JDB Collecting $5,000.00 Interest During Wage Garnishment

Most states have laws that allow a judgment creditor to charge statutory interest on a judgment balance (usually 9-12%). That interest they are charging is most likely "judgment" interest.

So the question is whether "judgment" interest falls under the scope of 1098 requirement set by the IRS. I would argue "yes".

The IRS defines mortgage interest as any interest charged on a "mortgage". A "mortgage" is any obligation secured by real property. Any interest paid on a mortgage over $600 must be reported to the IRS on Form 1098, and is tax-deductible for the payee.

Since the judgment is based on an underlying mortgage, I will argue that any judgment interest they charge is still considered mortgage interest as defined by the IRS. Although that is just my take.

You might call the IRS and ask them. If they say yes, then the JDB should send you a 1098.

Once a judgement is obtained, it is no longer a mortgage but a judgement account. Same applys for student loans....interest paid thru a judgement account is not tax deductable like other student loan interest.