Yes, a debt collector can add interest to a default judgment, but there are important legal restrictions depending on state laws, the terms of the original debt agreement, and court rulings.
When Can Interest Be Added to a Default Judgment?
✅ If Allowed by State Law – Most states permit post-judgment interest, but the rate varies.
✅ If Specified in the Original Contract – Some agreements allow interest accrual after a judgment.
✅ If Ordered by the Court – The court ruling may specify the interest rate and accumulation.
Types of Interest on Default Judgments
1️⃣ Pre-Judgment Interest – Some states allow collectors to add interest from the time of default until the judgment is entered.
2️⃣ Post-Judgment Interest – Most states allow interest to accrue on the judgment balance until it is paid.
3️⃣ Contractual Interest – If the original debt agreement specifies an interest rate, that may apply.
Limits on Interest
- State Interest Rate Caps – Many states set a maximum post-judgment interest rate (e.g., 6%-12%).
- FDCPA Protections – Under the Fair Debt Collection Practices Act (FDCPA), a collector cannot charge more than what is legally permitted.
- Court Approval – Some states require court approval before interest accrues.
What to Do If a Debt Collector Adds Excessive Interest?
🚩 Verify State Laws – Check your state’s post-judgment interest rate limits.
🚩 Review the Court Judgment – Ensure that the interest amount matches the court order.
🚩 Challenge Illegal Interest Charges – If excessive or unauthorized interest is added, The Consumer Rights Law Firm PLLC can help you fight back.
📞 Call Now: 877-700-5790
📩 Email Us: help@consumerlawfirmcenter.com
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