IN RE: Karen Brown (2026)

Chapter 13

ORDER DENYING CONFIRMATION

THIS MATTER is before the Court upon the Second Pre-Confirmation Modified Plan (the “Second Modified Plan”)¹ filed by Karen Brown (“Debtor”) and the Objection ² thereto filed by the Chapter 13 Trustee, Annemarie Mathews (the “Trustee”). The Trustee objected to confirmation asserting that Debtor did not propose the Second Modified Plan in good faith, as required by 11 U.S.C. § 1325(a)(3), and that the Second Modified Plan is not feasible pursuant to 11 U.S.C. § 1325(a)(6).

On August 20, 2026, the Court held a confirmation hearing. Counsel for Debtor, Debtor, and the Trustee were present at the hearing. After hearing arguments and the testimony of Debtor and Debtor's brother, the Court took the matter under advisement.

FACTUAL BACKGROUND

Debtor filed this case to preserve a family property located at 480 Duncan Road, North Augusta, SC 29841 (the “Property”), which Debtor owns with five siblings. Apart from the debt secured by the Property, Debtor's other debt consists principally of a tax debt, which may be reduced or eliminated as a result of Debtor's recently filed return, and a nondischargeable student loan.

Debtor is a professional ballerina and master ballet instructor. Her employment is irregular and her income varies. Schedule I identifies Debtor's employment as of the petition date as a Professor of Dance at the University of Missouri-Kansas City. Subsequent pleadings ³ and testimony indicate that this position concluded at the end of August, and therefore the information disclosed on the most recently filed Schedule I is not indicative of Debtor's projected income. Schedule J reflects Debtor's expenses as reported at the time of the petition. Among other expenses, Debtor listed projected monthly expenses of $1,000.00 for vehicle rental and $1,400.00 for housing.⁴

The schedules show that the Property is valued at $200,000.00, with a lien held by Wells Fargo Bank, N.A. (“Wells Fargo”) in the amount of $112,000.00.⁵ Debtor claims a homestead exemption ⁶ to fully exempt her portion of the unencumbered equity. Although Debtor is a co-owner of the Property, Debtor's sister, Lorraine Brown, is the obligor on the promissory note. Lorraine Brown experienced a decline in her health that caused her to stop making payments on the note. By the time Debtor and Debtor's siblings became aware of the situation, the Property was in foreclosure, leading to this bankruptcy filing. Shortly after filing the case, Debtor embarked on a pre-planned trip to Paris.

Debtor's initial plan ⁷ proposed payments totaling $132,225.00. The initial plan paid the principal of the debt at the contract interest rate to Wells Fargo in full; however, Wells Fargo objected,⁸ arguing it was entitled to a higher interest rate.⁹ The parties resolved Wells Fargo's objection through an amended plan (the “First Modified Plan”).¹⁰ Simultaneously with amending the plan, Debtor amended Schedules C, G, and I.¹¹ Amended Schedule I did not change Debtor's reported income; however, Question 13 was revised to provide: “Job with Conservatory at University of Missouri-Kansas City will terminate at the end of August 2026. Currently working virtual[ly] with University; will engage in private ballet coaching to replace loss of employment income. Siblings and co-owners of [the P]roperty are contributing to improvement and maintenance of home; and will contribute to plan at or within 10 months of filing.” The amendment did not quantify projected coaching income or identify the anticipated source, timing, or reliability of that income.

Debtor filed another modified plan shortly thereafter (the “Second Modified Plan”), which is now before the Court for confirmation. The Second Modified Plan increased Debtor's total pledged repayment by more than $57,000.00 with proposed step payments that increase to $3,433.00 per month for the final 50 months of the plan.¹² The treatment of Wells Fargo's claim remained consistent with the First Modified Plan. No party, other than the Trustee, objected to the Second Modified Plan. The Trustee objected pursuant to 11 U.S.C. §§ 1325(a)(3) and (6), raising issues of good faith and feasibility.¹³

