For some time, it was unclear what should be the appropriate rate of interest on secured loans on personal property(cars, furniture, etc.) paid through a Chapter 13 Bankruptcy Plan. In 2004, however, the Supreme Court settled the issue and determined a formula to be used in Chapter 13 cases. (Till v. SCS Credit Corporation, 541 U.S 465 (2004).) The Court announced that the rate should be the national prime rate, adjusted slightly upward to account for the risk of lending to a bankruptcy debtor. In the Till case, the risk was deemed to be 1.5% over prime. Lower courts have generally approved adjustments in the range of 1% to 3% over prime. Generally in both Oregon and Washington, the resulting rate ranges somewhere between four and six percent.
What Interest Rates Will I Pay on Secured Loans in a Chapter 13 Bankruptcy?