Tuesday, December 20, 2011


If you are an attorney that represents creditors in debt collections, whether it be large commercial notes or  small private notes, your practice will be affected by recent changes to A.R.S. § 44‑1201, regarding judgment rates of interest.  This is how I interpret the statute:

A. Loans with a stated rate of interest:  If plaintiff is seeking to collect on a loan, indebtedness or other similar obligation and the parties have a rate of interest contracted for in the writing, the rate of interest in that writing will apply.  See A.R.S. § 44‑1201(A).

B. Loans without a stated rate of interest:  If plaintiff is seeking to collect on a loan, indebtedness, or other similar obligation, which rate of interest is not contracted for in writing, plaintiff will apply the rate of 10% per annum to that loan.  See A.R.S. § 44‑1201(A).

C.  All other amounts on a judgment:  All other amounts on a judgment, including attorneys' fees, costs, and damages not found in A or B above, will bear interest at either the rate contracted for in writing or prime rate, plus 1 percent, as identified by the Federal Reserve Statistical Release H.15, on the date of judgment.  A hyperlink to this Federal Reserve rate is found here.  See A.R.S. § 44‑1201(B). 

These are significant changes from the old statute.  I urge you to review the statute.  Also, if you interpret the statute differently, please comment to this article.  The statute has caused some debate on how to interpret the words in unique cases.  Moreover, each attorney I have talked with about these changes has come to a different conclusion.