Eleventh Circuit Affirms Broad Judicial Discretion to Deny §1329 Modifications Seeking Post-Petition Personal-Injury Proceeds

Introduction

On 1 August 2025 the United States Court of Appeals for the Eleventh Circuit delivered its unpublished, yet precedentially important, opinion in Christopher Conte v. Johnny Hill (consolidated with Conte v. Proffitt), Nos. 24-10264 & 24-10265. The appeals arose from two Chapter 13 bankruptcy cases in which the standing trustee attempted to modify confirmed repayment plans under 11 U.S.C. § 1329 to seize debtors’ post-petition personal-injury settlement proceeds for the benefit of unsecured creditors. Both the bankruptcy court and the district court refused the trustee’s request; the Eleventh Circuit has now affirmed, underscoring that: Even when a proposed modified plan satisfies every technical requirement of § 1329, the bankruptcy court retains broad, reviewable-only-for-abuse-of-discretion authority to deny confirmation.

The ruling clarifies the scope of judicial discretion under § 1329 and tangentially addresses mootness concerns when discharges have entered but funds remain sequestered by stay order.

Summary of the Judgment

• Debtors Lisa Jo Ann Boutwell and Peggy Bedsole Proffitt each confirmed Chapter 13 plans in 2018-2019.
• After confirmation, they suffered unrelated personal-injury accidents (Dollar General and Walmart) and received net settlements of $19,685.61 and $7,685.39 respectively.
• Trustee Christopher T. Conte moved under § 1329 to capture 100 % of the non-exempt settlements, boosting projected dividends from 40 %→77 % (Boutwell) and 62 %→77 % (Proffitt).
• The bankruptcy court found the proceeds to be estate property but nevertheless denied modification, deeming the money necessary for ongoing medical and household needs and finding no meaningful increase in the debtors’ “ability to pay.”
• District court affirmed; Eleventh Circuit likewise affirmed. It assumed arguendo that the trustee’s proposed plans complied with § 1329, yet held that: 1. § 1329 uses the permissive term “may be modified,” not “shall,” preserving discretion. 2. Relying on evidence of continuing injuries, payday-to-payday living, anticipated surgery, and parental loans, the bankruptcy judge made no clear error in judging the settlements insufficient to justify plan alteration. 3. Nothing in precedent (including In re Waldron) mandates modification simply because proceeds exist. 4. Stay of the modification order kept the controversy alive despite subsequent discharges, defeating mootness.

Analysis

A. Precedents Cited

• In re Guillen, 972 F.3d 1221 (11th Cir. 2020) — Recognized that § 1329 gives courts discretion to confirm or refuse a modified plan even where statutory criteria are met.
• In re Waldron, 536 F.3d 1239 (11th Cir. 2008) — Held that a trustee or unsecured creditor has standing to request § 1329 modification but did not guarantee success.
• In re Brown, 742 F.3d 1309 (11th Cir. 2014) — Reiterated appellate standard of review in bankruptcy as a “second court of review.”
• In re Stanford, 17 F.4th 116 (11th Cir. 2021) — Discussed mootness principles in bankruptcy appeals.
• SuVicMon Dev. v. Morrison, 991 F.3d 1213 (11th Cir. 2021) — Articulated abuse-of-discretion standard: incorrect law, improper procedures, clearly erroneous facts, or clear error in judgment.
• Neidich v. Salas, 783 F.3d 1215 (11th Cir. 2015) — Noted dismissal of a Chapter 13 case generally moots pending appeals; distinguished here by the stay isolating funds.

B. Legal Reasoning

1. Statutory Text – “may be modified.”
   Section 1329(a) permits, but does not compel, modification of a confirmed plan. The permissive “may” contrasts with the mandatory language in § 1325 (“the court shall confirm” if requirements are met). Therefore, satisfaction of § 1329(b) factors only removes statutory barriers; it does not abridge judicial discretion.
2. Discretion Confirmed by Eleventh Circuit Precedent.
   Citing Guillen, the panel reaffirmed that courts may refuse modification even when criteria are satisfied. The opinion treats Guillen as dispositive authority for the discretionary nature of post-confirmation plan alterations.
3. Findings of Fact.
   The bankruptcy court made credibility determinations after live testimony: ongoing medical problems, inability to work, necessity of funds for basic transportation and future surgery, and debtor living “paycheck to paycheck.” None were clearly erroneous.
4. Application to Ability-to-Pay.
   Although settlements increased liquid assets, the court rationally concluded they did not enhance long-term disposable income or the realistic capacity to service unsecured debt beyond existing plan payments.
5. Misinterpretation Allegations Rejected.
   Trustee’s argument that refusal to modify “nullifies § 1329” was dismissed; § 1329 continues to function but does not provide an entitlement.

C. Impact of the Decision

1. Strengthens Debtor Protections. Debtors who receive moderate, non-windfall post-petition injury settlements retain greater opportunity to meet personal and medical needs without automatic sequestration for creditors.
2. Guidance for Trustees. Trustees now have a clearer hurdle: they must demonstrate not merely the presence of additional funds but a material, sustainable enhancement in the debtor’s capacity to pay, overcoming factual findings to the contrary.
3. Judicial Discretion Emphasized. The opinion cements that bankruptcy courts’ equitable role endures after BAPCPA; statutory floors are not ceilings, but neither are they automatic levers for trustees.
4. Mootness Clarification. Courts can preserve appellate jurisdiction by tailoring stay orders that separate contested funds from discharged estates—an approach likely to be duplicated.
5. Potential Forum Strategy. Because the decision is unpublished but influential, litigants may forum-shop within circuits lacking definitive precedent; nationwide divergence could mature into a future Supreme Court question regarding the limits of § 1329 discretion.

Complex Concepts Simplified

• Chapter 13 vs. Chapter 7 – In Chapter 13, debtors keep their assets and pay creditors over time from income; in Chapter 7, assets are liquidated immediately.
• Confirmed Plan – A repayment schedule approved by the court; once confirmed, it binds debtor and creditors unless modified.
• § 1329 Modification – Post-confirmation alteration of the payment plan, typically requested when debtor’s financial circumstances change.
• Liquidation Test (§ 1325(a)(4)) – Ensures unsecured creditors receive at least what they would have gotten in a hypothetical Chapter 7.
• Disposable Income Test (§ 1325(b)(1)) – Requires that, absent full payment of unsecured claims, a debtor devote all projected disposable income to the plan.
• Abuse-of-Discretion – Appellate standard under which a decision will be reversed only if based on wrong law, wrong procedure, clearly erroneous facts, or irrational judgment.
• Mootness Doctrine – Courts cannot decide cases where they can no longer offer effective relief; here avoided because funds were frozen pending appeal.

Conclusion

Conte v. Hill reinforces that a bankruptcy judge’s discretion remains the decisive factor in post-confirmation plan modifications under § 1329. Even when a trustee demonstrates technical compliance with statutory minima and illustrates additional funds, the court may – consistent with equitable principles and factual findings – deny alteration. The decision will influence trustees’ litigation strategies, provide comfort to debtors reliant on modest settlements for subsistence or medical care, and underscore the need for robust factual records in modification proceedings. Ultimately, the Eleventh Circuit’s opinion delineates a meaningful boundary: § 1329 is a permissive gateway, not a compulsory highway.