How Are Interest Rates on Judgments Calculated in Illinois?

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    Legislation

    • The rules governing interest on judgments are contained in two sections of chapter 735 of the Illinois Code. Section 12-109 establishes that interest is payable and that there are special rules for child support. Section 2-1303 establishes the applicable rates.

    Ordinary Rate

    • In most circumstances, the interest rate on judgments is the equivalent of 9 percent per year. The actual amount charged is based on the time between the judgment being issued and the terms being met--that is, the relevant payment made in full. If the debtor makes a partial payment, interest only continues to accrue on the outstanding amount.

    Special Rate

    • If the debtor is a government entity, such as a unit of local government or a school or community district, the interest rate applicable is the equivalent of 6 percent per year. The same rules apply as with the usual rate regarding timescale and partial payments.

    Child Support

    • The system for interest on judgments relating to child support is a little more complicated. At the end of each calendar month, an additional interest charge is calculated by applying one-twelfth of the ordinary rate to the outstanding balance. In other words, the interest charge each month is 0.75 percent of the outstanding balance. When calculating the interest, only the balance outstanding from the original judgment is used. Interest is not compounded, meaning it doesn't take into account any previous interest charges. Payments made by the debtor each month, including money withheld from federal income tax refunds, are first applied to the current month's child support. Any excess money is then applied to the outstanding balance. Only once all current and past child support liabilities are cleared is the money put towards paying off interest charges.

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