Montana Judgment Interest Rate: How to Calculate What You Are Owed

The Current Formula

Montana post-judgment interest is set by MCA § 25-9-205. For a standard civil or small claims judgment (one not based on a contract that specifies its own rate), the formula is:

Federal Reserve Bank Prime Loan Rate on January 1 of the judgment year + 3%

The rate that applies on January 1 stays fixed for every judgment entered that entire calendar year. It does not change mid-year, even if the prime rate moves.

Interest is calculated as simple interest — no compounding. It accrues from the date the judgment is entered until the debt is paid in full.

A Worked Example

Say you won a $5,000 small claims judgment on January 15, 2026, and the prime rate on January 1, 2026 was 7.5%. Your statutory interest rate is 7.5% + 3% = 10.5%.

After 180 days with no payment:

$5,000 × 10.5% × (180 ÷ 365) = $258.90 in accrued interest

Your total owed at that point — before enforcement costs — is $5,258.90.

How to Apply Partial Payments

When the sheriff collects a partial payment through garnishment or a levy, Montana applies the money in a specific order:

1. Enforcement costs first — sheriff fees, transcript fees, any recoverable execution costs
2. Accrued interest second — all interest that has built up since the last payment
3. Principal last — whatever remains reduces the outstanding principal balance

This matters because reducing the principal also reduces the base on which future interest accrues. Keep a running ledger that tracks each payment's allocation — courts and sheriffs expect creditors to maintain accurate records.

The Exception: Contract-Rate Judgments

Under MCA § 25-9-205(2), if your judgment is based on a written contract that specifies an interest rate, interest accrues at that contractual rate instead of the prime-plus-3 formula. This typically applies to promissory notes or written agreements with explicit interest terms. Most small claims judgments from disputes over services, repairs, or deposits do not involve a contract rate and use the standard statutory formula.

Common Mistakes

Using the old 10% rate. Before the current formula took effect, Montana judgments earned 10% interest. Some online guides and even some clerks' offices still reference 10%. The correct rate is prime + 3%, which has been above 10% in recent years but is not always 10%.

Compounding the interest. Montana law explicitly requires simple interest on judgments. If you calculate compound interest, the court clerk may reject your writ application or the debtor may challenge the amount.

Forgetting to include interest in the writ. When you request a Writ of Execution, the total amount should include accrued interest as of the date you are requesting the writ. Understating the amount means the sheriff can only collect up to what the writ says — you leave money on the table.

Tracking It Over Time

For a judgment that takes months or years to collect — through periodic garnishment payments, partial settlements, or long dormant periods before a property lien pays off — the interest calculation can get complicated. Each partial payment resets the principal, and interest on the new lower principal accrues until the next payment.

The full interest calculation worksheet, payment allocation ledger, and worked examples for multi-payment scenarios are all included in our Montana Judgment Collection Guide.

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