A MATTER OF INTEREST FOR CHILD SUPPORT CASES

February 7, 2011 § Leave a comment

MCA § 75-17-7 provides:

All judgments or decrees founded on any sale or contract shall bear interest at the same rate as the contract evidencing the debt on which the judgment or decree was rendered.  All other judgments or decrees shall bear interest at a per annum rate set by the judge hearing the complaint from a date determined by the judge to be fair but in no event prior to the filing of the complaint.

It is error for the trial court to fail to award interest on the amount adjudicated to be owed for arrearage in child support.  Ladner v. Logan, 857 So.2d 764 (Miss. 2003). 

Although the statute expressly states that pre-judgment interest may not extend back prior to the filing of the complaint, the rule does not apply to due and unpaid child support.  That is because each payment in arrears is vested when due and becomes an automatic judgment against the obligor.  Pope v. Pope, 803 So.2d 499, 501 (Miss. App. 2002).  Each unpaid monthly installment begins to accrue interest at the legal rate, not from the time it may subsequently be reduced to judgment by a court, and it is error for a chancellor to reduce or eliminate the interest.  Dorr v. Dorr, 797 So.2d 1008, 1015 (Miss. App. 2001).  Amounts paid by an obligor in arrears are applied first to the interest obligations, and then to extinguish the principal amount of the oldest outstanding child support payment, and then the next oldest, and so on.  Brand v. Brand, 482 So.2d 236, 238 (Miss. 1986). 

The appellate courts have allowed the trial judges deference in setting the rate of interest.  Rates from three pecrent (Brawdy v. Howell, 841 So.2d 1175, 1180 (Miss. App. 2003)) to eight percent (e.g., Houck v. Ousterhout, 861 So.2d 1000, 1003 (Miss. 2003)) have been upheld.

There is no prohibition that I know of for a property settlement agreement to provide a contract rate for interest on unpaid child support or other obligations such as alimony, but I have never seen a property settlement agreement with such a provision.  The rarity is due, I am sure, to the difficulty of getting an agreement.  An advantage would be that the court would be bound to the contract rate.  See, e.g., Tower Loans, Inc. of Mississippi v. Jones, 749 So.2d 189, 190 (Miss. App. 1999), where the court of appeals reversed a circuit judge’s imposition of eight percent interest where the contract called for a 34.71% rate, and the contract rate was not usurious.  Another advantage would apply to alimony and other non-child-support obligations in that it would allow pre-judgment interest back to the filing of the complaint for enforecement; a nice perk if you can get it.  Finally, setting an interest rate at least for non-child-support obligations might be prudent in view of the authority that, if the court does not impose interest on a judgment it renders for non-child-support obligations, it is presumed that the judgment does not earn interest.  Aldridge, August 28, 1998, A.G. Opinion #98-0507.

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