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

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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

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 9 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.


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