A new law recently passed in Wisconsin has modified the rate of interest on all civil money judgments. Until recently, if a business or individual obtains a money judgment in Wisconsin, interest accrues on the judgment at an interest rate of 12 percent per year until the judgment is paid in full. However, under the new law, the interest rate on a judgment is now the prime rate plus 1 percent. The prime rate is the reported rate by the Federal Reserve Board. The current prime rate is 3.25 percent, which means any interest on a judgment will accrue at 4.25 percent.
To further complicate matters, the interest rate as of January 1 applies to all judgments entered on or before June 30, and the interest rate as of July 1 applies to all judgments entered after June 30. The interest rate on any judgment at the time it is entered will remain the same, although the prime rate may change over the course of the judgment.
Under the prior law, debtors had a greater incentive to pay on a judgment. With the new law, not only is there less incentive to pay, but creditors must track different interest rates for any matters in which they receive a judgment.