On June 23, 2025, the U.S. Supreme Court declined to hear an appeal in the case of Bronitsky v. Saldana, effectively upholding a Ninth Circuit Court of Appeals decision that allows Chapter 13 bankruptcy debtors to continue making voluntary retirement contributions during their repayment plans. The Supreme Court’s decision to not take the case is an important victory for consumer debtors.
The case focused on whether retirement contributions qualify as “disposable income” under 11 U.S.C. § 541(b)(7), which would require the funds to be paid to unsecured creditors. The Ninth Circuit concluded that these contributions are excluded from disposable income, recognizing Congress’s intent to protect retirement savings even during bankruptcy. Although the Chapter 13 trustee argued the funds should be paid to creditors rather than allowing debtors to contribute to retirement funds and repay previous loans from retirement savings, the appellate court emphasized that debtors who had made consistent, good-faith contributions pre-petition could continue to do so.
In denying the appeal, the Supreme Court left in place a growing judicial consensus, shared by other circuits, that the continuation of retirement savings during a Chapter 13 plan is proper and consistent with the Bankruptcy Code’s provisions. Bankruptcy courts in Iowa have also recognized the right of debtors to continue contributions to retirement funds in Chapter 13. If the U.S. Supreme Court had taken the case and reversed the Ninth Circuit, the decision could have had far-reaching negative consequences—potentially barring retirement savings for over 180,000 Chapter 13 filers annually, disproportionately affecting older and financially vulnerable individuals.
The National Consumer Bankruptcy Rights Center (NCBRC), which Nancy L. Thompson Law Office supports, played a key role in this outcome, filing an amicus brief in the Ninth Circuit and collaborating with debtor’s counsel and the Stanford Supreme Court Litigation Clinic.
For now, debtors still have the ability to protect their financial future in Chapter 13 bankruptcy, while also repaying all or a portion of their debts. This ability to continue contributions to retirement funds will become even more crucial as the Trump administration and the Republican party slash support for social programs like Social Security and Medicaid.
