# Calculating Interest on a Judgment Debt

1. Member
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Sep 2013
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## Calculating Interest on a Judgment Debt

My question involves collection proceedings in the State of: NY (NYC)

We are the landlord/judgment creditor. We sued a former tenant for unpaid rent in small claims and won a default judgment.

The tenants debt started to accumulate on, let's say, 1/1/16.

The tenant moved out on, let's say, 5/1/16.

The judgment was dated, let's say, 3/10/18.

The judgment was for the principal amount of \$2,500 plus \$30 in disbursements for a total of \$2,530. No interest included.

Former tenant now wants to pay the debt. I have two questions concerning interest calculations.

1. To calculate interest owed, do I go back to to 1/1/16 when the debt started, the 5/1/16 move out date or the date the judgment was issued on 3/10/18?

Civil court includes the interest in its judgments back to the date the debt started based on plaintiffs documents. Small claims, for some reason, does not.

2. When calculating interest, am I basing it on principal amount of \$2,500 or the principal plus disbursements (total judgment amount) of \$2,530?

Thank you.

2. Senior Member
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## Re: Calculating Interest on Debt

The fact that the former tenant is ready and willing to pay you is somewhat of a miracle. It can be difficult to impossible to actually collect on a small claims court judgment. If I were in your shoes, I probably wouldn't push it by trying to add interest.

3. Member
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## Re: Calculating Interest on Debt

I'm not going to push for the interest but I plan to include it in the post judgment payment plan just in case of default.

4. Senior Member
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## Re: Calculating Interest on Debt

Quoting AlwaysOnTime
I'm not going to push for the interest but I plan to include it in the post judgment payment plan just in case of default.
Oh, so he's not "paying the debt" after all. He's promising to make payments. His promise is as good as his rent paying history.

How much is he going to pay you up front?

By the month?

Anyway, NY statute CVP 5004 allows for 9% interest on judgments and doesn't make any distinction between civil and small claims.

https://www.nysenate.gov/legislation/laws/CVP/5004

However, I think if you weren't specifically awarded pre-judgment interest, you would only be entitled to post-judgment interest.

Two suggestions:

1 - Make sure your promissory note has an acceleration clause where the entire balance is due if he misses or is late on any payment. You can find sample forms on the internet.

2 - Insist on a voluntary wage assignment where his employer takes the money out of his paycheck and sends it to you. If he balks on that, then he's likely to default on the promissory note.

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## Re: Calculating Interest on Debt

Quoting AlwaysOnTime
1. To calculate interest owed, do I go back to to 1/1/16 when the debt started, the 5/1/16 move out date or the date the judgment was issued on 3/10/18?
Since you said the court didn't award prejudgment interest, you're entitled to post-judgment interest, which obviously only starts to accrue on the date of the judgment.

Quoting AlwaysOnTime
2. When calculating interest, am I basing it on principal amount of \$2,500 or the principal plus disbursements (total judgment amount) of \$2,530?
Post-judgment interest is calculated on the amount of the judgment.

Two suggestions:

1 - Make sure your promissory note has an acceleration clause where the entire balance is due if he misses or is late on any payment. You can find sample forms on the internet.
Better suggestion: You already have an enforceable judgment. Do not replace that judgment with a promissory note, which would require you to sue again in the event of non-payment. All you need do is agree to forebear on enforcing the judgment as long as the debtor makes the agreed payments.

Insist on a voluntary wage assignment where his employer takes the money out of his paycheck and sends it to you. If he balks on that, then he's likely to default on the promissory note.
I disagree and also doubt that most employers would go along with an assignment of this sort.

6. Senior Member
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## Re: Calculating Interest on Debt

Quoting pg1067
I disagree and also doubt that most employers would go along with an assignment of this sort.
Then I would have gone immediately to wage garnishment since the judgment debtor has already proven to be untrustworthy.

7. Member
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Sep 2013
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## Re: Calculating Interest on Debt

Thanks to all for responding.

It appears from the responses that I can only charge post judgment interest based on full judgment amount of \$2,530.

To address your concerns, I typically use a post judgment payment plan when debtors come to my office agreeing to pay down the debt over time for default judgments only. I believe it is usually better to negotiate a reduced rate as opposed to the debtor requesting the court to vacate the judgment which will only create unwanted litigation costs. That said, my post judgment payment plan includes, among other things, an acceleration clause requiring debtor to pay, upon default, the original full amount plus all costs incurred and 9% interest back to day 1 and utilize any and all legal tools to collect the debt including wage garnishment.
I think it's a good approach, especially on default judgments.

1.