Interest rates are compensation for the time-value of money, and are calculated on judgments (the amount of money one party to a lawsuit is ordered to pay another party) based on the applicable state or federal statutes. There are often different interest rates set by law for prejudgment interest (the interest on the amount owed before the judgment) and post-judgment interest (the interest on the amount owed after the judgment). The calculation of prejudgment and post-judgment interest rates vary from state to state (and in federal court), and require a careful analysis of the statutes.

In Michigan, interest rates on judgments are governed by state law, which sets forth the rates for both prejudgment and post-judgment interest. Prejudgment interest is the interest accrued from the time the money is owed until a judgment is entered. In Michigan, the prejudgment interest rate can be either stipulated by the parties in a contract or, if not specified, it is calculated at a rate of 6% per annum for complaints filed after December 31, 1986, unless the action is based on a written instrument that has a different rate of interest. Post-judgment interest is the interest that accrues after a judgment has been entered by the court. In Michigan, the post-judgment interest rate is variable and is adjusted every six months. It is based on a formula that takes into account the average interest rate of five-year United States Treasury notes. The Michigan State Court Administrative Office publishes these rates. It is important for parties to a lawsuit to be aware of these rates as they can significantly affect the total amount owed under a judgment. An attorney can provide specific guidance on how these rates would apply to a particular judgment.