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Interest on Judgment

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Mark Cappel
UpdatedJun 20, 2024

I have a judgment against me and learned the creditor is charging me 10% interest. Is that legal?

I have a judgment against me. I agreed to make 50 monthly payments and have been for 18 months. I recently found out that they have been charging me 10% interest they told me it equals $112 monthly. I don't understand how if I'm paying $50 monthly its doing no good because I'm still being charged $62 on top of that for interest. Is this legal?

Most states do allow creditors to add interest, collection costs, and attorney’s fees to the balance of a judgment after the judgment is entered by the court, but the amount the creditor can add and how it must go about this process will largely depend on your state of residence.

Generally speaking, 10% interest on a judgment is legal, but some states have a lower maximum rate. See State Consumer Protection Laws and Exemptions for the maximum amount for your state.

In California for example, a judgment creditor must file with the court a document called a "Memorandum of Costs after Judgment, Acknowledgment of Credit, and Declaration of Accrued Interest," in which it outlines the costs it has incurred in its efforts to enforce the judgment, the interest accrued, and the amount it has received in payments to reduce the judgment balance. Once the creditor files this statement with the court, the court will review the claimed costs and interest, and unless you object to the claim, will likely add the request amount to the judgment balance. The creditor is required to mail you a copy of this document before it is considered by the court, giving you an opportunity to file an objection; if you do file an objection, the court will likely set the matter for a hearing, allowing you and the creditor to argue your cases to the judge.

Although the process is similar in many other states, remember that the procedure outlined above is specific to California, and is only provided as an example of the fact that judgment balances can have interest and fees added. Regardless your state of residence, a judgment creditor usually cannot increase the balance owed on a debt arbitrarily without court approval.

I hope this information helps you Find. Learn & Save.



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kkara, Feb, 2014
I was sued in court for two credit cards. Prior to being sued, I tried to settle with the collection agency but they refused to send the paperwork to my new address, in a different state. They kept insisting that they would send the agreement to my New York address. When I informed them that I no longer lived there to please send it to my new address they refused. I forgot about the incident and did not think much about it until a year later when I received my credit report and saw that they sued me in court in New York. I was furious, as I never received a summons to appear in court or anything, as this is what they traditionally call a gutter subpoena. the collection agency has now sold it to another agency that wants to collect on the debt or garnish my wages. Do I have any recourse at this point?
BBill, Feb, 2014
Consult with a lawyer in your state of residence about filing a motion to vacate the judgment based on an insufficient service of process. Talk to your lawyer about filing a complaint with the New York Bar Association against the plaintiff's lawyer that, apparently, knowingly completed a defective service of process.
BBill, Dec, 2009
There is not a limit as to how long a creditor can continue to attempt to collect an unresolved debt. Please see Collections Advice to learn more about your rights as a debtor. If you received a summons to appear and appeared, you could have explained to the judge that the debt was outside of the statute of limitations, and the case would have been dismissed. It appears that you were sued by the creditor, did not respond, and this resulted in a judgment. I urge you to speak to a California attorney who has experience in consumer law and ask him or her if you have the option to attempt to vacate this judgment and argue to the court that the debt is beyond California's statute of limitations on collecting unsecured debt.
KKelly, Dec, 2009
I have a similar situation, I have a debt that is 10 years old and a judgement was just filed against me last year. I live in California, is this legitimate?