Child Support Interest

With the economy like it is, there are lots of people getting behind on child support.  What kind of interest is to be set on past due amounts?  Mississippi Code 75-17-7 provides that: “All judgments or decrees founded on any sale or contract shall bear interest at the same rate as the contract evidencing the debt on which the judgment or decree was rendered. All other judgments or decrees shall bear interest at a per annum rate set by the judge hearing the complaint from a date determined by such judge to be fair but in no event prior to the filing of the complaint.”  It is error to not award interest on past due support.  Ladner v. Logan, 857 So.2d 764, 772-773 (Miss. 2003).  The question then arises, is the court to award simple interest (i.e interest on just the principal amount due) or compound interest (i.e. interest on the amount due and then interest on any interest that accrues or accrued)? 

"The general rule is that 'when interest is allowable, it is to be computed on a simple rather than compound basis in the absence of express authorization otherwise.'" Exxon Corp. v. Crosby-Miss. Res., Ltd., 40 F.3d 1474, 1489 (5th Cir. 1995) (citing Stovall v. Illinois Cent. Gulf R.R., 722 F.2d 190, 192 (5th Cir.1984)). Mississippi Code Annotated section 75-17-7 (Rev. 2009) allows the trial court to set the rate and in effect the method of its calculation. See Estate of Baxter v. Shaw Assocs., Inc., 797 So.2d 396, 407 (48) (Miss. Ct. App. 2001) (Pursuant to section 75-17-7, the trial court could decide whether prejudgment interest was simple or compound.); see also In re Guardianship of Duckett v. Duckett, 991 So.2d 1165, 1182 (40) (Miss. 2008) ("The purpose of [s]ection 75-17-7 is to allow parties to recover both prejudgment and post-judgment interest.").

Based on this line of cases, the trial court can set whether the interest should be simple or compound.  Unless the court specifically says otherwise, the interest is simple.  A good practice would be to start asking for compound interest in the event you represent the party who is not in default.