Filing for bankruptcy may seem like a simple form-filling exercise. You list your debts, assets, income, and expenses. You fill out some forms and wait for a fresh start.
But a recent decision from the U.S. Court of Appeals for the Fourth Circuit, Goddard v. Burnett, 173 F.4th 550 (4th Cir. 2026), shows just how easily a well-intentioned debtor can lose everything they were hoping to protect, even after properly filling out the forms.
There are important lessons from this case that can apply to people struggling financially and considering bankruptcy. The team at Frost Law can help. Schedule a free consultation by calling (410) 497-5947.
The debtor in this case, Bobby Goddard, filed for Chapter 13 bankruptcy. He had significant income and owned three vehicles that he had purchased in the years leading up to his filing: a 2015 Chevrolet Corvette, a 2021 GMC Sierra 1500, and a 2022 Genesis G70. The bankruptcy court considered these vehicles to be luxury vehicles. He had also accumulated more than $84,000 in unsecured debt, much of it from personal loans taken out around the same time as those vehicle purchases.
Under his proposed Chapter 13 plan, the bankruptcy trustee would pay off the car loans in full, while his unsecured creditors would receive less than 8% of what they were owed. Any balances owed to his unsecured creditors at the end of his plan would be discharged.
The plan technically satisfied the Bankruptcy Code requirements under 11 U.S.C. § 1325(b). On paper, the numbers worked. But the bankruptcy court denied confirmation of the plan anyway, finding that it failed the separate “good faith” requirement of § 1325(a)(3). The court concluded that the plan was structured to let Goddard keep luxury items at his unsecured creditors' expense, rather than reflecting an honest effort to repay them.
Goddard appealed to the district court, which agreed with the bankruptcy court. He then appealed again to the Fourth Circuit, which also affirmed. The appellate court held that even if a proposed plan satisfies the Bankruptcy Code's formulaic requirements, it does not shield a Chapter 13 plan from separate scrutiny under the good-faith standard. In other words, meeting the technical numerical requirements of the Code is not enough — a plan can be denied if the court determines it fails the subjective good-faith requirement.
It would be easy to read this case and think, “That's just about someone trying to keep luxury cars — it doesn't apply to my case.” But the real lessons are broader and apply to almost anyone considering bankruptcy:
Another important lesson from the Goddard decision is that bankruptcy courts can bring their own definitions and expectations to the debtors who come before them. The court in Goddard characterized the debtor's vehicles as luxury vehicles — a judgment call that others might well see differently.
Courts have broad discretion to decide whether a debtor's spending and expenses are reasonable. Is it reasonable for a debtor in bankruptcy to pay for their children's private school? What about club or travel sports? Questions like these come up in nearly every case. While some uncertainty is unavoidable, an experienced attorney can help set realistic expectations based on the client's goals and the specific facts of their case.
An experienced bankruptcy attorney does far more than fill out forms. An attorney should:
If you're considering bankruptcy, talk to a qualified bankruptcy attorney before you file. The cost of proper representation is almost always smaller than the cost of a failed case.
If you are struggling with debt, contact the experienced bankruptcy attorneys at Frost Law at (410) 497-5947 or schedule a free consultation.
Filing for bankruptcy may seem like a simple form-filling exercise. You list your debts, assets, income, and expenses. You fill out some forms and wait for a fresh start.
But a recent decision from the U.S. Court of Appeals for the Fourth Circuit, Goddard v. Burnett, 173 F.4th 550 (4th Cir. 2026), shows just how easily a well-intentioned debtor can lose everything they were hoping to protect, even after properly filling out the forms.
There are important lessons from this case that can apply to people struggling financially and considering bankruptcy. The team at Frost Law can help. Schedule a free consultation by calling (410) 497-5947.
The debtor in this case, Bobby Goddard, filed for Chapter 13 bankruptcy. He had significant income and owned three vehicles that he had purchased in the years leading up to his filing: a 2015 Chevrolet Corvette, a 2021 GMC Sierra 1500, and a 2022 Genesis G70. The bankruptcy court considered these vehicles to be luxury vehicles. He had also accumulated more than $84,000 in unsecured debt, much of it from personal loans taken out around the same time as those vehicle purchases.
Under his proposed Chapter 13 plan, the bankruptcy trustee would pay off the car loans in full, while his unsecured creditors would receive less than 8% of what they were owed. Any balances owed to his unsecured creditors at the end of his plan would be discharged.
The plan technically satisfied the Bankruptcy Code requirements under 11 U.S.C. § 1325(b). On paper, the numbers worked. But the bankruptcy court denied confirmation of the plan anyway, finding that it failed the separate “good faith” requirement of § 1325(a)(3). The court concluded that the plan was structured to let Goddard keep luxury items at his unsecured creditors' expense, rather than reflecting an honest effort to repay them.
Goddard appealed to the district court, which agreed with the bankruptcy court. He then appealed again to the Fourth Circuit, which also affirmed. The appellate court held that even if a proposed plan satisfies the Bankruptcy Code's formulaic requirements, it does not shield a Chapter 13 plan from separate scrutiny under the good-faith standard. In other words, meeting the technical numerical requirements of the Code is not enough — a plan can be denied if the court determines it fails the subjective good-faith requirement.
It would be easy to read this case and think, “That's just about someone trying to keep luxury cars — it doesn't apply to my case.” But the real lessons are broader and apply to almost anyone considering bankruptcy:
Another important lesson from the Goddard decision is that bankruptcy courts can bring their own definitions and expectations to the debtors who come before them. The court in Goddard characterized the debtor's vehicles as luxury vehicles — a judgment call that others might well see differently.
Courts have broad discretion to decide whether a debtor's spending and expenses are reasonable. Is it reasonable for a debtor in bankruptcy to pay for their children's private school? What about club or travel sports? Questions like these come up in nearly every case. While some uncertainty is unavoidable, an experienced attorney can help set realistic expectations based on the client's goals and the specific facts of their case.
An experienced bankruptcy attorney does far more than fill out forms. An attorney should:
If you're considering bankruptcy, talk to a qualified bankruptcy attorney before you file. The cost of proper representation is almost always smaller than the cost of a failed case.
If you are struggling with debt, contact the experienced bankruptcy attorneys at Frost Law at (410) 497-5947 or schedule a free consultation.
