How is interest on a judgement calculated?

[paddyshadarack]

If somebody has a debt judgment and the debt plus interest from date of default and legal costs were awarded against someone

Say the debt judgment is 30k

Is the total interest on the debt judgment 2% (used to be 8)

Or is it 2%(used to be 8)
plus another 8 percent for interest on the legal fees


Hoping for help

 

[TomEdison]

It's 2% on the entire amount of the judgment debt (which includes any award of costs) unless the judge orders than only part of the judgment debt is to bear interest, in which case it's 2% on that part and 0% on the rest.

There's no power for the court to order 8% interest on any part of the judgment debt. The only circumstance in which interest is charged at a rate other than 2% is where the judgment debt arises out of a contract, and the contract itself specifies an interest rate. So if you're sued in relation to a loan from the bank and the bank gets a judgment against you, that judgment debt will carry interest at the rate set by, or determined under, the loan agreement.

 

[paddyshadarack]

Thanks, and if i defaulted on a loan causing a judgment say 100k would I have to pay 23 percent vat on that amount? Reason asking if I owed vat for legal fees awarded or other reasons like the original loan? Or is vat or irrelevant

 

[TomEdison]

If you have a judgement against you for 100k and you don't pay it, it attracts interest at the rate of 2% p.a. The interest is not subject to VAT.

However you could have a case where the judgment debt itself includes an element of VAT. For example, I perform professional services for you and bill you for 100k, including VAT; you don't pay; I sue and get a judgment for 100k, which includes the VAT element of my original bill. You still don't pay; interest accrues at 2% and obviously some of that is interest of the VAT element of the judgment.