By: Doreen M. Abdullovski, Esq.
Pursuant to Ohio Revised Code 5703.47 , the Ohio Tax Commissioner is required annually to determine the interest rate that will be awarded on judgments in Ohio courts, absent a different rate in the contract between the parties. The rate is based on a formula utilizing certain Federal short-term interest rates. Currently the 2008 calendar year interest rate is eight percent (8%) per annum. The Tax Commissioner has determined that the interest rate for the calendar year 2009 will be five percent (5%) per annum. Any section of the Revised Code requiring interest to be computed at the statutory rate per annum beginning January 1, 2009 will use the new 5%.
The 2009 five percent (5%) rate is a significant decrease and is the lowest it has dropped since 2005. Historically, the interest rate has steadily increased or remained the same since 2005.
Pursuant to Ohio Revised Code 1343.03(A), the creditor is entitled to interest at the rate per annum determined pursuant to section 5703.47 of the Revised Code which for 2009 will be 5%, unless a written contract provides a different rate. In this case the creditor is entitled to interest at the rate provided in the contract.
The applicable rate is the rate in effect at the time the judgment is rendered. This means any judgments obtained in the year 2008 where the statutory rate is applicable will be calculated at the 2008 interest rate of 8%, and any judgments obtained in 2009 will be calculated at 5%. Once judgment is obtained in a given year the interest rate calculated is not subject to a yearly review or modification.
It is uncertain as to when a court may actually render judgment in a case. In order to not ask for a higher rate than what will be in effect when the judgment is ultimately rendered and to avoid any Fair Debt Collection Practices Act issue of asking for more than is legally owed, Weltman, Weinberg & Reis Co., L.P.A. requests for the principal balance, accrued interest, “plus interest thereafter on the balance due at the rate of interest per Ohio Revised Code 1343.03” in its complaint.
Because of what generally is a huge difference between the rate of interest provided in the contract and the statutory rate, we cannot stress enough the importance of providing documentation (the agreement and/or contract and statements) to support the account balances and the agreed interest rate between the parties to the debt. This allows us to pursue the maximum recovery for our clients. The higher rate is applicable from the time of default as well as on the judgment itself. When there is no contract rate and the client will have to accept the statutory rate, we apply the statutory interest rate to the ongoing account balances from default through the date of judgment. It then remains in effect until the judgment, decree or order is satisfied. ORC 1343.03(B)
The 2009 five percent (5%) statutory interest rate will amount to recovery of lower balances where we do not have the documentation to support a higher interest rate. Notwithstanding these realities, Weltman, Weinberg & Reis Co., L.P.A. continues to strive to protect your interests and looks forward to our continued representation in this recovery process.
Have a happy and health holiday season!
If you have any questions on this information, please contact Ms. Doreen M. Abdullovski, Esq.
Doreen M. Abdullovski is an associate in the Compliance department of the Brooklyn Heights operations center of Weltman, Weinberg & Reis Co., L.P.A. She can be reached at (216) 739-5646 or via email at dabdullovski@weltman.com.
Client Advisory is published by Weltman, Weinberg & Reis Co., L.P.A. , an organization providing comprehensive creditor representation. The information contained in this advisory is a summary of legal information and is not intended to constitute legal advice on specific matters or create an attorney-client relationship. Contact any of our offices or visit our website at www.weltman.com for more real estate related information, company facts and attorney profiles. ©2008
That Credit Union Blog 