Calculation of Post Judgment Interest

Post-judgment interest is the extra money added to the amount a person has to pay after a court has made a decision. It is like a penalty or fee for not paying the money right away after the judgment. This interest keeps growing until the full payment is made.

Let’s say the court orders someone to pay $10,000 to another person. If they do not pay the money immediately, then interest will be added daily, monthly, or yearly until they finally pay.

This helps the winning party (the one who receives the money) because they are not losing value while waiting for the payment.

Why Post-Judgment Interest is Important

Post-judgment interest is important for many reasons:

Encourages quick payment: People will try to pay faster to avoid extra charges.
Protects the winner: The winner of the case does not lose money due to delay.
Covers inflation: It helps maintain the value of the judgment even if prices go up.

Key Terms to Understand

Before we go further, here are a few simple terms you should know:

Judgment: A final decision given by a court.
Creditor: The person who wins the case and is supposed to receive money.
Debtor: The person who loses the case and has to pay money.
Interest Rate: A percentage added to the main money (judgment amount).
Post-Judgment: After the court has given its final decision.

When Does Post-Judgment Interest Start?

Post-judgment interest starts after the date of judgment. This means the interest begins the day the court gives its decision. From that day, the interest keeps growing until the full amount is paid.

How is Post-Judgment Interest Calculated?

To calculate post-judgment interest, we need to know three things:

Total judgment amount (how much the court has ordered to be paid)
Interest rate (decided by law or the court)
Number of days or years the payment is delayed

Basic Formula:

Interest = (Judgment Amount) × (Interest Rate) × (Time Period)

Let’s understand this with a simple example.

Example 1: Simple Interest for One Year

Judgment Amount = $10,000
Interest Rate = 5% per year
Time = 1 year

Interest = $10,000 × 0.05 × 1 = $500

So, the debtor has to pay $10,000 + $500 = $10,500 if they pay after one year.

Example 2: Simple Interest for Part of the Year

Sometimes, the payment is made after a few months or days, not a full year.

Judgment Amount = $10,000
Interest Rate = 6% per year
Time = 6 months (or 0.5 years)

Interest = $10,000 × 0.06 × 0.5 = $300

So, the total payment will be $10,300.

Example 3: Daily Interest Calculation

If the court says interest is calculated daily, use this method:

Judgment Amount = $5,000
Interest Rate = 5% per year
Days delayed = 100

Daily Interest Rate = Annual Rate / 365
= 0.05 / 365 = 0.000136986

Interest = $5,000 × 0.000136986 × 100 = $68.49

So, the total amount = $5,000 + $68.49 = $5,068.49

What is the Interest Rate?

The interest rate depends on the country or state law. Sometimes, it is a fixed rate like 5% or 6%. Other times, it is linked to something like the Treasury Rate, bank rate, or court rules.

Some courts use the federal interest rate, which changes every week or month.

Federal vs. State Post-Judgment Interest

In some countries like the United States, there are federal courts and state courts. Both can have different interest rates.

Federal courts: Use a rate set by the government, usually based on the Treasury yield.
State courts: Use a rate set by state law. It could be a fixed number like 8%, or it could change every year.

Where to Find the Interest Rate?

You can find the post-judgment interest rate by:

Checking your local court’s website
Looking at your country’s or state’s finance department
Asking a lawyer or legal advisor

Compound vs. Simple Interest

There are two types of interest:

1. Simple Interest

This means interest is added only on the main judgment amount.

2. Compound Interest

This means interest is added on both the judgment and previous interest. It grows faster.

Example:
If the court says compound interest yearly, then:

Year 1: $10,000 × 5% = $500 → Total = $10,500
Year 2: $10,500 × 5% = $525 → Total = $11,025
Year 3: $11,025 × 5% = $551.25 → Total = $11,576.25

So after 3 years, the total is $11,576.25

Can the Court Change the Interest Rate?

Yes. In some cases, the court may decide a different rate. For example:

If there was a contract between two people with a special rate
If the court wants to punish the debtor more
If the law allows special rules for certain types of cases

Can You Avoid Post-Judgment Interest?

Yes, there are a few ways to avoid paying post-judgment interest:

Pay immediately after the judgment.
Reach an agreement with the other party for a payment plan.
Appeal the judgment, although interest might still apply during the appeal.

Online Post-Judgment Interest Calculators

There are many websites where you can calculate post-judgment interest. You just need to enter:

Judgment amount
Interest rate
Start and end date

Then the calculator will show you how much interest is added.

Some examples of online calculators:

U.S. Court Federal Interest Calculator
State Court Interest Tools
Private legal websites

Common Mistakes in Calculating Post-Judgment Interest

Using the wrong interest rate
Not calculating partial years correctly
Forgetting to include weekends or holidays
Not checking if the interest is simple or compound

Always double-check the court order and the law.

What Happens If the Debtor Still Doesn’t Pay?

If the debtor refuses to pay even with interest:

The creditor can ask the court for more action.
The court can allow wage garnishment (taking money from salary).
The court can seize property or freeze bank accounts.
More interest will continue to build up.

Real-Life Example

Imagine Sarah wins a case against Mark. The court tells Mark to pay $20,000 on January 1st. The interest is 6% per year. Mark delays and finally pays on July 1st (6 months later).

Interest = $20,000 × 0.06 × 0.5 = $600
Total Mark must pay = $20,600

If he waits longer, interest will keep increasing.

Conclusion

Post-judgment interest is a way to make sure the person who wins in court does not lose out due to delay. It encourages fast payment and protects the value of the judgment.

To calculate it:

Know the amount of judgment
Know the interest rate
Know the time of delay

Use the formula or an online calculator to make it easy. Always check your country’s or state’s law for the correct rate and rules.

Would you like a calculator tool or simple HTML code to calculate post-judgment interest on a website?

Calculation of Post Judgment Interest​