At the confirmation hearing, Debtor and her brother, Keith Brown, provided testimony. According to Debtor's testimony, the Paris trip was tangentially related to the pending loss of employment at the University. Debtor testified that she met with professional contacts and sought work that would begin after her professorship ended and that she also celebrated her seventieth birthday with friends. Debtor testified that, before learning that a bankruptcy filing would be necessary to preserve the Property, she had saved funds and paid a portion of the trip's cost. She further testified that the trip served both business and personal purposes and that her living expenses while abroad did not exceed the expenses she would have incurred had she remained at home. Debtor introduced a bank statement indicating that she had been saving separately to pay for the trip in cash. Debtor further testified that she no longer has a vehicle rental expense and her housing expenses may be eliminated when the Property is habitable.

Keith Brown testified that he and another brother are assisting Debtor with the plan payments. Keith Brown and another sibling are also restoring the Property after it fell into disrepair. While Mr. Brown testified that he had the financial means to purchase the Property outright, thereby saving it from foreclosure, not all of his siblings consented to a sale, necessitating this attempt to pay off the debt to Wells Fargo while maintaining the current ownership composition.

CONCLUSIONS OF LAW

This Court has jurisdiction over this contested matter pursuant to 28 U.S.C. § 1334. This is a core proceeding pursuant to 28 U.S.C. §§ 157(b)(2)(A) and (L), and the Court may issue a final order.

“For a Chapter 13 plan to be confirmed, the Court must find that it satisfies the requirements of 11 U.S.C. § 1325(a).” In re Kemmerlin, 659 B.R. 741, 748 (Bankr. D.S.C. 2024) (internal citation omitted). When a party objects to confirmation, that party bears the initial burden of presenting evidence in support of the objection; the burden then shifts to the debtor to prove that the plan meets all confirmation requirements by a preponderance of the evidence. Trantham v. Tate, 112 F.4th 223, 236 (4th Cir. 2024); In re Morris, 628 B.R. 824, 828 (Bankr. D.S.C. 2021).

Section 1325(a) of the Bankruptcy Code sets forth requirements for confirmation of a Chapter 13 plan. Relevant here, it provides:

Except as provided in subsection (b), the court shall confirm a plan if—

(3) the plan has been proposed in good faith and not by any means forbidden by law; [and]

․

(6) the debtor will be able to make all payments under the plan and to comply with the plan.

11 U.S.C. § 1325(a)(3), (6).

A chapter 13 plan is proposed in good faith when, under the totality of the circumstances, it represents “an honest effort to repay [the debtor's] creditors,” consistent with Chapter 13's purpose of “the sincerely-intended repayment of pre-petition debt consistent with the debtor's available resources.” In re Sherrod, 660 B.R. 776, 789 (Bankr. D.S.C. 2024) (quoting In re McGillis, 370 B.R. 720, 750 (Bankr. W.D. Mich. 2007) (quoting Metro Employees Credit Union v. Okoreeh-Baah (In re Okoreeh-Baah), 836 F.2d 1030, 1033 (6th Cir. 1988))). To that end, courts in the Fourth Circuit employ a “totality of the circumstances” analysis to holistically review whether a plan would be an “abuse of the provisions, purpose, or spirit” of chapter 13. Deans v. O'Donnell, 692 F.2d 968, 972 (4th Cir. 1982) (quoting 9 Collier on Bankruptcy, 9.20 at 319 (14th ed. 1978)). Factors considered include:

1. The percentage of the proposed repayment;

2. The financial situation of the debtor;

3. The period of time over which payment will be made;

4. Debtor's employment history and prospects;

5. The nature and amount of unsecured claims;

6. Past bankruptcy filings of the debtor;

7. Debtor's honesty in representing facts;

8. Any unusual or exceptional problems facing the particular debtor;

9. The debtor's pre-filing conduct; and

10.The possibility of non-dischargeability of any debts in a Chapter 7 proceeding.

In re Sherrod, 660 B.R. at 789 (citing In re Pizzo, 628 B.R. 811, 818 (Bankr. D.S.C. 2021)). Here, the Court need not exhaustively address each good faith factor to conclude that the Second Modified Plan was proposed in good faith.

