The Kentucky legislature recently passed HB223 which changes the State’s post-judgment interest rate. Kentucky Governor Matt Bevin signed the bill into law on March 16, 2017 and it is scheduled to take effect at the end of June.
KRS 360.040 determines the interest rate on judgments and in its current form sets a rate of 12% for judgments. Judgments based on written obligations however, receive the interest rate agreed to in the writing.
HB223 halves the statutory interest rate to 6% for most judgments with exceptions for child support and disability payments. Judgments based on contracts, promissory notes, or other written obligations will continue to accrue interest at the rate set by the writing. The bill only affects judgments entered after the effective date of the bill.
The bill was supported by the U.S. Chamber of Commerce and debate focused on its effects on medical malpractice litigation, further evidenced by the companion bill signed on the same day that creates medical malpractice review panels in the state.
As this is the first modification to the Kentucky statute governing interest rates in almost 35 years, practitioners should evaluate their procedures to ensure they do not inadvertently seek an incorrect judgment interest rate.