interest calculations

In order to compensate creditors for late payment of judgment debts and being deprived of the funds owed, legislation allows creditors to recover interest for late payment by judgment debtors.

Calculating Interest

The method of calculating interest on a principal debt is as follows:

1. Multiply the principal by the interest rate (assuming an interest of 8%, .08). This gives the interest that accrues per annum;
2. Divide the number arrived at by 365, to give the interest accruing per day;
3. Calculate the number of days since that debt fell due and payable;
4. Multiply the daily interest by the number of days the debt has been outstanding.

Usage: The judgment creditor was calculated interest at 8% of the judgment debt.

Related Words: litigation; pleadings.