An unpaid judgment accrues interest at the rate of 9% in New York. This
applies to unpaid
child support and
maintenance as well as
equitable distribution awards.
Recently, the ex-husband of a new client wanted to payoff a judgment that
had been entered against him at the conclusion of his
divorce case in 2011. The ex-husband, apparently, is buying a house and cannot
obtain mortgage approval due to the judgment. The original amount was
approximately $31,000 and there is also a later judgment for child support
arrears of $2,000. When I calculated the interest that accrued at 9% the
amount of the payoff was approximately $46,000.
The delay in payment will cost the ex-husband 9% per year which is compounded
each year so that for example after the first year he would owe $31,000
x 1.09 = $33,790 and after the second year it would be calculated as $33,790
x 1.09 = $36,831. Needless to say, the amount now due will be quite a
shock to the ex-husband.
Often in cases with large child support arrears cases I have seen situations
where the amount that is paid monthly toward the arrears does not even
cover the interest. In such a situation, the amount owed is growing and
not being reduced.
If you find yourself in such a situation with large arrears, sometimes
a reduction in the amount owed will be considered if a lump sum payment
is made or a significant down payment is made with an enforceable payment
plan. Ideally, the best advice is to avoid the accumulation of arrears
or other unpaid sums.