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Interest rate on a settlement agreement

  • 07-02-2014 2:29pm
    #1
    nacho66
    Registered Users, Registered Users 2 Posts: 175 ✭✭


    Hi guys

    Let's say there's a settlement made between two people to sort out some outstanding arrears. The payment is agreed to be divided into installments. Each one has to be paid before 15th of each month. What would be common and reasonable interest rate/penalty for delay (by reasonable I mean a number perhaps dictated by regulations/directives)? Is 5% of each installment for each day of delay reasonable?


Comments

  • #2
    Pro Hoc Vice
    Closed Accounts Posts: 6,087 ✭✭✭Pro Hoc Vice


    Any penelty or interest should have been in the settlement!


  • #3
    nacho66
    Registered Users, Registered Users 2 Posts: 175 ✭✭nacho66


    infosys wrote: »
    Any penelty or interest should have been in the settlement!

    The details of the settlement are being agreed now. It's not a settlement decided in court


  • #4
    Pro Hoc Vice
    Closed Accounts Posts: 6,087 ✭✭✭Pro Hoc Vice


    nacho66 wrote: »
    The details of the settlement are being agreed now. It's not a settlement decided in court

    Then the Solicitor drafting should know what will be a reasonable figure. Anyone saying x or y % is ok per day without any knowledge of the case, the papers or the parties would be talking through their rearend. In other words what might be a reasonable penalty in one case may not be In another.


  • #5
    nacho66
    Registered Users, Registered Users 2 Posts: 175 ✭✭nacho66


    Ok, I thought there may be some general acceptable figure that a party cannot decline as crazy, if you now what I mean. Eg, if 5% per day is proposed, they could 'yeah, that's reasonable and would be typical across the board'

    Perhaps there's isn't anything 'typical' like that. Or as you say it may heavily depend on the case


  • #6
    Pro Hoc Vice
    Closed Accounts Posts: 6,087 ✭✭✭Pro Hoc Vice


    nacho66 wrote: »
    Ok, I thought there may be some general acceptable figure that a party cannot decline as crazy, if you now what I mean. Eg, if 5% per day is proposed, they could 'yeah, that's reasonable and would be typical across the board'

    Perhaps there's isn't anything 'typical' like that. Or as you say it may heavily depend on the case

    Courts interest is 8% per year. 5% a day may or may not be excessive.


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  • #7
    seb65
    Registered Users, Registered Users 2 Posts: 402 ✭✭seb65


    nacho66 wrote: »
    Hi guys

    Let's say there's a settlement made between two people to sort out some outstanding arrears. The payment is agreed to be divided into installments. Each one has to be paid before 15th of each month. What would be common and reasonable interest rate/penalty for delay (by reasonable I mean a number perhaps dictated by regulations/directives)? Is 5% of each installment for each day of delay reasonable?

    5% per day?? What are credit cards, 17% per year?

    Look at some bills of lading or invoices and see what businesses usually charge per month for late payments.

    Will the interest be compounded?


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