Michigan post judgment interest rates are often considered a confusing aspect of determining the value of a final judgment. If an attorney does not understand how to determine the value of a post judgment interest, they are leaving money on the table that could otherwise be in their client’s pockets.
The basis of Michigan post judgment interest is found in (MCL Sections 600.6013 and 600.6455) which state the following:
Sec. 6013(6) Except as otherwise provided by subsection (5) and subject to subsection (11), for complaints filed on or after January 1, 1987, interest on a money judgment recovered in a civil action shall be calculated at 6-month intervals from the date of filing the complaint at a rate of interest which is equal to 1% plus the average interest rate paid at auctions of 5-year United States treasury notes during the 6 months immediately preceding July 1 and January 1, as certified by the state treasurer, and compounded annually, pursuant to this section.
Sec. 6455 (2) Except as otherwise provided in this subsection, for complaints filed on or after January 1, 1987, interest on a money judgment recovered in a civil action shall be calculated from the date of filing the complaint at a rate of interest which is equal to 1% plus the average interest rate paid at auctions of 5-year United States treasury notes during the 6 months immediately preceding July 1 and January 1, as certified by the state treasurer, and compounded annually, pursuant to this section.
Highlighted above is an often overlooked portion of the statutes. The rates published by the State of Michigan must also include an additional 1 % per MCL 6013(6) and MCL 6455(2). For example, the “historical interest rate” listed by the state for 1/1/2025 to 7/1/2025 is 4.016%. Therefore, the interest rate used in the calculation of post judgment interest for that period is 5.016%.
When calculating post-judgment interest in Michigan over multiple interest periods (i.e. more than 6 months), follow these steps:
Step 1: Determine the Applicable Interest Rates
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- Michigan’s post judgment interest rate changes every 6 months (on January 1st and July 1st).
- You can find the applicable rates on the State of Michigan website.
- Track the rate changes across each period.
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Step 2: Break the Time into Periods
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- Divide the total time into segments based on when the interest rate changes.
- For each period, calculate the interest using the corresponding rate.
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Step 3: Apply the Interest Formula for Each Period
The formula remains the same for each period:
Where:
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- Remaining Principal = The judgment amount, unless partial payments have been made.
- Interest Rate = The applicable interest rate for that period.
- Number of Days in Period = Days between interest rate changes or payment dates.
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Step 4: Example Calculation
Suppose a Complaint was filed on January 1, 2024, a judgment for $100,000.00 was entered and you need to calculate the post-judgment interest on December 15th, 2024:
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- Judgment Amount: $100,000
- Published Interest Rate from MI Treasury for Jan 1, 2024, to June 30, 2024: 4.392%
- Interest Rate for Post Judgment Interest: 4.392% + 1% = 5.392%
- Published Interest Rate from MI Treasury for July 1, 2024, to Dec 31, 2024: 4.359%
- Interest Rate for Post Judgment Interest: 4.359% + 1% = 5.359%
- Payment Date: Dec 15, 2024
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Period 1: Jan 1, 2024, to June 30, 2024 (181 days)
Interest = $100,000 x (5.392/100) x (181/365)
Interest = $100,000 x (0.05392) x (0.4959) = $2,673.89
Period 2: July 1 to Dec 15 (payment date) (167 days)
Interest = $100,000 x (5.359/100) x (167/365)
Interest = $100,000 x (0.05359) x (.4575) = $2451.74
Step 5: Calculate Total Interest and Amount Due
Add the interest from both periods:
Total Interest = $2,673.89 + $2451.74 = $5125.63
Total Amount Due = $100,000 + $5125.63= $105,125.63
Additional Tips
- If partial payments are made, reduce the principal before calculating interest for the next period.
- Track interest separately for each period using the correct rate.
- Always round to the nearest cent.
- Don’t forget that the interest is compounded annually. I.E. add the interest obtained annually to the principle for future interest calculations.
This alert serves as a general summary and does not constitute legal guidance. Please contact us with any specific questions. When it matters in Michigan, we are the trusted legal advisors for businesses and individuals.
Andrew G. Martin is an experienced registered patent attorney with history working in the automotive, electrical, and agricultural industries. He regularly advises startups and small businesses on the patent and trademark prosecution process, assisting clients from start to finish. You can reach him at 517.377.0834 or at amartin@fraserlawfirm.com.