Lowering the Judgment Interest Rate – Help or Hindrance for Collection?
Judgments entered after December 2, 2011, accrue interest at a much lower rate. Now judgments accrue interest at the rate of 1% plus prime. From now on, if the judgment is entered on or before June 30 of any given year, you use the prime rate as of January 1 of that year. If the judgment is entered on or after July 1, you use the prime rate as of July 1. Even though the prime rate may fluctuate over time, the rate of post-judgment interest is fixed and does not change until the judgment is paid. The prime rate is presently 3.25% (and has been since 2008). So that means all judgments entered after December 2, 2011 accrue interest at 4.25% and that rate is locked in. That is also the rate that will apply to new judgments until the prime rate changes. Obviously 4.25% is not as good as 12% if you are a judgment-creditor, but it may more fairly represent the time-value of money right now.
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