Nobelman v. American Savings Bank

The Nobelmans (plaintiffs) owed American Savings Bank (defendant) $71,335 on a home mortgage secured by property worth only $23,500, and after filing Chapter 13 bankruptcy, they proposed a plan paying the bank only up to the home's reduced fair market value, treating the remaining balance as an unsecured claim under § 506(a) that would receive nothing. The bankruptcy court, district court, and court of appeals all refused to confirm this plan, and the Nobelmans sought Supreme Court review to resolve a circuit split.