Discretion Re-Affirmed: Post-Petition Personal-Injury Proceeds Need Not Trigger Chapter 13 Plan Modification – Commentary on Christopher Conte v. Peggy Proffitt (11th Cir. 2025)

1. Introduction

This consolidated appeal from the Eleventh Circuit addresses whether a Chapter 13 trustee can require debtors who obtain post-petition personal-injury settlements to increase plan dividends to unsecured creditors. Trustee Christopher T. Conte challenged two separate, but similarly situated, debtors—Lisa Jo Ann Boutwell and Peggy Bedsole Proffitt—after each received modest tort settlements during their confirmed Chapter 13 plans. Although the settlements were agreed to be property of the estate, the Bankruptcy Court (S.D. Ala.) refused to modify the plans; the District Court affirmed; and now the Eleventh Circuit, in an unpublished but precedentially significant opinion, likewise affirmed.

Key questions: (i) Do §§ 1329 & 1325 require modification of a confirmed plan once the debtor’s financial condition improves? (ii) What is the scope of a bankruptcy court’s discretion where the statutory prerequisites for modification are otherwise satisfied?

2. Summary of the Judgment

The panel (Branch, Abudu & Kidd, JJ.) held that a bankruptcy court did not abuse its discretion in denying the trustee’s motions to modify Boutwell’s and Proffitt’s plans.
Even assuming the proposed modified plans complied with 11 U.S.C. § 1329(b)(1) and incorporated §§ 1322 & 1325 requirements, § 1329 states only that a plan “may” be modified—language that reserves discretion to the bankruptcy court.
The lower court made fact findings that both debtors still endured medical issues, lived “paycheck-to-paycheck,” and needed settlement funds for ongoing medical and household needs; thus the settlements did not enhance their realistic ability to pay unsecured creditors.
Because those findings were plausible in light of the record, denying modification was not a clear error of judgment.
The appeal remained justiciable notwithstanding the debtors’ Chapter 13 discharges because the bankruptcy court had stayed use of the settlement proceeds pending appellate resolution, preserving a live controversy over their disposition.

3. Analysis

3.1 Precedents Cited

The Court wove a short but important line of Eleventh Circuit precedent:

In re Guillen, 972 F.3d 1221 (11th Cir. 2020) – Confirmed that even when a proposed modification satisfies § 1329, the bankruptcy court retains discretion to refuse confirmation. The opinion’s refrain—“Nothing prevents a bankruptcy court from refusing to confirm a modified plan”—became the cornerstone of the present decision.
In re Waldron, 536 F.3d 1239 (11th Cir. 2008) – Reaffirmed the trustee’s right to seek modification post-petition, but did not compel courts to grant such relief. The trustee’s reliance on Waldron was dismissed for overlooking this nuance.
SuVicMon Dev., Inc. v. Morrison, 991 F.3d 1213 (11th Cir. 2021) – Provided the abuse-of-discretion standard: error of law, procedure, fact, or a clear error in judgment.
In re Brown, 742 F.3d 1309 (11th Cir. 2014) & In re Rosenberg, 779 F.3d 1254 (11th Cir. 2015) – Articulated the appellate posture in bankruptcy (court of second review) and the identical standard applied by district and circuit courts.
Neidich v. Salas, 783 F.3d 1215 (11th Cir. 2015) – Cited in supplemental briefing on mootness; distinguished because the cases remained live under the stay mechanism.

3.2 Legal Reasoning

Step 1 – Compliance Presumed. The Court assumed without deciding that Trustee Conte’s proposed modifications met the statutory prerequisites: incorporation of §§ 1322(a)&(b), 1323(c), and § 1325(a) (liquidation test) or § 1325(b)(1)(B) (disposable-income test). This sidestepped complex ongoing debates about the precise mechanics of those tests in the modification context.

Step 2 – Discretionary Lane of § 1329. Section 1329(a) uses permissive language (“may be modified”) rather than mandatory language (“shall” or “must”). Guillen confirms that modification remains a matter of judicial discretion even when statutory floors are satisfied. Therefore, the trustee’s burden on appeal was to show an abuse of that discretion.

Step 3 – Fact-Finding Support. The Bankruptcy Court credited each debtor’s testimony: ongoing pain, future surgery costs, single functioning vehicle, parental loans, etc. These facts rebutted the notion that the settlements meaningfully improved disposable income. Because those findings were plausible, the circuit court would not disturb them under the clearly-erroneous rubric (Rule 8013).

Step 4 – No Error of Judgment. The lower court weighed the hardships against the benefit to unsecured creditors (an incremental dividend increase from ~40→77 % and 62→77 %). That balancing fell comfortably within its discretionary authority.

3.3 Impact on Future Litigation & Practice

Debtor Protection. Chapter 13 debtors who obtain modest personal-injury (or other) windfalls now have a stronger basis to resist trustee modifications where proceeds are earmarked for genuine post-injury needs.
Trustee Strategy. Trustees must develop a robust evidentiary record—medical improvement, income adjustments, expenditure patterns—to convince courts that settlement funds enhance “ability to pay.” Mere mathematical enhancement of dividends may be insufficient.
Circuit Consensus. The decision aligns the Eleventh Circuit with a growing body of case law (e.g., 6th Cir. In re Storey, 7th Cir. In re Witkowski) that underscores discretion rather than automatic redistribution.
Plan Drafting. Counsel may wish to draft plans or confirmation orders reserving or clarifying treatment of post-petition PI claims to minimize later litigation.
Estate Property vs. Distribution. The opinion confirms that such settlements are estate property (Bankr. Rule 6009; § 1306), yet property status alone does not predetermine distribution under a modified plan.

4. Complex Concepts Simplified

Chapter 13 Plan Dividend: The percentage of an unsecured creditor’s claim that will be paid through the plan.
Post-Petition Asset: Property acquired by the debtor after filing but before discharge. Under § 1306(a)(1), many such assets, including PI claims, become part of the estate.
Liquidation Test (§ 1325(a)(4)): Unsecured creditors must receive at least what they would get in a hypothetical Chapter 7 liquidation of non-exempt property.
Disposable-Income Test (§ 1325(b)(1)(B)): If a trustee objects, the debtor must commit all projected disposable income for the “applicable commitment period” (3–5 years) to plan payments.
Plan Modification (§ 1329): After confirmation, a debtor, trustee, or unsecured creditor may seek to alter payment amounts, duration, or other terms. The statute’s permissive “may” gives the bankruptcy judge gatekeeping authority.
Abuse of Discretion Standard: Appellate courts will only reverse when the lower court applied the wrong law, ignored procedure, clearly misread the facts, or made an unreasonable judgment.

5. Conclusion

The Eleventh Circuit’s unpublished but influential opinion in Conte v. Proffitt clarifies a critical tension in Chapter 13 practice: while post-petition personal-injury proceeds are property of the estate and may justify plan modification, they do not mandate it. Bankruptcy judges retain considerable discretion, and their equitable instincts—grounded in debtor hardships and factual nuance— will be respected on appeal absent clear abuse. For practitioners, the message is two-fold: trustees must marshal concrete evidence of enhanced payment capacity, and debtors should document ongoing needs to safeguard settlement funds essential to their fresh start.