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Simple versus Compound Interest on Judgments

In Missouri, Section 408.020, RSMo requires that nine-percent (9%) annual interest typically accrues on monetary judgments. Missouri statutes, however, do not specify whether the interest is simple or compound. Based on case precedent, compound interest is generally not allowable on a judgment. Wallemann v. Wallemann, 817 S.W.2d 548, 549 (Mo. Ct. App. 1991).

There are two exceptions to this rule. First, trial courts may, setting as a court of equity, assess compound interest when justice requires it to “serve the cause of equity.” Geisner v. Budget Rent A Car of Mo, 999 S.W.2d 265, 268 (Mo. Ct. App. 1999). Second, compound interest is allowed if the parties consent to it in the contract or agreement in question. Id. Under the first scenairio, the trial court has a broad amount of discretion. The second situation is much more common in that creditors and contracts will often include provisions articulating interest rates and collection costs in the event of a breach of default. 

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