Legal Question in Civil Litigation in California
Interest
Final divorce agreement had me owing $75,000 to spouse to make things even. The divorce papers did not state when the debt was due, how it was to be paid back, nothing stated about any interest on unpaid amount, just that I owed her the $75K, ok from Aug '92 to Jan '03 I not only paid back the entire $75K but made $3,472/month spousal and child support payments. Now after 13 years of being divorced and 1 1/2 years after the $75K was paid back she is claiming that I owe her 10% interest or an additional $86K. During the previous 13 years there was never a new document about interest, no discussions of interest, no demand for interest, and again nothing written in the divorce agreement paying interest from a specific due date or etc. So, is there an assumed law that entitles someone to interest if it is not stated/written and particulary if it isn't a ''cash loan'' only a settlement or 'evening the score' type of award? Thank you.
1 Answer from Attorneys
Re: Interest
The "divorce agreement" must have been made part of a final judgment by the court. Judgments in California accrue simple interest at the rate of 10% per year until paid. Had you paid the judgment in August of 1992 you would only have had to pay the principal. Since you didn't, interest accumulated on the unpaid amount and you are responsible for it.
My sense is that the agreement also did not say anything about the $75,000 being paid years later and/or in installments, yet you behaved as if it did. Your ex was entitled to $75,000 as of August 1992, but if you were not required to pay interest your decision to take more than a decade to pay the debt would have reduced the actual value of the obligation to a fraction of its face value. I don't have much sympathy for your effort to hold your ex to the letter of a contract which you did not honor to the letter yourself.
Regardless of my sympathies, though, the law is squarely on your ex-wife's side. She is entitled to the interest and you have to pay it.
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