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Many judgment creditors focus exclusively on recovering the principal amount awarded by the court and overlook one of the most valuable components of their judgment: post-judgment interest. In New York, statutory interest on unpaid judgments can add tens or even hundreds of thousands of dollars to your ultimate recovery, especially when collection takes years. Understanding how post-judgment interest works, how to calculate it properly, and how to ensure you collect every dollar owed can substantially increase your total judgment recovery.
New York’s Statutory Post-Judgment Interest Rate
New York law establishes a statutory post-judgment interest rate of nine percent per year under CPLR Section 5004. This rate is simple interest, not compound interest, meaning it accrues only on the principal judgment amount and not on previously accumulated interest. However, even at simple interest, nine percent represents a substantial return that can significantly increase the total amount a debtor owes over time.
The nine percent rate applies automatically to all money judgments unless a different rate is specified by statute or contract. Unlike pre-judgment interest rates that may vary depending on the type of claim, post-judgment interest is uniform across virtually all judgment types. This consistency simplifies calculations and makes it easy to determine exactly how much interest has accrued on any given date.
For context, nine percent is considerably higher than most commercial interest rates available in the current economic environment. While savings accounts and certificates of deposit yield only a fraction of this amount, your judgment continues accruing nine percent regardless of broader interest rate trends. This makes unpaid judgments surprisingly valuable assets that appreciate steadily over time.
When Post-Judgment Interest Begins Accruing
Post-judgment interest begins accruing on the date the judgment is entered by the clerk of the court, not on the date of the verdict, decision, or order. This distinction matters because there can be delays between when a judge issues a decision and when the formal judgment is actually entered. Always use the entry date shown on the judgment document itself when calculating interest.
Interest continues to accrue daily from the date of entry until the judgment is satisfied in full. There is no maximum period for interest accrual as long as the judgment remains enforceable. Given that New York judgments are enforceable for 20 years and can be renewed indefinitely, interest can theoretically accrue for decades on unpaid judgments.
Certain events can interrupt interest accrual. If a debtor files for bankruptcy, the automatic stay generally stops post-judgment interest from continuing to accrue during the bankruptcy case for unsecured claims. Similarly, if a judgment is stayed pending appeal, interest may not accrue during the stay period depending on the specific terms of the stay order. However, absent these exceptional circumstances, interest runs continuously from entry until payment.
Calculating Post-Judgment Interest Accurately
The formula for calculating simple interest is straightforward: multiply the principal judgment amount by the interest rate and then multiply by the time period expressed as a fraction of a year. For daily calculations, divide the annual interest by 365 to get the daily rate. For example, a $100,000 judgment accrues approximately $24.66 per day in interest calculated as $100,000 times 0.09 divided by 365.
To calculate total interest for a specific period, multiply the daily interest amount by the number of days elapsed. If that same $100,000 judgment remains unpaid for one year, it accrues exactly $9,000 in interest. After five years, the total interest equals $45,000, bringing the total amount owed to $145,000.
When partial payments are made, reduce the principal balance before calculating future interest but do not retroactively recalculate interest on the original higher balance. Payments should be applied first to accrued interest and then to principal unless a court order or agreement specifies otherwise. This application method ensures you capture all interest earned before reducing the interest-bearing principal.
Collecting Interest During Enforcement
Every enforcement action you take should specify the total amount due including both principal and accrued interest through the date of enforcement. When serving restraining notices, filing executions, or pursuing turnover proceedings, calculate interest to the current date and include that figure in your demand. Failing to claim interest means leaving money on the table.
Update interest calculations regularly as collection efforts continue. Interest accruing at nine percent on a substantial judgment adds thousands of dollars monthly. Working with experienced Warner & Scheuerman collection counsel ensures interest calculations remain accurate and complete throughout the enforcement process.
When debtors make settlement offers, verify that their proposed payment amount includes all accrued interest. Many debtors attempt to settle by paying only the original judgment amount while ignoring years of accumulated interest. Unless you are explicitly agreeing to waive interest as part of a negotiated discount, insist on payment of the full amount including interest.
Interest in Payment Plans and Settlements
If you agree to a payment plan, specify whether ongoing interest continues to accrue on the unpaid balance during the payment period. Payment plans that include continuing interest on the declining balance are far more favorable than fixed payment schedules that effectively freeze interest accrual.
Structure payment agreements so each installment covers accrued interest first before reducing principal. This ensures you capture interest earnings even if the debtor defaults partway through the payment plan. Without this provision, early payments might reduce principal while interest continues mounting on the remaining balance.
Common Mistakes That Reduce Interest Recovery
Many creditors inadvertently reduce their interest recovery by accepting satisfaction of judgment documents that specify payment of only the principal amount. Before signing any satisfaction, verify that the payment received includes all accrued interest through the payment date. Once you file a satisfaction of judgment, your right to claim additional interest is extinguished.
Another common error is failing to claim interest when renewing judgments. Renewed judgments should include all unpaid principal plus all accrued interest from the original entry date through the renewal date. The renewed judgment then continues accruing interest on this combined amount, though still at the simple interest rate rather than compound.
Always maintain detailed records of all interest calculations, partial payments, and current balances. These records become essential if debtors dispute the amount owed or if you need to prove your calculation in court proceedings.
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