In Arizona, a creditor may sometimes collect interest on a debt even if there was no agreement between the parties regarding the payment of interest on the debt. Arizona law permits the collection of “prejudgment interest” on liquidated claims.
What is “Prejudgment Interest?”
Prejudgment interest is interest awarded on a claim for some period of time before the judgment in a lawsuit is entered. In Arizona, a party is entitled to interest on a number of his damages prior to judgment, provided the sum demanded is liquidated.
What is a “Liquidated Claim?”
A claim is liquidated if the evidence furnishes data from which it is possible to compute the amount with exactness.
Prejudgment interest is awardable as a matter of right in the case of a liquidated tort claim, even if a good-faith dispute over liability exists. Uncertainty as to liability does not bar recovery of pre-judgment interest on a liquidated claim.
Legal Rate of Interest
In Arizona, the legal rate of interest on a judgment used to be ten percent (10%) per annum, unless the parties agreed in a contract to a different rate of interest. Now, the current rate depends on other factors and may be four and one-quarter percent (4.25%) depending upon fluctuations in the federal reserve prime rate. Prescott AZ lawyers
Demand for Interest
Since prejudgment interest accrues from the date of demand, many Arizona creditors make a point to put their demand for payment in a writing which reflects the date of demand. Prescott