October Term 2003 · Docket 02-1016
What interest rate applies to Chapter 13 secured debt payments?
Creditors argue for a risk-based rate. Debtors argue for a market-based rate.
Verified source milestones
- — An official oral-argument transcript was verified.
- — An official oral-argument transcript was verified.
The arguments, in order
This case may have been argued more than once. Each entry below uses that session's official transcript. Later arguments do not erase earlier ones.
Argument 1 ·
What happened at the argument
Ms. Harper argued deferred payments must equal the present value of collateral.
She stated present value is an objective concept involving real interest and inflation.
Mr. Brunstad argued the formula approach is inaccurate and under-values risks.
He cited a forty percent payment rate for Chapter 13 debtors as evidence of risk.
Read the official transcript for this argument · Official argument details
Sources used for this argument breakdown
- Official Supreme Court Transcript — file page 15, lines 13-7 — Transcript, file page 15, lines 13-7
- Official Supreme Court Transcript — file page 25, lines 31-1 — Transcript, file page 25, lines 31-1
- Official Supreme Court Transcript — file page 3, lines 15-47 — Transcript, file page 3, lines 15-47
- Official Supreme Court Transcript — file page 3, lines 5-13 — Transcript, file page 3, lines 5-13
- Official Supreme Court Transcript — file page 51, lines 17-29 — Transcript, file page 51, lines 17-29
- Official Supreme Court Transcript — file page 54, lines 29-45 — Transcript, file page 54, lines 29-45
- Official Supreme Court Transcript — file page 55, lines 47-57 — Transcript, file page 55, lines 47-57
A citizen's guide to the whole case
What this case is about
This case concerns the calculation of deferred payments for secured debt in Chapter 13 bankruptcy. The dispute centers on the appropriate interest rate to apply to these payments.
Official sources for this section
- Official Supreme Court Transcript — file page 15, lines 13-7 — Transcript, file page 15, lines 13-7
- Official Supreme Court Transcript — file page 25, lines 31-1 — Transcript, file page 25, lines 31-1
- Official Supreme Court Transcript — file page 3, lines 15-47 — Transcript, file page 3, lines 15-47
- Official Supreme Court Transcript — file page 51, lines 17-29 — Transcript, file page 51, lines 17-29
- Official Supreme Court Transcript — file page 54, lines 29-45 — Transcript, file page 54, lines 29-45
How the case got here
The Supreme Court heard oral argument in this case on December 2, 2003.
Official sources for this section
- Official Supreme Court Transcript — file page 3, lines 5-13 — Transcript, file page 3, lines 5-13
- Official Supreme Court Transcript — file page 55, lines 47-57 — Transcript, file page 55, lines 47-57
What each side wants
Debtors want payments based on objective market rates.
Creditors want payments based on the risk of default.
Official sources for this section
- Official Supreme Court Transcript — file page 15, lines 13-7 — Transcript, file page 15, lines 13-7
- Official Supreme Court Transcript — file page 25, lines 31-1 — Transcript, file page 25, lines 31-1
- Official Supreme Court Transcript — file page 3, lines 15-47 — Transcript, file page 3, lines 15-47
- Official Supreme Court Transcript — file page 51, lines 17-29 — Transcript, file page 51, lines 17-29
- Official Supreme Court Transcript — file page 54, lines 29-45 — Transcript, file page 54, lines 29-45
What each side says
Debtors argue present value equals real interest plus inflation.
Creditors argue the formula ignores the true risk of nonpayment.
Official sources for this section
- Official Supreme Court Transcript — file page 15, lines 13-7 — Transcript, file page 15, lines 13-7
- Official Supreme Court Transcript — file page 25, lines 31-1 — Transcript, file page 25, lines 31-1
- Official Supreme Court Transcript — file page 3, lines 15-47 — Transcript, file page 3, lines 15-47
- Official Supreme Court Transcript — file page 51, lines 17-29 — Transcript, file page 51, lines 17-29
- Official Supreme Court Transcript — file page 54, lines 29-45 — Transcript, file page 54, lines 29-45
What the justices asked
How many Chapter 13 debtors actually default on their plans?
Would a creditor receive replacement value if they foreclosed?
Official sources for this section
- Official Supreme Court Transcript — file page 55, lines 47-57 — Transcript, file page 55, lines 47-57
Why it matters
The outcome sets the cost of borrowing for millions of debtors. It determines the total amount of money debtors must pay. It affects the profitability of secured lending in bankruptcy.
Official sources for this section
- Official Supreme Court Transcript — file page 15, lines 13-7 — Transcript, file page 15, lines 13-7
- Official Supreme Court Transcript — file page 25, lines 31-1 — Transcript, file page 25, lines 31-1
- Official Supreme Court Transcript — file page 3, lines 15-47 — Transcript, file page 3, lines 15-47
- Official Supreme Court Transcript — file page 51, lines 17-29 — Transcript, file page 51, lines 17-29
- Official Supreme Court Transcript — file page 54, lines 29-45 — Transcript, file page 54, lines 29-45
What happens next
This article currently covers the argument record. Use the official docket link for later case activity.
Official sources for this section
- Official Supreme Court Transcript — file page 3, lines 5-13 — Transcript, file page 3, lines 5-13
- Official Supreme Court Transcript — file page 55, lines 47-57 — Transcript, file page 55, lines 47-57
Official Court provenance
Official docket and case history · Official Supreme Court oral-argument detail page
Title and summary sources
- Official Supreme Court Transcript — file page 15, lines 13-7 — Transcript, file page 15, lines 13-7
- Official Supreme Court Transcript — file page 25, lines 31-1 — Transcript, file page 25, lines 31-1
- Official Supreme Court Transcript — file page 3, lines 15-47 — Transcript, file page 3, lines 15-47
- Official Supreme Court Transcript — file page 51, lines 17-29 — Transcript, file page 51, lines 17-29
- Official Supreme Court Transcript — file page 54, lines 29-45 — Transcript, file page 54, lines 29-45
- Official Supreme Court Transcript — file page 15, lines 13-7 — Transcript, file page 15, lines 13-7
- Official Supreme Court Transcript — file page 25, lines 31-1 — Transcript, file page 25, lines 31-1
- Official Supreme Court Transcript — file page 3, lines 15-47 — Transcript, file page 3, lines 15-47
- Official Supreme Court Transcript — file page 51, lines 17-29 — Transcript, file page 51, lines 17-29
- Official Supreme Court Transcript — file page 54, lines 29-45 — Transcript, file page 54, lines 29-45
Revision history
- Revision 1 · Official Transcript ·
Correction: Rewritten to the concise citizen-facing editorial standard.
- Revision 2 · Official Transcript ·
Correction: Migrated to the dated official Court activity contract without model use.