July 2000, pg. 216. Calculating Simple Interest on Delinquent Installment Judgments.

Maine Bar Journal

2000.

July 2000, pg. 216.

Calculating Simple Interest on Delinquent Installment Judgments

Maine Bar JournalJuly 2000Calculating Simple Interest on Delinquent Installment JudgmentsCopyright 2000 Arthur J. Keenan

Alimony and child support installment obligations are judgments in installments. Carter v. Carter, 611 A.2d 86, 88 (Me. 1992) (child support). See Allen v. Allen, 629 A.2d 1228, 1230 (Me. 1993) (alimony). Each installment that is not timely paid bears interest at the statutory rate of 15% per annum. 14 M.R.S.A §1602-A. Interest on judgments is simple interest, not compound interest. Allen, at 1230. Each unpaid installment has a different computation because it is outstanding for a different time period. After the Carter decision, I wondered from time to time if there were a simpler way to calculate the interest over a given period. Eventually it occurred to me that a quick estimate was simply to half the interest computed as if the principal due for the entire period was outstanding over the entire period because the accumulation of interest grows proportionately with the length of time the installments are delinquent. The chart in Figure One helps visualize the idea of the proportionate arithmetical growth of interest as the diagonal half of a square box. While the idea seems roughly accurate for an estimate, it is not useful for court purposes, and the degree of accuracy is always in question. Recently, I looked more closely at this idea, and derived a formula for it.

Figure One is useful only to illustrate the idea that interest accumulates on a 1:1 ratio with the passage of time. However, it also tends to confuse since it suggests that more interest is due from the week nearest in time, rather than from the week furthest in time. Figure Two corrects that implication to show that the week furthest in time accumulates the most interest. Referring to Figure Two, if 10 weeks of support is delinquent, no interest is due in the 10th week as the principal itself only then comes due. One week's interest is due for the 9th week, plus two week's interest for the 8th, and so on to the 1St week where 9 weeks of interest is due. The number of periods that interest accumulates, times the total units of interest due for the first period, which is always the same number, squares the term and creates...