Post Judgment Interest Calculator
The post-judgment interest calculator is a tool that helps you calculate the amount of accumulated interest that needs to be paid to the creditor for the days between the judgment and the actual payment date. Follow the next section to learn more about the court interest rate definition and how to calculate post-judgment interest.
What is post-judgment interest?
Federal post-judgment interest is a type of interest that should be calculated and paid by the debtor to the creditor. The reason for this is the difference between the day of judgment and the day on which the payment was made.
This difference incurs additional interests because of the economic concept of the time value of money. According to the time value of money definition, hat the same amount of money received now is worth more than if it is received in the future.
To ensure that the creditor is not losing the cash due to the delayed payment, the federal post-judgment interest was introduced. The role of this interest is not to additionally punish the defendant but works rather like compensation to the victim. Check the next section to see what you need to calculate it.
How to calculate post-judgment interest
To use the court interest rate calculator correctly, you need to get a bunch of data first:
- Judgment amount - the amount to pay;
- Interest rates - you may find them on the Federal Reserve website;
- Judgment date - the date the judicial decision was made;
- Writ date - the date the actual payment was made; and
- The days between the judgment date and the writ dates.
Once you gathered all the necessary data, you may proceed with the calculation:
Post-judgment interest = Judgment amount * interest rate * days / 365
Federal post-judgment interest example
Imagine an investor who did not receive their expected cash from a Treasury bill bought on the secondary market which had a life expectancy (maturity) of one year. The amount he should of received was $100,000, which should have been paid four weeks ago. Based on the Federal Reserve website, the interest rate that should be applied is that for 27th July, which is 0.14% per annum. Let's put all the data into the formula from the previous section:
Post-judgment interest = $1,000,000 * 0.0014 * 28/365 = $107.40
Based on this post-judgment interest calculation, the investor should receive $107.40 in compensation for the 4-weeks delay.
Pre-judgment, post-judgment and statutory interest - differences
Pre-judgment and post-judgment interest is compensation that has to be paid because of a delay between the damage and the payment. The difference between pre-judgment and post-judgment interests is the covered period:
- Pre-judgment - the period between the damage and the judgment; and
- Post-judgment - the period between the judgment and the payment.
Both pre-judgment and post-judgment are statutory interests, which means that the Federal Government defines them.