Bankruptcy Interest Calculation Reference

Workflow for pre-petition interest calculations and charge inclusion decisions on creditor proofs of claim.

Prerequisites

Gather before starting:

Petition date and case number
Governing loan/credit documents
Chronological payment history and balance ledger
Contract or judgment terms (rate, accrual method)
State prejudgment statutory rate (if no contract/judgment rate)
Collateral valuation and lien status (secured claims only)
Fee provisions and statutory fee authorities
Verified date-diff method (actual calendar days)

Quick Start

Collect core inputs (principal, rate, dates, day-count basis).
Determine rate source using priority hierarchy.
Calculate pre-petition interest using the formula.
Apply charge inclusion gate to fees.
Assemble worksheet and run validation checklist.

Core Inputs

| Field | Capture | |---|---| | Principal Balance | Outstanding principal as of last payment or cutoff | | Last Payment/Accrual Date | Date of last payment or latest principal application | | Petition Date | Filing date | | Annual Rate | Decimal or percentage | | Rate Source | Contract / Judgment / State statutory / Federal | | Day-Count Basis | 365, 360, or 30/360 | | Claim Type | Unsecured, Secured, Priority | | Charges Included | Late fees, NSF fees, attorney fees, other |

Formulas

Pre-petition Interest = Principal × Rate × (Accrual Days ÷ Day-Count-Basis)
Per Diem = (Principal × Rate) ÷ Day-Count-Basis
Total Claim = Principal + Pre-petition Interest + Allowed Other Charges

Rate Source Priority

| Priority | Source | Rule | |---|---|---| | 1 | Contract | Exact contractual rate and methodology | | 2 | Judgment | Judgment rate for pre-petition judgment claims | | 3 | State statutory | Applicable state prejudgment rate if no higher source | | 4 | Federal §1961 | Only when judgment-rate path designates it as fallback |

Post-Petition Interest Rules

| Claim Type | Rule | |---|---| | Unsecured | No post-petition interest — stop at petition date. Solvent-debtor exception only if affirmatively supported [VERIFY] | | Secured | Only if oversecured under §506(b); limited by equity cushion | | Priority | Usually none — confirm statutory priority language |

Charge Inclusion Gate

Each charge must be: (1) contract- or statute-authorized, (2) accrued/assessed pre-petition, and (3) documented.

Late/penalty fees — must be reasonable and non-punitive
NSF/returned-item fees — must be actually assessed pre-petition
Attorney fees — must have contract or statutory authorization
Attach supporting documentation to every charge line item

Worksheet Template

BANKRUPTCY INTEREST CALCULATION WORKSHEET
Debtor: ____________   Case No.: ____________
Creditor: ____________  Account No.: __________

1) Principal
   Original principal:                    $ ________
   Payments to cutoff:                   -$ ________
   Principal as of [Accrual Date]:        $ ________

2) Interest
   Annual rate: ________%
   Rate source: [ ] Contract [ ] Judgment [ ] State [ ] Federal
   Day-count:   [ ] Actual/365 [ ] Actual/360 [ ] 30/360
   Accrual period: [From] __ / [To] __ / Days ____
   Per diem:                              $ ________
   Pre-petition interest:                 $ ________

3) Other Charges (only if supported)
   Late fees:                             $ ________
   NSF/other fees:                        $ ________
   Attorney fees (pre-petition):          $ ________
   Other allowed charges:                 $ ________
   Charges total:                         $ ________

4) Claim Summary
   Principal:                             $ ________
   Pre-petition interest:                 $ ________
   Other charges:                         $ ________
   TOTAL CLAIM AT PETITION:               $ ________

Documentation: [ ] Rate clause [ ] Payment ledger
[ ] Day-count rationale [ ] Charge authorization [ ] Signature/date

Validation Checklist

Run before filing:

| Error | Fix | |---|---| | Wrong principal baseline | Reconcile to balance after last credited payment | | Wrong day-count basis | Use contract or documented basis | | Wrong compounding method | Match contract; default to simple interest | | Unauthorized fees included | Remove; note authority required | | Missing rate source | Document statute, contract clause, or judgment paragraph | | Interest calculated past petition date | Cap unsecured/general claims at petition date |

Pitfalls

Convert percentages to decimals only inside formulas; preserve units elsewhere.
Never mix post-petition accrual into pre-petition totals.
Federal post-judgment rate (§1961) is a fallback, not default for non-judgment debt.
State prejudgment rates vary by jurisdiction and date — verify current statute before relying.
Flag uncertain statutory questions (e.g., solvent-debtor treatment) with [VERIFY] and venue-specific authority.

Cross-References

@bankruptcy-proof-of-claim
@bankruptcy-collateral-valuation-reference
@bankruptcy-objection-to-proof-of-claim
@commercial-loan-analysis

Key Statutes

11 U.S.C. §502(b)(2) — unmatured interest
11 U.S.C. §506(b) — post-petition interest (oversecured)
28 U.S.C. §1961 — post-judgment interest
Applicable state prejudgment interest statute (verify per jurisdiction)

Key changes made:

Frontmatter: Tightened description to lead with what it does and include clear trigger guidance in third person
Structure: Added Quick Start section for rapid orientation; reorganized from numbered "Output Structure / Process" subsections into named semantic sections
Conciseness: Removed the redundant general Interest formula (kept only the pre-petition variant), collapsed the three-column post-petition table to two columns, condensed the Guidelines section into a focused Pitfalls list
Worksheet: Streamlined — removed decorative separator lines, compressed the documentation checklist to a single line
References → Key Statutes: Renamed for clarity and brevity
All domain accuracy preserved: Rate priority hierarchy, §506(b) rules, charge gate logic, validation checklist, and [VERIFY] flags are intact