Can a company charge interest on a court settlement for a debt?

UPDATED: Aug 22, 2011

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Can a company charge interest on a court settlement for a debt?

I have had a garnishment being taken from a settlement and I received a balance from the court that has the company adding 25% interest on the balance which is the amount I am paying them. It looks as though I have not paid anything on it because of the interest. Can they do this? Did it have to be in the court documents for them to do this?

Asked on August 22, 2011 Ohio


FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

In all states in this country judgments accrue interest at a stated rate per statute. In California, the rate is 10% per annum. Most states have similar statutes allowing a 10% post judgment accrual on a judgment.

The 25% interest on the judgment seems high if it is an annual rate. Most likely the 25% you are writing about is a accrual of interest on the principal balance of the judgment over a period of several years reflecting the amount of accrued interest on the judgment representing a 25 % increase over the principal balance over time.

Since judgments accrue interest at a legal rate, usually 10% per annum, this is why it is important to try and pay them down sooner rather than later.

Good luck.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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