POST-JUDGMENT INTEREST
JOSEPH A. SAMRETA
Although a prevailing party in a lawsuit often does not contemplate the effect of post-judgment interest until after a judgment has gone unpaid, the issue of post-judgment interest is one which is important to consider prior to taking your case to court. The fundamental principle behind post-judgment interest is that there has been a deprivation of the use of the money and that unless interest is awarded, the injured party cannot be fully compensated for the loss suffered. Marshall v. Bird, 577 N.E.2d 254, 257 (Ind. Ct. App. 1991). In a case involving a large sum of money or one in which the delinquent party fails to properly pay a judgment for a length of time, post-judgment interest can be substantial.
In Indiana, an award of post-judgment interest is governed by statute. Indiana Code 24-4.6-1-101, which governs the maximum interest allowed, states:
Maximum interest rate. – Except as otherwise provided by statute, interest on judgments for money whenever rendered shall be from the date of the return of the verdict or finding of the court until satisfaction at:
(1) The rate agreed upon in the original contract sued upon, which shall not exceed an annual rate of eight percent (8%) even though a higher rate of interest may properly have been charged according to the contract prior to judgment; or
(2) An annual rate of eight percent (8%) if there was no contract by the parties.
I.C. 24-4.6-1-101. Unless otherwise provided by statute, interest on judgments for money runs from the date of the judgment. Irvine v. Irvine, 685 N.E.2d 67, 71 (Ind. Ct. App. 1997). The obligation to pay post-judgment interest is part and parcel of the obligation to pay a money judgment and an unsuccessful party must decide whether to limit their liability and pay or risk having to pay accruing interest if not successful on appeal. Poehlman v. Feferman, 717 N.E.2d 578, 583 (Ind. 1999).
Although post-judgment interest will not be realized until after the return of a verdict and the unsuccessful party has failed to comply in paying the judgment, the rate at which post-judgment interest accrues can be agreed upon between the parties well before a lawsuit is ever filed. Accordingly, it is imperative to take into account the nature of the action and the remedies which will be levied in the event of non-payment in all negotiations. By being aware of the amount of post-judgment interest allowed, a successful party can maximize the amount of money it is able to collect following a judgment.
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