When a California court enters most money judgments, a clock starts running in the creditor's favor: post-judgment interest, generally at 10% per year. On a meaningful judgment, that clock changes negotiating leverage, payoff math, and even whether waiting out a stubborn debtor is rational. This article explains how judgment interest works in California, how payments are credited, where the 10% rate does not apply, and how to make sure you actually collect the interest you are owed.
The rate: 10% simple interest from entry
Code of Civil Procedure section 685.010 sets post-judgment interest at 10% per year on the principal amount of the judgment, subject to the exception discussed below. Interest generally accrues automatically from the date the judgment is entered — no motion or court order required — and it is simple interest: it accrues on the unpaid principal, and unpaid interest does not itself earn interest unless it is capitalized upon renewal. The practical arithmetic is easy to keep in your head: a $100,000 judgment accrues about $27.40 per day, roughly $10,000 per year. For creditors doing debt collection at scale, tracking that accrual precisely is not optional — every payoff demand, levy, and settlement negotiation depends on an accurate running balance.
The consumer-debt exception
The 10% rate is no longer universal. For qualifying judgments entered or renewed on or after January 1, 2023, section 685.010 sets a 5% rate for money judgments with a principal amount under $200,000 against natural persons based on claims related to medical expenses or personal debt, as statutorily defined. Judgments based on business debts, judgments against entities, and judgments of $200,000 or more remain at 10%. If your portfolio includes medical or personal debts, confirm which rate applies before quoting a payoff — an overstated interest figure in collection communications creates unnecessary risk under consumer protection statutes like the Rosenthal Act.
Pre-judgment vs. post-judgment interest
Do not confuse the two. Pre-judgment interest compensates for the time between the breach and the judgment, and it follows different rules. Depending on the claim, contract damages may bear interest at a rate stipulated in the contract or, for a contract entered into after January 1, 1986, that does not stipulate a legal rate, at 10% under Civil Code section 3289. Other claims have their own standards. Whatever pre-judgment interest the court awards gets folded into the judgment principal — and then the entire judgment, including that interest, begins earning post-judgment interest at the statutory rate. Plead and prove pre-judgment interest before entry; it is far harder to add later.
How payments are applied
California law prescribes the order in which money collected is credited (CCP § 695.220). In simplified form, payments apply first to accrued costs, then to accrued interest, and only then to principal. This ordering matters enormously on long collections: a debtor making small sporadic payments may barely dent principal while interest continues accruing on the undiminished balance. It also means creditors should:
- Keep a dated ledger of every payment and every allowable cost
- Recalculate the payoff as of a specific date for every demand or settlement discussion
- File a memorandum of costs after judgment (CCP § 685.070) so enforcement costs — writ fees, levy fees, and certain other expenses — are added to the judgment and earn interest too
Interest as leverage — and its limits
Ten percent is well above what safe investments pay, and debtors' advisors know it. That asymmetry gives creditors patience: an abstract of judgment recorded against the debtor's real property creates a judgment lien in that county, and a sale or refinance may prompt payment of a claim that quietly grows. Renewal magnifies the effect — when a judgment is renewed, accrued interest is added to the renewed principal, and the new total earns interest going forward. But interest is only as good as collectability. A judgment against an insolvent debtor accrues impressive numbers on paper and nothing in fact, which is why interest math should inform — not replace — a real enforcement strategy built on asset investigation and timely levies.
Practical checklist for judgment creditors
- Calendar the judgment entry date and calculate the daily interest amount.
- Confirm whether the 10% or 5% rate applies to your judgment.
- File memoranda of costs so enforcement expenses join the balance.
- Apply every recovery in the statutory order and document it.
- Quote payoffs "good through" a date certain, with a per-diem figure.
- Before the 10-year mark, renew the judgment to capitalize accrued interest and keep enforcement alive.
If a dispute arises over the balance — debtors sometimes contest interest calculations or claimed costs — accurate records usually end the argument before it becomes motion practice in civil litigation.
Talk to a California business attorney
If you hold a judgment, the interest accruing on it is real money — provided your calculations are right and your enforcement keeps pace. Schedule a free consultation or call (949) 418-2113.
This article is attorney advertising and provides general information only. It is not legal advice and does not create an attorney–client relationship. Facts matter; consult a lawyer about your specific situation.
