Every California money judgment earns 10% annual simple interest from the date of entry. That's automatic, no action required. Over 10 years, your judgment doubles. Over 20 years, it triples. Here's how it works.
Under CCP 685.010, interest accrues on California money judgments at 10% per year (simple interest) from the date the judgment is entered. This is the standard rate unless the contract specifies a different rate.
The 10% statutory rate was set decades ago when interest rates were higher. In today's low-rate environment, 10% guaranteed return beats almost any investment. A judgment is like owning a bond paying 10% annually, secured by the debtor's assets.
The formula is straightforward:
Daily Interest = (Principal × 0.10) ÷ 365
Total Interest = Daily Interest × Number of Days
Here's how a $10,000 judgment grows:
If your contract with the debtor specified an interest rate, that rate may apply to the judgment instead of the 10% statutory rate.
To get a contract rate higher than 10%, the judgment itself must specify that rate. If your judgment is silent on interest rate, the default 10% statutory rate applies. If you have a higher contract rate, make sure to plead for it and get it included in the judgment.
When the debtor makes partial payments (or you collect through levy), how are those payments applied?
Under CCP 685.050, payments are applied in this order:
Notice that the $1,000 payment didn't reduce the principal at all - it went entirely to costs and interest. The principal continues earning 10% on the full $10,000 until all accrued interest is paid off. This is why long-term judgments grow so dramatically.
No. California judgment interest is simple interest, not compound. You earn 10% of the original principal each year, not 10% of the growing balance. However, when you renew a judgment, the accrued interest becomes part of the new principal, which then earns interest - effectively compounding at each renewal.
Yes, in many cases. Under Civil Code 3289, you can recover pre-judgment interest (interest from when the debt was due until judgment) in contract cases at 10% or the contract rate. Include this in your complaint. Pre-judgment interest is added to the judgment principal, then post-judgment interest runs on the total.
Keep detailed records. Track the judgment date, all payments received (dates and amounts), and maintain a running calculation. If disputed, you may need to present your calculation to the court with supporting documentation. Spreadsheets with formulas showing daily interest are very helpful.
Generally, yes - but you can't collect it during the bankruptcy case. Post-judgment interest continues accruing on your claim. However, if the debt is discharged in bankruptcy, the entire debt (including interest) is wiped out. If the debt survives bankruptcy (like certain fraud judgments), the accrued interest survives too.
Generally yes. Interest received on a judgment is typically taxable as ordinary income. Consult a tax professional, as the treatment can vary based on the nature of the underlying claim (compensatory vs. punitive damages, personal injury vs. contract, etc.). Keep records for tax purposes.
I help creditors calculate accurate judgment balances including interest, track payments properly, and ensure renewals capture all accrued amounts.