Does the Judgment Against Me Accrue Interest?

By Jedidiah McKeehan

From time to time I will speak or meet with someone who tells me, “Never in my life have I had to hire a lawyer.” They usually say it with pride. Good for you! I recognize that when someone hires a lawyer they are usually in crisis mode and it is not a happy occasion. I am glad that your paths have not yet had to cross.

Some people may have had some small amount of exposure to the court system while opting not to hire a lawyer, such as going to court over a traffic ticket or being sued in general sessions (small claims) court over a debt.

A debt that people can often be sued over is a medical debt that may be only a few thousand dollars. However, a collection agency for the hospital where you received treatment may decide to file suit. You probably agree with them that you owe them money. Often, people do not show up to court to contest these suits against them, or they may show up and simply set up a payment plan with the collection agency at court while agreeing to have a judgment be entered against them for the amount that they owe.

One concern that most people do not consider is that judgments obtained at court accrue interest after the judgment is entered!

If you have a credit card debt, some of the credit card contracts state that post-judgment interest will accrue at some crazy high percentage like 25%. I have seen some judges simply refuse to enforce these high percentages because they are so extreme and make it impossible for the debtor to ever pay off what they owe.

If there is no specific provision in a contract stating whether post-judgment interest will accrue, or at what rate it will accrue, then the law says that, “Beginning July 1, 2012, any judgment entered will have the interest set at two percent below the formula rate published by the Tennessee Department of Financial Institutions as set in Public Chapter 1043. The rate does not fluctuate and remains in effect when judgment is entered.”

This rate is reviewed every six months and is updated and may go up or down. Since this law went into effect, here have been the post-judgment interest rates in Tennessee.

January 1, 2012 to December 31, 2015- 5.25%

January 1, 2016 to December 31, 2016 – 5.50%

January 1, 2017 to June 30, 2017 – 5.75%

July 1, 2017 to December 31, 2017 – 6.25%

January 1, 2018 to June 30, 2018 – 6.50%

July 1, 2018 to December 31, 2018 – 7.00%

January 1, 2019 to June 30, 2019 – 7.45%

July 1, 2019 to December 31, 2019 – 7.50%

January 1, 2020 to June 30, 2020 – 6.75%

Jedidiah McKeehan is an attorney practicing in Knox County and surrounding counties.  He works in many areas, including divorce, custody, criminal, personal injury, landlord-tenant, and estate planning. Visit attorney-knoxville.com.

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