You are probably aware that state statutes allow judgment creditors to collect attorney’s fees and other costs as part of a judgment. But did you also know that Utah allows creditors to apply interest to their judgments? It is called post-judgment interest, and it is established by statute.
The interesting thing about post-judgment interest is that it continues to accrue at a set rate until the debt has been fully paid. Interest is charged annually, based on the total amount still outstanding. That total amount includes everything from principal to expenses, and fees to interest already accrued.
How is the interest rate determined? That depends on when the original judgment was filed and whether or not a contract outlining interest rates exists between the two parties. For more information, you can check out the Utah State Courts website. We will summarize the information here for you.
With and Without Contracts
There are some cases in which the two parties to a judgment have a contract in place, a contract that stipulates what the post-judgment interest rate will be. That rate is honored until the debt is paid in full. In cases where no contract is in force, a court will impose an interest rate based on the current federal rate.
There is one big exception to the post-judgment rate when no contract is involved. It applies to judgments of less than $10,000 relating to the purchase of goods or services. The rate on such judgments is a whopping 14.73%.
Interest Is Not Applied by Default
Unless a contract stipulating post-judgment interest is in force, interest is not applied to a judgment by default. The judgment creditor must petition the court by filing a motion after the fact. It is the court’s responsibility to issue an order allowing post-judgment interest. With that order and place, the creditor can assess interest on an annual basis until the debt is paid.
In cases where judgment creditors are renewing their judgments, the same formula for determining post-judgment interest remains the same. Using the current rate of 6.73%, that rate would not change for the life of the judgment. If a judgment creditor were to renew seven or eight years from now, the same 6.73% would apply.
There Is a Lot to Know About Collecting Judgments
If all of this is confusing to you, we understand. There is a lot to know about collecting judgments in Utah. Doing what we do is anything but simple. Our advantage is that collecting judgments in Utah is our specialty. Our fully trained and competent staff work on judgements day in and day out. We work on behalf of clients who either do not have the resources or simply cannot put the time and effort into collection.
If you have an outstanding judgment, we invite you to consider letting us handle it for you. Let us do the heavy lifting that comes with collections so that you and your team can get back to doing what you do best. We handle everything from research to making contact with the debtor.
In the meantime, the Utah State Courts website offers a lot of helpful information about post-judgment interest. You will also find a ton of other information on Utah judgments.