MD Ga - "910 Vehicle" Lender Entitled To Till Interest Rate In Chapter 13 Plan, Even If Higher Than Contract Rate
In re Davis, Ch. 13 Case No. 07-50761, 2007 Lexis 3175 (Bankr. M.D. Ga. September 12, 2007).
On February 26, 2005, Debtor purchased a new 2005 Chevrolet Trail Blazer ... Debtor financed the purchase by entering into a Retail Installment Sale Contract ...GMAC holds a purchase money security interest in Debtor's truck. Debtor purchased the truck for his personal use. Under the contract, Debtor was to pay the amount financed, $ 39,079.49 plus interest of 4.9%, by making seventy-two monthly payments of $ 628.83 beginning on April 13, 2005.... Debtor filed a petition under Chapter 13 of the Bankruptcy Code on April 4, 2007. The current balance of Debtor's obligation to GMAC is $ 30,627.44. Debtor offers to pay this amount plus interest of 4.9 % through his proposed Chapter 13 plan. GMAC contends that it is entitled to receive interest on its claim at the prime rate, which the parties stipulate is 8.25 %. ...
"Although the Court [in Till] was dealing specifically with a 'strip-down' case, it is widely understood that its decision applies to all cramdown cases under Section 1325(a)(5)(B)." In re Grunau, 355 B.R. at 336.
In the case at bar, Debtor's Chapter 13 plan proposes to cram down the claim secured by his truck over the objection of the holder of the claim, GMAC. Debtor offers to pay the claim plus interest of 4.9%. The Court is persuaded that Debtor must pay the full amount of GMAC'S claim plus interest as required by Till. GMAC has agreed to accept the prime rate (8.25%) with no upward adjustment for risk. Debtor's proposed Chapter 13 plan fails to pay the Till rate.
I am dealing with a similar case - the contract rate is 1% but the lender wants 9% per Till. It sure seems like the lender is getting quite a windfall. Ridiculous. Congress needs to close this loophole.
@Ginsberg:
I'm not finding many lenders who are insisting on Till when K rate is lower, perhaps because their counsel has not read that opinion? But, in the cast majority of cases, these people are paying 14-16-18% or more, so I'm happy with Till.