Interest Rates are Rising in South Carolina Courts

Burr Forman McNair

Current economic signs give consumers, investors and economists alike reason for optimism. Unemployment is at historically low levels which means employers are having to offer higher wages to attract and keep talent. Although the economy is in its ninth year of expansion and is statistically past due for a correction, if market fundamentals such as low unemployment, wage growth and global demand remain strong the economy should too.

While we are still in a historically low interest rate environment, with the economy continuing to expand it is likely that interest rates will rise. We have already seen some interest rate fluctuations in South Carolina courts.

On  January 4, 2018, the South Carolina Supreme Court issued its order regarding interest rates on money decrees and judgments. This rate is tied to the prime rate plus four percentage points.  Specifically, for the period of January 15, 2018 through January 14, 2019, the legal rate of interest for judgments and money decrees entered in South Carolina is 8.5% compounded annually (up from the prior rate of 7.75%).

Interest rates on money decrees and judgments has not been the only court sanctioned interest rate to increase in 2018. On January 26, 2018, the United States Bankruptcy Court for the District of South Carolina entered an operating order indicating that after considering the recommendation from the Chapter 13 Interest Rate Committee, it would increase the presumed reasonable interest rate in Chapter 13 cases for plan confirmation purposes to six percent (6%). This was the first such rate increase in several years (it was 5.25% previously). The increased rate will be effective on all cases filed on or after March 1, 2018.

As 2018 unfolds, we will see whether the economy will continue to expand, and we will continue to monitor the Federal Reserve’s monetary policy to see how many, if any, rate increases will occur. Until then, judgment creditors and secured creditors in Chapter 13 cases will get some benefit from the rate increases in South Carolina courts this year.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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