Leonard and Harriet Nobelman (plaintiffs) purchased their home in Texas with a $68,250 loan from American Savings Bank (American Savings) (defendant). The loan was evidenced by an adjustable-rate note and its payment secured by the mortgaged property. The Nobelmans fell behind in their payments and filed a Chapter 13 bankruptcy petition. At the time of the filing, they owed $71,335 to American Savings but the property was valued at only $23,500. The Nobelmans proposed a plan under which they would make mortgage payments to American Savings only up to the fair market value of the residence. Pursuant to 11 U.S.C. § 506(a), the Nobelmans argued that the bank debt was secured only to the amount of $23,500; the difference between that and the balance of the loan obligation was alleged to be an unsecured claim. Under the Nobelmans’ proposed plan, unsecured claimants would recover nothing. American Savings and the Chapter 13 trustee (defendant) opposed the Nobelmans’ proposal. The bankruptcy court withheld confirmation of the Nobelmans’ plan. The district court and court of appeals affirmed. The Nobelmans petitioned the Supreme Court for certiorari.