What Is the Till Rate of Interest in Chapter 13?

The Till rate of interest in Chapter 13 is the rate a debtor pays on secured debts that have been reduced, or “crammed down,” through a repayment plan. It equals the national prime rate plus a risk premium of 1% to 3% set by the bankruptcy court. With the prime rate at 6.75% as of late 2025, most Chapter 13 debtors can expect a Till rate between roughly 7.75% and 9.75%, depending on the risk adjustment the court assigns. The rate takes its name from the U.S. Supreme Court’s 2004 decision in Till v. SCS Credit Corp., and it matters most when you want to keep collateral, like a car, that’s worth less than what you still owe.

Where the Rate Comes From

In Till v. SCS Credit Corp., the Supreme Court answered a question that had split the lower courts: when a Chapter 13 plan forces a secured creditor to accept repayment over time instead of getting paid immediately, what interest rate makes those future payments fair? The Court endorsed a “formula approach” that starts with the national prime rate and adds a small risk adjustment, on the theory that someone in bankruptcy is a riskier borrower than a bank’s best commercial customer.¹

The rate exists to satisfy a specific statutory requirement. When a Chapter 13 plan pays a secured creditor over time against their wishes, the creditor must receive the “present value” of their allowed secured claim as of the plan’s effective date.² A dollar paid three years from now is worth less than a dollar today. The Till rate closes that gap by compensating the creditor for waiting.

The Prime-Plus Formula

The calculation has two components.

The first is the national prime rate, which reflects the interest a commercial bank charges its most creditworthy borrowers. It’s published by the Federal Reserve and by financial outlets like the Wall Street Journal. As of December 2025, that rate is 6.75%.

The second is the risk adjustment. Because a debtor in bankruptcy poses a higher risk of default than a prime commercial borrower, the court adds a premium on top. The Supreme Court noted that bankruptcy courts have generally approved adjustments between 1% and 3%.¹ In the Till case itself, the bankruptcy court approved a 1.5% adjustment.

So if the prime rate is 6.75% and the court assigns a 2% risk premium, the Till rate on that plan is 8.75%. Every payment the debtor makes on the crammed-down secured claim accrues interest at that rate.

When the Rate Applies: Cramdown

The Till rate only comes into play during a cramdown, so understanding that mechanism is essential. Under federal bankruptcy law, a secured claim is worth only as much as the collateral behind it. If you owe $18,000 on a car loan but the car is now worth $11,000, the court can split the debt into two pieces: an $11,000 secured claim equal to the car’s value, and a $7,000 unsecured claim for the shortfall.³

Through the Chapter 13 plan, you repay only the $11,000 secured portion at the Till rate to keep the car. The remaining $7,000 joins your other unsecured debts and is paid at whatever percentage the plan provides to unsecured creditors. In many cases that’s a fraction of the balance, and any unpaid amount is discharged when you complete the plan.

The savings can be significant. If the original loan carried 12% interest and you cram the balance down to the car’s current value at a Till rate of 8.75%, you pay less interest on a smaller principal. On an $11,000 secured claim repaid over 60 months at 8.75%, the total interest comes to roughly $2,600, well below what the full $18,000 balance at 12% would generate.

Which Debts Qualify for a Cramdown

Not every secured loan can be crammed down. Congress added timing restrictions in 2005, and home mortgages sit outside the process entirely.

The 910-Day Rule for Vehicles

If you bought a car for personal use and the loan is less than 910 days old (about two and a half years) on your bankruptcy filing date, you cannot cram the loan down. The lender keeps the full balance as a secured claim, and you must pay it in full through the plan to keep the vehicle.² The Till rate still applies to these 910-day claims in most courts, which can lower your interest rate below the contract rate, but the principal doesn’t shrink to the car’s current value.

If the loan is older than 910 days, the cramdown power is fully available. You pay the car’s replacement value at the Till rate, and the excess balance becomes unsecured debt.

The One-Year Rule for Other Personal Property

For secured debts on personal property other than a motor vehicle, such as furniture, appliances, or equipment, a separate restriction applies. Debts incurred within one year before filing cannot be crammed down.² Older debts on these items can be crammed down like older vehicle loans.

Home Mortgages

A Chapter 13 plan cannot modify the terms of a mortgage secured only by your primary residence.⁴ The lender’s original interest rate, balance, and payment schedule stay intact. Chapter 13 lets you cure mortgage arrears over the three-to-five-year plan, but the loan itself is off-limits. This protection does not extend to mortgages on investment properties or vacation homes, which can be modified or crammed down like other secured debts.

How Courts Set the Risk Adjustment

The 1% to 3% range is a guideline, not a rigid formula, and the number assigned to your plan depends on the facts of your case. The Supreme Court identified factors the bankruptcy court should weigh: your overall financial circumstances, the nature and condition of the collateral, and whether the proposed plan looks feasible.¹

In practice, these are the pressures on the number:

Lower risk, closer to 1%: stable employment, a realistic budget with room for unexpected expenses, collateral that holds its value, and a shorter plan duration.
Higher risk, closer to 3%: irregular income, a plan that stretches the budget thin, collateral that depreciates quickly, and a history of missed payments after filing.

The debtor and creditor can negotiate the adjustment, and many plans are confirmed at an agreed rate. When they can’t agree, the court holds a hearing and both sides present evidence. The court aims for a rate high enough to fairly compensate the creditor for the risk of nonpayment, but not so high that it makes the plan impossible to complete. Some bankruptcy districts publish a presumptive Till rate that local courts apply absent a specific objection.

How the Collateral Is Valued

Because the cramdown amount depends on what the collateral is worth, valuation drives the whole calculation. For personal property in a Chapter 13 case, the Bankruptcy Code uses “replacement value,” meaning the price a retail merchant would charge for property of the same kind, considering age and condition.³ For vehicles, that number sits closer to a retail or dealer price than a private-party or trade-in value. Getting it right matters, because it fixes the secured claim you’ll repay at the Till rate.

Creditors frequently challenge valuations, arguing the collateral is worth more than the debtor claims. If the parties can’t agree, the court decides.

When the Rate Locks In

The prime rate used in the Till calculation is the one in effect on the plan’s effective date, which is typically the confirmation date. The rate on your filing date doesn’t control. If the prime rate drops between filing and confirmation, you benefit. If it rises, you pay more.²

Once confirmed, the rate is fixed for the life of the plan. Even if the prime rate moves significantly during the three-to-five-year repayment period, your rate stays the same. That predictability is one of the practical advantages of a Chapter 13 plan: your secured-debt payments won’t fluctuate, which makes budgeting through the plan easier.⁵

1
Justia. Till v. SCS Credit Corp.
2
Office of the Law Revision Counsel. 11 USC 1325 – Confirmation of Plan
3
Office of the Law Revision Counsel. 11 USC 506 – Determination of Secured Status
4
Office of the Law Revision Counsel. 11 USC 1322 – Contents of Plan
5
United States Courts. Chapter 13 Bankruptcy Basics