What Is the Till Rate of Interest in Chapter 13?

The Till rate in Chapter 13 is the interest rate a debtor pays on crammed-down secured debts, calculated by adding a risk premium of 1% to 3% to the national prime rate. With the prime rate at 6.75% as of late 2025, most debtors can expect a Till rate somewhere between roughly 7.75% and 9.75%, depending on the risk adjustment the bankruptcy court assigns. The rate comes from the U.S. Supreme Court’s 2004 decision in Till v. SCS Credit Corp.¹ and matters most when you want to keep collateral, like a car, that’s worth less than what you still owe on the loan.

The Prime-Plus Formula

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

The second part is a 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 in the range of 1% to 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 for that debtor’s plan is 8.75%. Every payment made on the crammed-down secured claim accrues interest at that rate over the life of the plan.

The rate exists because federal law requires it. 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, and the Till rate compensates the creditor for waiting.

What Pushes the Risk Adjustment Up or Down

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

In practice, the adjustment tends to move lower when you have stable employment, a realistic budget with some breathing room, collateral that holds its value, and a shorter plan. It tends to move higher when income is irregular, the plan stretches the budget thin, the collateral depreciates quickly, or there’s a history of missed payments after filing.

Debtors and creditors can negotiate the adjustment, and many plans are confirmed with an agreed-upon rate. When they can’t agree, the court holds a hearing where both sides present evidence. Some bankruptcy districts publish a presumptive Till rate that local courts apply unless a party specifically objects, which can simplify the process.

How Cramdown Works and Why the Till Rate Matters

The Till rate only comes into play during a “cramdown.” Under federal bankruptcy law, a secured claim is worth only as much as the collateral backing it. If you owe $18,000 on a car loan but the car is now worth $11,000, the law lets the bankruptcy court split that 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 your Chapter 13 plan, you repay only the $11,000 secured portion at the Till rate to keep the car. The remaining $7,000 gets lumped in with your other unsecured debts, like credit cards and medical bills, and is paid at whatever percentage your plan provides to unsecured creditors. In many cases, unsecured creditors receive only a fraction of what they’re owed, and any unpaid balance is discharged when you complete the plan.

The savings can be dramatic. If your original car loan carried a 12% interest rate and you cram the balance down to the car’s current value at a Till rate of 8.75%, you’re paying less interest on a smaller principal. On an $11,000 secured claim repaid over a 60-month plan at 8.75%, the total interest comes to roughly $2,600, compared to far more on the full $18,000 balance at 12%.

Which Debts You Can Cram Down

Not every secured loan qualifies. Congress added timing restrictions in 2005, and your home mortgage is off-limits entirely.

The 910-Day Rule for Vehicles

If you bought a car for personal use and the loan was taken out within 910 days (about two and a half years) before 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, so you may get a lower interest rate than your contract, but you cannot reduce the principal 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 current 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. If the debt was incurred within one year before filing, the cramdown is blocked.² Debts older than one year on these items can be crammed down using the same process as vehicle loans.

Primary-Residence Mortgages

Chapter 13 plans 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. You can use Chapter 13 to cure mortgage arrears over the plan’s three-to-five-year timeline, but the underlying loan itself is untouchable. 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 the Collateral Is Valued

The cramdown amount hinges on what the collateral is worth, and the Bankruptcy Code specifies how to measure it. For personal property in a Chapter 13 case, the standard is “replacement value,” meaning the price a retail merchant would charge for property of the same kind, considering its age and condition.³ For vehicles, this is closer to a retail or dealer price than a private-party or trade-in value. Getting the valuation right matters because it directly sets the secured claim you’ll repay at the Till rate.

Creditors frequently challenge valuations, arguing the collateral is worth more than the debtor claims. A debtor might use a resource like NADA or Kelley Blue Book and point to the car’s mileage, wear, and mechanical condition. The creditor might counter with a higher book value or testimony from a dealer. If the parties disagree, 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, typically the date the bankruptcy court confirms your plan. The rate in effect when you first filed the case doesn’t control. If the prime rate drops between your filing date and your confirmation hearing, you benefit. If it rises, you pay more.²

Once confirmed, the Till rate is fixed for the duration of your plan. Even if the prime rate moves significantly during your three-to-five-year repayment period, your rate stays the same. That predictability is a practical advantage of Chapter 13: your secured-debt payments won’t fluctuate, making it easier to budget and complete the plan successfully.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