CPLR § 5004 – Amended; Statutory Rate of Interest Reduced for Certain Judgments

New York Consolidated Laws, Civil Practice Law and Rules (“CPLR”) Section 5004 – Rate of interest, has been amended. Effective April 30, 2022 (the “Effective Date”), the interest rate applicable to money judgments arising from actions involving consumer debt where the defendant is a natural person will be calculated at the rate of two percent (2%) per annum, except where otherwise provided by statute. All other money judgments will retain the existing statutory rate of interest of nine per percent (9%) per annum, of course, except where otherwise provided by statute.

CPLR § 5004 was amended to read as follows:

Interest shall be at the rate of nine per centum per annum, except where otherwise provided by statute; provided the annual rate of interest to be paid in an action arising out of a consumer debt (emphasis supplied) where a natural person is a defendant shall be two per centum per annum (i) on a judgment or accrued claim for judgments entered on or after the effective date of the chapter of the laws of two thousand twenty-one which amended this section, and (ii) for interest upon a judgment pursuant to section five thousand three of this article from the date of the entry of judgment on any part of a judgment entered before the effective date of the chapter of the laws of two thousand twenty-one which amended this section that is unpaid as of such effective date.

Consumer debt is defined as any obligation or alleged obligation of any natural person to pay money arising out of a transaction in which the money, property, insurance or services which are the subject of the transaction are primarily for personal, family or household purposes, whether or not such obligation has been reduced to judgment, including, but not limited to, a consumer credit transaction, as defined in subdivision (f) of section one hundred five of this chapter.

While amounts paid prior to the Effective Date will not be affected by the amendment, the two percent (2%) interest rate will be given retroactive application to the remaining balance of a consumer debt money judgment entered prior to the Effective Date.

Additional sections of the CPLR were amended to account for procedural changes attributable to the reduced interest. Perhaps the most important revisions were to CPLR § 3215 (f) (Proofs – Default judgment) and (i) and CPLR § 3218 (a) (Affidavit of defendant – Judgment by confession), both of which now require the inclusion of a statement, where applicable, that “the interest rate for consumer debt pursuant to CPLR § 5004 applies.”

CPLR §§ 5230 (a) and (b) (Executions), 5231 (a), (d), (j) and (k) (Income execution), and 5222 (a) and (c) (Restraining notice) were also amended.

The complete text of the amendment (and a thorough explanation of each affected subsection) may found by clicking here nysenate.gov and nyassembly.gov.

It should be noted that judgments of foreclosure and sale are not affected by the amendment because a judgment of foreclosure and sale is not a money judgment. (See 3 Bergman On New York Mortgage Foreclosures §27.01[2], LexisNexis, Matthew Bender for a more extensive review and case citations.)

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