Legal Question in Credit and Debt Law in California
Interest collection on small claims $$ due to me
A customer owes us $2500 on a past due invoice. If we take him to small claims court, I was told that if we win, we can collect 10% interest on the outstanding amount due from the time of invoice is past due. How is this 10% calculated?? On an annual basis: Amount time 10% divided by 360 times number of days past due? or on a monthly basis? etc.
Thanks,
Cindy
1 Answer from Attorneys
Re: Interest collection on small claims $$ due to me
10% per annum (i.e. per year) on the oustanding principal from the date that the debt was due, or the date of last payment, depending up on the circumstances.
Example: A owes B the sum of $10,000 for a widget which B made and shipped to A. The invoice from B to A shows Net 30 terms, and the invoice is dated March 26, 2005. That means payment in full was due no later than April 25, 2005. Thus, as of today (April 25, 2006), A owes B the sum of $10,000 principal plus $1,000 interest.
To convert the 10% per annum to daily rate, take principal, multiple by .10, then divide by 365 (not 360).
Good luck.
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