What Is The Interest Rate On Judgments

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.