Newsletter Articles Anderson, O'Brien, Bertz, Skrenes & Golla Law

A money judgment is a judicial determination that one party owes another party a certain amount of money. Sometimes obtaining a judgment may be only half of the battle. Collecting the judgment may be the other half.

A judgment owner may use certain remedies in collecting a judgment. Among the remedies are the garnishment of earnings and non-earnings. The owner may also have the Sheriff seize and sell personal property and real estate of the debtor.

Another aid or inducement in collecting a money judgment is the imposition of interest on the judgment amount. Over the last 30 years, interest on a money judgment accrued at the annual rate of 12% per year. For example, the amount owing on a $1,000 judgment would increase $120 a year until the debtor started making payments against the judgment.

This law recently changed. Effective December 2, 2011, instead of interest at 12% per year, the rate is as follows:

Judgments entered before June 30th of a given year:
Interest rate is 1% plus the prime rate in effect on January 1st of that year.

Judgments entered after June 30 of a given year:
Interest rate is 1% plus the prime rate in effect on July 1st of that year.

For example, the prime rate as of July 1, 2011 was 3.25%. Therefore, the interest rate is 4.25% for any judgments obtained from December 2, 2011 through December 31, 2011. The prime rate as reported by the Federal Reserve Board on January 1, 2012 will determine the interest rate for the following six months. In the meantime, the old interest rate of 12% will continue to apply to all judgments entered before December 2, 2011.

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