In Re Julian Roosevelt Goeb and Jane Alma Goeb, Debtors. In Re Julian Roosevelt Goeb and Jane Alma Goeb v. Harry W. Heid, Chapter 13 Trustee

Julian and Jane Goeb appeal from the bankruptcy court’s refusal to confirm their Chapter 13 bankruptcy plan. Section 1325(a), 11 U.S.C., instructs bankruptcy courts to confirm Chapter 13 plans that satisfy six conditions. In this case, the court held that the Goebs’ plan satisfied all but the condition imposed by subsection (a)(3), that “the plan has been proposed in good faith and not by any means forbidden by the law.” Because the court misapplied the good-faith requirement, we reverse and remand for further consideration of the Goebs’ plan.

I. Facts

The Goebs proposed a five-year plan to repay their debts under Chapter 13. They owe $64,967 to secured creditors under deed-trust obligations on their home; $11,-851 to priority creditors, consisting mostly of taxes left unpaid from an unsuccessful and now defunct business; and $20,597 to numerous unsecured creditors. Under the plan, they would repay secured and priority creditors in full but unsecured creditors only one cent on the dollar.

Following the confirmation hearing, the bankruptcy court found:

The court also found that the Goebs cannot afford larger payments to the unsecured creditors and that, had the Goebs filed for…