Many creditors have default interest provisions in their contract documents. The highest rate allowable under Florida law for these default provisions is 18% per annum or 1.5% per month. However, creditors almost never address post judgment interest in their contract documents. Such omission leaves them at the mercy of the interest rate set forth in Section 55.03, which states:
(1) On December 1, March 1, June 1, and September 1 of each year, the Chief Financial Officer shall set the rate of interest that shall be payable on judgments or decrees for the calendar quarter beginning January 1 and adjust the rate quarterly on April 1, July 1, and October 1 by averaging the discount rate of the Federal Reserve Bank of New York for the preceding 12 months, then adding 400 basis points to the averaged federal discount rate.
The final sentence of Section 55.03 provides some interesting guidance for creditors by saying, “Nothing contained herein shall affect a rate of interest established by written contract or obligation.” See Whitehurst v. Camp, 699 So.2d 679 (Fla. 1997). Since July 1, 2012, the statutory post judgment interest rate has been 4.75%. Not very good considering the statutory rate topped out at 11% in 2007 and 2008.
Creditors can eliminate the uncertain fluctuation of statutory post judgment interest and insert an agreed upon post judgment rate in their contracts or credit applications. Parties may agree to deviate from statutory interest rates but the language of the post judgment contractual provision must affirmatively demonstrate the parties’ intent to deviate from the post judgment rate set by the statute. The contractual post judgment statutory rate must not violate usury laws either. Therefore, creditors should write post judgment interest provisions alongside their default interest provisions. Parties should also consider inserting such provision into any pre-suit and post suit settlement agreements and forbearance agreements.