Received First Objection and it was Chrysler Financial

[FishersMike]

They did not object to the cram-down value of the vehicle but they are objecting to the 3.90 percent interest rate that was proposed. This was proposed as this is what I have been paying them per their contract.

They are asking for 1, 2, or 3 points above prime of 3.25 percent. I am not to worried about increasing the percentage to 4.25, or 5.25 percent, etc. but I just think it stinks that they are objecting even though it is same rate they currently getting.

Is this normal?

[despritfreya]

They did not object to the cram-down value of the vehicle but they are objecting to the 3.90 percent interest rate that was proposed. . . I am not to worried about increasing the percentage to 4.25, or 5.25 percent, etc. but I just think it stinks that they are objecting even though it is same rate they currently getting.

Why would you think it stinks? You are not abiding by the contract to pay the lender in full, why do you think the lender must abide by the interest provided in that contract? This is a give and take. The lender is entitled to an interest rate based upon market conditions and the risk associated with the loan. The points over prime it is suggesting are within that requirement.

Des.

[FishersMike]

So I take it by your response this seems normal then....

[despritfreya]

So I take it by your response this seems normal then....

Yes. . . and sorry. After I read back my response. . . I did not mean to sound snippy.

Des.

[FishersMike]

No worries yeah I guess I did use the wrong way to express my view on it by saying it "stinks" -- because I completely understand what you are saying. It just seems so minimal that they would be bothering to object, especially when I was extremely generous with the valuation as my attorney wanted it almost 2k less. -- guess this means less money to the unsecureds hehe

[justbroke]

This is really all about the Till Rate. In the TIll decision, it was found that the creditor can get the Till Rate plus a risk factor of 1%, 2% or 3%. This is absolutely normal. If you had only proposed the prime lending rate (as published in the WSJ) for the prior quarter, then you didn't add the risk on it.

If you had previously paid on time, then the risk factor can be argued at 1% or less. If you paid late at any time (slow pay or even 30+ days late, ever), then there is more risk for the lender so 2% to 3% should be used.

justbroke's study guide: Till went all the way to the Supreme Court and in TILL V. SCS CREDIT CORP, (02-1016) 541 U.S. 465 (2004) 301 F.3d 583, reversed and remanded, while they didn't address the risk factor directly, they did write about it.

The Bankruptcy Court in this case approved a risk adjustment of 1.5%, App. to Pet. for Cert. 44a—73a, and other courts have generally approved adjustments of 1% to 3%, see In re Valenti, 105 F.3d 55, 64 (CA2) (collecting cases), abrogated on other grounds by Associates Commercial Corp. v. Rash, 520 U.S. 953 (1997)

TILL V. SCS CREDIT CORP[/URL], (02-1016) 541 U.S. 465 (2004) 301 F.3d 583