Saturday, December 1, 2012

Till v. SCS Credit Corporation case brief

Till v. SCS Credit Corporation (2004)   

Facts: Debtor owed $4894.89 on a truck worth only $4000 at time of Chapter 13 filing. Secured claim limited to $4000 and the balance was unsecured. Original contract called for 21% per year interest. The debtor proposed their plan w/ 9.5% interest per year that was the “prime-plus” rate. 
Issue: What is the correct interest rate to apply?

Holding: Look to the national prime rate and allow the bankruptcy court to adjust accordingly. If a “eye-popping” interest rate is necessary, then the plan probably should not be confirmed.

Analysis: §1322(b)(2) allows the court to modify the rights of any creditor whose claim is secured by any interest other than real property that is the debtor’s principal residence. We reject the coerced loan, presumptive contract rate, and cost of funds approaches.
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