Interest Rates on Secured Claims in Chapter 13 Cases in the EDKY

UPDATE:  The prime rate increased to 4.5% effective December 14, 2017.

The prime rate of interest increased a quarter of a point to 4% effective March 16, 2017.  Read on for information on how this affects chapter 13 plans in the EDKY, and what other interest rates are applicable to secured claims.

Prime rate:

Generally the interest rate on secured claims being paid through a chapter 13 plan is prime plus a risk factor of 1 to 3 points.  We often refer to this as the Till rate, named after the 2004 Supreme Court opinion which advanced the formulaic “prime plus” method of setting interest rates in chapter 13 cases.

The plan in the EDKY sets forth a “default” interest rate of the Wall Street Journal (WSJ) prime rate on the date of confirmation plus 2 percentage points.  Thus, for secured claims that are not specifically provided for in the plan, or for those secured claims that are provided for but for which no interest rate has been stated, we will use 6% (prime plus 2) as the interest rate in cases where plans are confirmed on or after March 16, 2017.

The WSJ prime rate is reported at, and also at  The website updates its reported rates weekly.  Its last update was March 15, so the website does not yet reflect the increased prime rate, but the website is worth bookmarking.

The interest rate on most secured claims being paid through the plan (even the so-called “910 car claims”) may be modified to the Till rate.   However, pursuant to section 511 of the Bankruptcy Code (11 U.S.C. § 511), tax claims are paid at the applicable nonbankruptcy rate, so attorneys need to be aware of the various interest rates for tax claims.

IRS secured claims:

The interest rate for unpaid federal taxes is fixed quarterly by the IRS and is the federal short-term rate (rounded to the nearest full percent) plus 3 percentage points.  The federal tax rate is presently 4%.  The IRS usually lists the applicable rate on its proof of claim, but we use the interest rate set by the IRS as of the date of confirmation if there is a difference.  Use this link to find out what the current IRS rate is: [12/14/17 UPDATE:  This link is current to the second quarter of 2017.  For the most current IRS rate, go to and search for “interest rates 2018” (or whatever year you are looking for), and click on the appropriate link to the news release].

Kentucky Department of Revenue secured claims:

The interest rate on Kentucky tax claims other than property taxes is adjusted annually and is presently 6%.  The current and historical rates can be found at this link: (scroll to bottom of page).

Kentucky property tax claims:

Under Kentucky law, the owner of a certificate of delinquency for unpaid property taxes is entitled to receive interest at 12% on the amount paid to purchase the certificate of delinquency.  Because it is a tax claim, it is entitled to the same 12% interest rate when paid through a chapter 13 plan, even if the claim is held by a non-governmental purchaser.  See also Delinquent Property Tax Claims in Chapter 13 Cases.


  1. Your thoughts on what will this mean for the proposed new National plan? I have not had the opportunity yet to review it as to the provision on interest rate for secured claims. BTW, the new profile photo is really nice, I think!


    1. The national plan doesn’t have a “default” clause for secured claims not otherwise provided for in the plan (or for an interest rate if there is no interest rate stated). I don’t yet know whether our court will adopt the national plan or some modified version. Thanks!


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