Interest & Penalties
Any payments due for either child support or alimony become “judgments” by operation of law from the date they are due but unpaid. Other payments due (either periodic, or lump sum) do not have this automatic provision, and if they were not formally “reduced to judgment” in the earlier proceedings constitute unliquidated damages until the person owed the money returns to court to reduce those sums to judgment.
When a judgment requires payments at a series of future dates, and a payment is missed, the missed payment “draws interest . . . until satisfied.” The person owed the money does not have to do anything to start the running of interest – that is automatic – but it is usually the burden of the person owed the money to calculate the sum owed, and to collect it from the party owing the money. The rate owed varies every six months, at 2% more than the prime rate of interest.
Child support is treated specially under Nevada law, in several ways. Because of a change to the laws in 1987, the Nevada Supreme Court has ruled that the statute of limitations never runs on child support obligations that accrued on or after July 1, 1981.
A court that finds that an arrearage in child support has accrued is required to add interest to the sum due, as well as “a reasonable attorney’s fee,” which is to be awarded “unless the court finds that the responsible parent would experience an undue hardship if required to pay such amounts.”
Further, and in addition to interest and attorney’s fees incurred for collection, a court finding an arrearage in child support must add a 10% per year penalty on each delinquent payment from the date it was due, for all sums accruing on or after October 15, 1995. District attorneys and other public agencies are specifically charged with enforcement of the provision.
The penalties provision was given a two-year delay before it went into effect (from its passage in the 1993 legislature, until October, 1995), presumably for the purpose of allowing anyone then in arrears to catch up on payments.
While many lawyers apparently do not know how to calculate interest and penalties, or routinely fail to do so, this office requests and obtains both when due for sums awarded in favor of our clients. It is not uncommon for the sum of interest and penalties to be sufficient to even pay all costs and attorney’s fees, while still enlarging the net award to the client. Basically, if interest runs at 10% per year, and a debt is owed for five years, the sum owed increases by about 50%. Calculating – and obtaining – all sums due to a client is just part of good lawyering.
WILLICK LAW GROUP developed the “Marshal Law Judgment and Interest Calculator Program” in 1991, and has updated and improved it over the years since then. Version Three added the child support penalties calculator. The accuracy and admissibility of Marshal Law calculations have been approved by every judge in the State of Nevada that has been asked to rule on that question, and it is the standard program for calculation of interest and penalties in use in this State. The attorneys of this office have published articles and have been teaching lawyers and judges how to properly apply judgment and interest for about 15 years.
- A Matter of Interest: Collection of Full Arrearages on Nevada Judgments
- Child Support Statutes – NRS 125B.070/125B.080
- Prime Interest Rates