TBA Law Blog

Posted by: Donald Paine on Apr 1, 2014

Journal Issue Date: Apr 2014

Journal Name: April 2014 - Vol. 50, No. 4

I wrote about this topic in September 2005. Much has changed since then.

What is the rate? In the good old days the victor got a 10 percent rate. That got whittled down effective July 1, 2012. Now postjudgment interest is “equal to 2 percent less than the formula rate per annum published by the Commissioner of Financial Institutions.”

Tenn. Code Ann. §47-14-121. You can find this rate on the Administrative Office of Courts website at www.tncourts.gov. The rate has been 5.25 percent.

What Date Governs the Rate?

Interest shall be computed on every judgment from the day on which the jury or the court, sitting without a jury, returned the verdict without regard to a motion for new trial.
Tenn. Code Ann. §47-14-122

Many judgments are challenged by appeal. Take a look at T.R.App.P. 41. Appellate affirmance of dismissal doesn’t change things. But “if a judgment is modified or reversed with a direction that a judgment for money be entered in the trial court, the mandate shall contain instructions with respect to allowance of interests.”

What About Child Support?

Buried in lengthy Tenn. Code Ann. §36-5-101 is subsection (f)(1), which reads in part:

If the full amount of child support is not paid by the date when the ordered support is due, the unpaid amount is in arrears, shall become a judgment for the unpaid amounts, and shall accrue interest from the date of the arrearage, at the rate of 12 percent per year.

The subsection goes on to state that “all interest that accumulates on arrearages shall be considered child support.” Consequently we can see that a deadbeat parent will owe lots more money quickly, a just result.

Is the Rate Simple or Compound?

We find the answer at a list of definitions in Tenn. Code Ann. §47-14-102. The sixth definition tells us that the effective rate of interest “is the simple rate of interest, i.e., the ratio between the interest payable on an obligation and the principal for a period of time, including the result of converting compound, discount, add-on, or other nominal rates of interest into simple rates of interest.”

Don Paine DONALD F. PAINE died Nov. 18, 2013. He was a past president of the Tennessee Bar Association and at the time of his death was of counsel to the Knoxville firm of Paine, Tarwater, and Bickers LLP. He was member emeritus to the Tennessee Bar Journal Editorial Board. He wrote his columns months in advance, and as a result, “Paine on Procedure” will continue through mid-2014. Read remembrances about him at www.tba.org/news/don-paine-legal-community-shares-thoughts-memories