Legislation Introduced to Change Interest Rates in Small Claims Court

Under current Wisconsin law, plaintiffs who win favorable verdicts are usually entitled to recover interest on the monetary judgments awarded to them. There are two types of interest. There is post-judgment interest, which is meant to compensate the plaintiff for loss of the use of the money while a defendant appeals an unfavorable judgment. Post-judgment interest accrues from the time the judgment is made until the time the judgment is paid. There is also pre-judgment interest, which accrues from the time the plaintiff makes an offer of settlement until the settlement is paid.

Past Reform

Prior to 2011, pre- and post- judgment interest rates were set at 12 percent. Because appeals or settlement agreements and payment can take time, plaintiffs could receive a significant windfall due to the high interest rate. 2011 Senate Bill 14 signed into law as 2011 Act 69 changed the interest formula from 12 percent to the prime rate set by the Federal Reserve Board plus one percent. This ensures that plaintiffs do not receive a windfall while also ensuring that defendants pay a reasonable interest rate.

2015 Assembly Bill 95

Assembly Bill 95 seeks to change the interest rate for pre- and post –judgment interest for verdicts in small claims court from the formula created in Act 69 back to the 12 percent rate. The primary author of AB 95 is Representative Thiesfeldt. The bill was introduced on March 12 and was referred to the Assembly Committee on Judiciary. A public hearing on the bill was held on April 7. The primary author AB 95’s companion in the Senate, 2015 SB 76, is Senator Nass. SB 76 was introduced on March 23 and referred to the Senate Committee on the Judiciary and Public Safety.