How to Figure the Per Diem Interest on a Judgment

How to Figure the Per Diem Interest on a Judgment
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You won a judgment, but what happens if you don't receive the full amount of the judgment upfront or if the person that owes you the money does not pay the judgment. In this case, you can charge interest on the amount owed until it is paid in full. The rate of interest varies by state and case, however, the calculation of per diem of daily interest does not. Moreover, while you may think that per diem interest equals annual interest divided by 365, it does not.

Determine the amount of the judgment or payment per year. Assume your judgment is for $100,000 per year.

Identify the interest rate in which late payments are made. You can find this on your judgment paperwork or by contacting your lawyer. Each state has different limitations, and the rate may change from case to case. Assume for this example that the rate is 5 percent.

Divide the interest rate by 12. In this case the calculation would be .05 divided by 12, or 0.00417.

Multiply the amount calculated in Step 3 by the annual judgment amount. In this case the calculation is $100,000 multiplied by .00417, or $416.67.

Calculate per diem interest on the judgment. Based on a 30-day month, the calculation is the monthly rate calculated in Step 4 divided by 30, or $13.89.