534 B.R. 149
Bankr. E.D. Ky.2015Background
- Debtors Richmond and Ruthie Jones reside in a manufactured home financed by a 21st Mortgage loan.
- The plan proposes paying the home’s value of $28,000 with a 5.25% interest rate.
- The rate is 2% over WSJ Prime, aligned with this District’s Local Form Plan.
- 21st Mortgage objects to the rate, arguing Till lacks binding authority and pre-Till coerced-loan controls.
- The Sixth Circuit generally treats Till’s plurality as binding and applies a formula-rate approach in Chapter 13 proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is Till binding precedent for Chapter 13 cramdown rates? | Jones follows Till plurality as binding. | 21st Mortgage argues Till may be non-binding dictum. | Till plurality binding; formula rate appropriate. |
| Does Marks require Till to have a binding holding in this context? | Marks supports Till as binding holding. | Marks may not require Till as binding. | Marks analysis supports Till binding; plurality is binding. |
| Should the coercive-loan approach pre-Till control in this case? | Not applicable; Till overrides pre-Till methods. | Pre-Till coerced-loan approach still viable if Till not binding. | Formula approach under Till controls; coercive-loan rejected. |
| What rate should be used to calculate cramdown under §1325(a)(5)(B)(ii)? | Formula rate (prime plus risk adjustment) is permissible. | Possibility of contract-rate or other methods. | Formula rate is appropriate under Till. |
Key Cases Cited
- Till v. SCS Credit Corp., 541 U.S. 465 (U.S. 2004) (formulary approach to discounting deferred payments; risk adjustment)
- In re American HomePatient, Inc., 420 F.3d 559 (6th Cir. 2005) (Till treated as binding; formula rate preferred in 13 cases)
- In re Taranto, 365 B.R. 85 (6th Cir. BAP 2007) (Till binding; formula rate applied when financing market exists)