A contrary-to-duty obligation (CTD obligation) is a type of conditional obligation that tells us what to do when a primary duty is violated. Chisholm’s Paradox is one of the most famous deontic puzzles about CTD obligations. It is widely believed that Chisholm’s Paradox does not arise for ordering semantics, today’s orthodox semantics for modals and conditionals. In this paper, I propose a new puzzle, the CTD Trilemma, to show that ordering semantics still has difficulties in adequately representing natural reasoning with CTD obligations. I argue that to solve the CTD Trilemma a formal account must attend to two different functions played by ought-statements in our normative reasoning and discourse: ought-statements as normative rules and normative judgments. To formally capture this distinction I develop a new dynamic account of ought-statements and normative reasoning inspired by Frank Veltman’s update semantics for default reasoning. Finally, I show how my update semantics for normative reasoning provides a simple and elegant solution to the CTD Trilemma and explains seemingly inconsistent data about inferences using ought-statements in normative reasoning.