a calculation made in compliance with § 1325(b) cannot be
challenged because “in the BAPCPA, Congress chose to remove from the bankruptcy
court’s discretion the determination of what is or is not ‘reasonably necessary.’” 711 F.3d
at 1134 (emphasis added). And the Welsh court concluded further “that Congress’s
adoption of the BAPCPA forecloses a court’s consideration of . . . a debtor’s payments to
secured creditors as part of the inquiry into good faith under 11 U.S.C. § 1325(a).” Id. at
1135. That conclusion might well support Goddard’s suggestion that his calculations made
in compliance with § 1325(b) must be accepted and not be subject to a good-faith review.
But it does not support his argument that the correct calculation under § 1325(b) somehow
immunizes his Chapter 13 plan from any examination under the good-faith standard, as
required by § 1325(a)(3). Indeed, the Welsh opinion expressly recognized the distinction
between the two inquiries. It pointed out that the good-faith inquiry required under
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§ 1325(a)(3) “focuses on the debtor’s motivation and forthrightness with the court in
seeking relief,” whereas the “disposable income requirement [under § 1325(b)], in contrast,
focuses on the amount of funds that Congress expects a debtor to devote to paying off
unsecured creditors. These two inquiries are, indeed, separate and distinct.” Id. at 1132
(emphasis added). While the Welsh court, to be sure, did, on occasion, blur the two
concepts in discussion, that does not support an argument that compliance with § 1325(b)
somehow immunizes a debtor from the good-faith inquiry required by § 1325(a)(3). We
thus cannot agree with Welsh’s suggestion that a debtor’s decision to retain luxury items
“while paying relatively little to unsecured creditors,” id. at 1133, is irrelevant to the
broader good-faith inquiry. See Mort Ranta, 721 F.3d at 253 (observing that even after a
debtor complies with § 1325(b), “[t]he debtor’s plan . . . still must satisfy every other
requirement for confirmation set forth in the Code,” including that “the plan must have
been proposed in good faith”). Indeed, at oral argument, Goddard conceded, as we believe
he should have, that if a debtor has attempted to abuse or manipulate § 1325(b)’s test for
disposable income, then that can be the basis for the bankruptcy court to find that the plan
was not proposed in good faith, as required by § 1325(a)(3). See Oral Arg. 4:20–5:35.
Goddard also points for support to our decision in Bledsoe v. Cook, 70 F.4th 746
(4th Cir. 2023). But Bledsoe did not address the good-faith issue at all. Rather, it observed
simply, and unremarkably for here, that Congress cabined a bankruptcy court’s discretion
when it provided the means test in § 1325(b) for determining what expenses were
“reasonably necessary.” 70 F.4th at 751 (citing Welsh, 711 F.3d at 1130, 1134).
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At bottom, we conclude that while a debtor must comply with the means test in
§ 1325(b), he must also satisfy the requirement in § 1325(a)(3) that his Chapter 13 petition
be proposed in good faith.
III
Having concluded that compliance with § 1325(b) does not immunize a debtor from
the requirement of proposing a Chapter 13 plan in good faith, we conclude that in the
circumstances presented here, the bankruptcy court did not clearly err in finding a lack of
good faith. See Cook v. Chapter 13 Trustee (In re Chapter 13 Trustee), __ F.4th __, No.
25-1048, 2026 WL 981209, at *5 (4th Cir. Apr. 13, 2026); see also Trantham v. Tate,
112 F.4th 223, 230 (4th Cir. 2024).
Addressing Goddard’s pre-petition conduct, the bankruptcy court found that
Goddard purchased the luxury vehicles — costing, in round numbers, $45,700, $61,800,
and $57,700, respectively — over a short period of time, taking out both unsecured
personal loans and secured loans in connection with their purchase. He then sought to use
the bankruptcy procedure to obtain unencumbered ownership of the vehicles by using
Trustee disbursements to pay the secured loans and discharging the personal loans. As the
bankruptcy court stated:
Based on the timing of the Debtor’s personal loans, it appears that during the 21 months prior to filing his petition, the Debtor may have serviced the debts related to the Vehicles with the very loans he now seeks to discharge. Compliance with 11 U.S.C. § 1325(b)(1)(B) cannot and should not provide cover for such financial indiscretions.
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The court also found that the vehicles that Goddard purchased were not necessary
items, but luxury items, and, more importantly, that Goddard was attempting to use the
Chapter 13 proceeding to obtain unencumbered ownership of the vehicles while ridding
himself of more than $78,000 in unsecured debt. As the court again stated:
The Debtor’s testimony did not establish any necessity for all three Vehicles. If the Debtor had his way, the Trustee would disperse nearly $3,000 each month toward claims secured by vehicles that adorn the Debtor’s driveway and allow for luxuries at the expense of his creditors.
Finally, the court found that in this manner, Goddard manipulated the purposes of
the Bankruptcy Code to enhance his own position at the expense of his creditors. As the
court stated:
[T]he Debtor is seeking to improve his financial condition at the expense of his unsecured creditors. Under the terms of the Plan, the Debtor would emerge from bankruptcy with three unencumbered vehicles and the discharge of over $78,000 in unsecured debt. The Debtor conceded that he “probably could have” remained current on his unsecured debt obligations pre-petition if he had reduced his obligations related to the Vehicles.
Based on the record before the bankruptcy court, which well supports these findings,
we conclude that the bankruptcy court did not clearly err in finding that Goddard’s Chapter
13 plan was not proposed in good faith.
* * *
Accordingly, the district court’s March 13, 2025 judgment, affirming the order of
the bankruptcy court rejecting Goddard’s Chapter 13 plan, is affirmed.
AFFIRMED