Debtor experienced an unexpected change in fortune stemming from a property crisis coupled with her sister's health decline, which Debtor now seeks to stabilize during a time of employment transition. The Court finds Debtor's testimony to be credible and candid regarding her post-petition trip to Paris.¹⁴ Deans, 692 F.2d at 972 (giving weight to a debtor's candor in representing facts). While the timing of the trip abroad warrants scrutiny, the Court concludes that it does not, on balance, outweigh the remaining good-faith considerations. Debtor's career is unique; there was a business component to the trip; the trip does not indicate that Debtor otherwise engaged in luxury spending, neither Debtor nor her siblings are serial bankruptcy filers; and Debtor proposes payments totaling $189,650.00 over the life of the plan, representing a significant portion of claims filed in the case.¹⁵ While the Trustee has not raised the issue, Debtor appears to meet the “disposable income test” under § 1325(b). This alone is not tantamount to a finding of a plan proposed in good faith; however, the Court is persuaded by Debtor's effort to commit significant income to the case, which, given her available resources, weighs in favor of a good faith finding. See Goddard v. Burnett, 173 F.4th 550, 560 (4th Cir. 2026) (discussing the relationship between § 1325(b) and § 1325(a)(3)); In re Stitt, 403 B.R. 694 (Bankr. D. Idaho 2008) (finding that despite a debtor's compliance with the disposable income requirement of § 1325(b), the debtor's plan was not filed in good faith where the debtor maintained a lifestyle that included excessive expenditures for housing, transportation, and unprofitable business pursuits).

However, the question of plan feasibility cannot, at present, be answered in Debtor's favor. Under § 1325(a)(6), the debtor must demonstrate that the plan is feasible — i.e., that the debtor will be able to make all payments under the plan and to comply with the plan. This requires a showing that the plan has a reasonable likelihood of success based on a debtor's actual financial resources. First Nat'l Bank v. Fantasia (In re Fantasia), 211 B.R. 423 (1st Cir. B.A.P. 1997). See also Mort Ranta v. Gorman (In re Ranta), 721 F.3d 241, 254 (4th Cir. 2013) (factoring in a debtor's income excluded from means testing).

Schedules I and J provide an important starting point, but feasibility must be determined from the full evidentiary record, including reliable evidence of postpetition changes in income, expenses, and third-party contributions. “[A] debtor cannot satisfy the income requirement for Chapter 13 eligibility by mere allegations that there is an income potential which is contingent upon developments that appear unlikely.” In re Norwood, 2013 WL 4099834, at *8 (Bankr. D. Colo. Aug. 8, 2013) (citing In re Pellegrino, 423 B.R. 586, 590 (1st Cir. BAP 2010)). Here, Schedule I shows Debtor receiving $5,384.06 gross income from a professorship, but the schedule also discloses that this employment terminates in August 2026. Debtor testified that she will replace this income through private ballet coaching, but provided no detailed projection of coaching income, no contracts or commitments from prospective clients, no historical earnings data from prior coaching work, and no explanation of when the anticipated income would begin. The Court cannot find that Debtor will be able to make all payments under the plan when the proposed replacement for Debtor's primary income source is speculative and unsubstantiated at the time of confirmation.

Debtor further relies on contributions from her siblings, but does not provide detailed information as to how much and how often her siblings will chip in. While Keith Brown testified that he and another brother would contribute the amounts necessary to fund plan payments, further details are needed as to the amount of those contributions. He also testified that he had been contributing $500 per month toward Debtor's plan payments and planned to continue paying each month but this contribution alone would not make the Second Modified Plan feasible. However, depending on the profits from his seasonal business, he may be able to contribute more than $500 per month next year, but he did not give an estimate as to how much his payment could–or would–increase until the end of November. Debtor and her brother further testified that another one of Debtor's brothers, Allen Brown, has pledged to make plan payments for an unascertained dollar amount. Debtor introduced no affidavits or written commitments from, or testimony by, the other siblings expected to contribute. The record contains insufficient evidence of the siblings’ financial capacity or willingness to make contributions on an ongoing basis. Under the present record, the siblings’ contributions are insufficient and otherwise too speculative to support a finding of feasibility.

