Calculating Judgment interest is important when your bankruptcy attorney is calculating whether or not a judgment lien impairs the exemption on your homestead
See Judge Ruiz’s decision on how to calculate whether or not a judgment lien impairs the homestead exemption
Here is an example:
Suppose you have a judgment lien against you for $2,000 and another one for $20,000 that were both entered on September 28, 2008.
A Basic Method for Calculating Interest on a Judgment
Multiply the judgment amount X interest rate % = amount of annual interest due
$2,000 x 9% = $180.00 interest due per year
$20,000 x 9% = $1,800 interest due per year
Divide the amount of annual interest due by 365 = the daily interest amount
a $2,000 judgment collects daily interest in the amount of $0.493151 cents per day
a $20,000 judgment collects daily interest in the amount of $4.931507 per day
Multiply the daily interest amount times the number of days since the date of judgment to determine the amount of interest owed.
If you filed bankruptcy on September 23, 2011 the value of the judgment lien on that date would be
Judgment filed on 9/28/2008 Bankruptcy filed on 9/23/2011
original judgment amount new judgment amount
When does post-judgment interest start to run?
Generally, post-judgment interest starts to run on a civil judgment from the date the judgment is entered by the Court. In some courts, the entry of judgments is a function of the Court's Clerk. So even if a judge signs a judgment on one day, but the Clerk does not "enter" it until a week later, the post-judgment interest would not start to run until the judgment is docketed by the Clerk. When a judgment is considered entered is a product of the civil procedural rules and law applicable to the particular court from which the judgment was issued.
What post-judgment interest rate applies In New York?
In New York, the rate of post-judgment interest is set by the civil procedural law titled the Civil Practice Law and Rules (the "CPLR").
CPLR § 5004 fixes the post-judgment rate of interest at 9% per year and CPLR § 5003 states that interest shall run from the date of entry of the judgment.
In New York the interest is calculated as simple interest and not compounded.
What interest rate applies in a federal civil judgment?
28 U.S.C. 1961 provides, in pertinent part, "interest [on a civil judgment] shall be calculated from the date of the entry of the judgment, at a rate equal to the weekly average 1-year constant maturity Treasury yield, as published by the Board of Governors of the Federal Reserve System, for the calendar week preceding the date of the judgment." Each Monday the Federal Reserve publishes the applicable rates for the prior week.
A link to the current rate may be found here: http://www.federalreserve.gov/releases/h15/current/
Post-judgment interest on a federal civil judgment is compounded.
When is a party entitled to pre-judgment interest?
Whether a party is entitled to pre-judgment interest is a complicated question hinging on the facts of a particular case, the claims asserted by the parties and the applicable law and rules of the court in which the dispute has been brought.
A great post-judgment interest calculator can be found here: http://www.judgmentcenter.com/Calculator.htm. Simply provide the judgment amount, date of entry of the judgment and the jurisdiction and it will advise you of the applicable rate and balance due, inclusive of interest.