Moreover, Debtor's expenses are not clear. Debtor testified that she is no longer renting a car and that her housing expense may be substantially reduced if she moves into the Property. However, the record does not establish the anticipated move-in date, the expenses that would remain, or Debtor's cost, if any, to make the Property habitable.

Because Debtor has not established reliable replacement income, definite and sufficient third-party contributions to fund the Second Modified Plan, or a current and supportable expense budget, the Court finds that Debtor has not carried her burden of proving feasibility under § 1325(a)(6).

IT IS, THEREFORE, ORDERED that confirmation of the Second Modified Plan is denied without prejudice.

Within fourteen (14) days after entry of this Order, Debtor shall file amended Schedule A/B, Schedule I, and Schedule J, as applicable, and may file an amended plan in accordance with SC LBR 3015-2. Any amendment to Schedule A/B shall disclose any petition-date interest in prepaid travel or other prepaid expenses, including any right to a refund, credit, transfer, or other remaining value, or Debtor shall file a declaration establishing that no such interest existed.

If Debtor timely files an amended plan, the matter will be set for a further confirmation hearing as appropriate. If Debtor does not timely file an amended plan, either Debtor or Trustee may seek a further hearing on the Second Modified Plan or move for further relief.

AND IT IS SO ORDERED.

FOOTNOTES

1.   ECF No. 50.

2.   ECF No. 52.

3.   ECF No. 56.

4.   On the petition date, Debtor secured housing by engaging in short-term leases through Airbnb. However, this housing expense was not incurred during the period when Debtor was in Paris, as further discussed herein.

5.   See ECF No. 18.

6.   See S.C. Code Ann. § 15-41-30(A)(1)(a).

7.   ECF No. 19.

8.   ECF No. 21.

9.   See Proof of Claim No. 6-1. On May 26, 2026, a Notice of Assignment of Claim was filed reflecting that the servicing of the loan was transferred post-petition from Wells Fargo Bank, N.A. to Computershare Trust Company, N.A., Not In Its Individual Capacity But Solely As Owner Trustee for NBE Asset Trust, with all future notices to be sent to Rushmore Servicing. For the sake of clarity, the Court will continue to refer to the secured creditor as “Wells Fargo” herein.

10.   ECF No. 43.

11.   ECF No. 45.

12.   ECF No. 50.

13.   ECF No. 52.

14.   Debtor's Schedule A/B does not identify any prepaid travel expenses or other prepaid services associated with the Paris trip. To the extent that, on the petition date, Debtor held an interest in prepaid but unused travel, lodging, transportation, or other services—including a right to a refund, travel credit, transfer, or other remaining value—that interest should have been disclosed on Schedule A/B. The Trustee did not object to confirmation under § 1325(a)(4), and the present record does not establish the nature, refundability, transferability, or value of any such interest. The Court therefore does not determine whether any omission affects the liquidation analysis under § 1325(a)(4). The omission is nevertheless relevant to the Court's assessment of Debtor's candor under § 1325(a)(3). On the present record, the Court does not find that the omission establishes an intent to conceal assets or warrants a finding of bad faith, particularly in light of Debtor's otherwise credible testimony. Further, Debtor provided an accounting of these expenses to the Trustee who introduced them into evidence. Debtor shall amend Schedule A/B to disclose any such petition-date interests or file a declaration stating, for each potentially prepaid item, the date paid, amount paid, service purchased, whether the item was used before or after the petition date, and any refund, transfer, credit, or other value that existed on the petition date.

15.   The last day to file claims in this case was April 20, 2026 (or August 7, 2026, for governmental units). Total claims filed are $230,327.05 (of which $114,529.01 is secured; $26,437.30 is priority; and $89,360.74 is general unsecured).