State-applied interest on child support arrearages.

On Sat, 04 Mar 2006 18:34:39 GMT, "Bob Whiteside"
wrote:


"Beverly" wrote in message
.. .
On Thu, 02 Mar 2006 19:07:50 GMT, "Bob Whiteside"
wrote:


wrote in message
roups.com...
I read Dusty's article from Men's News Daily and I read it thoroughly
and noticed the following sentence within a paragraph about my favorite
issue:

INTEREST ON CHILD SUPPORT ARREARAGES

Here's the sentence:

If the 65% Federal maximum is not enough to satisfy the State's Family
Court order for child support, the parent will be facing a child
support arrearage that can grow with interest (at the option of the
state) at the federal maximum of 6% per annum (USC 42654 21a).

The cite of the statute sucks, (should be 42 U.S.C. 654(21)(a) but the
link


(http://assembler.law.cornell.edu/usc...c_42_00000654-
-
--000-.html#21_a)
to the statute worked...and here's what the statute says:

"at the option of the State, impose a late payment fee on all overdue
support (as defined in section 666 (e) of this title) under any
obligation being enforced under this part, in an amount equal to a
uniform percentage determined by the State (not less than 3 percent nor
more than 6 percent) of the overdue support, which shall be payable by
the noncustodial parent owing the overdue support;..."

Meaning states must charge at least 3% but no more than 6% on
arrearages.

I've called my congressman's office to see exactly when that statute
was enacted because until about two years ago, Virginia charged 9% (and
they change the rate every time the law in Virginia governing "judgment
interest" is changed -- current it's 6%.

Take a look at this site:

http://www.supportguidelines.com/art...art200301.html

Notice that some (few) states have ZERO interest...others, like Maine
have as much as 15%...nearly all exceed the 6% maximum...

Why aren't the feds going after the states who exceed the 6%
mandate...and any ideas how we could get NCPs in existing states to try
and turn the tables on those states?

My state does not charge interest on non-TANF cases, but assesses 9%
interest if the CP does the calculations and provides an explanation of
how
the interest was determined. On TANF cases the state calculates and
assesses 9% interest.

Now for the elephant in the living room nobody wants to talk about -
Where
does the interest go? Who gets to keep it?


Depending on the law your state uses to determine the interest, it is
may also be possible for a non-TANF case to get interest. My state,
for example, uses the interest and the rate applicable to all
judgments of money. It is not just child support related. Although
interest is automatically computed by child support enforcement, any
child support case before a judge can have interest added on arrears.

Interest, in any case, goes to the CP in one way or another. In TANF
cases, they may keep all child support payments collected up to the
amount of support in which they provide the family. Most states,
allow a small pass-through, however. The reason the state keeps the
interest is because state support provided most often exceeds child
support paid. State support includes cash payments, food stamps,
medical, housing allowances, and other assistance which varies by
state. TECHNICALLY, the CP is getting the interest.

Using this same logic, TECHNICALLY, the NCP is getting the interest too.
After all, the fact he is paying interest keeps the CS guideline awards down
and prevents future increases from occuring so he is paying less CS than if
he didn't pay interest.

Please explain how the welfare benefits are unchanged when interest is
accrued but the CP gets the interest from the state before it is paid.

This is how I understand it:

CP applies for welfare and, in doing so, signs a paper which assigns
the rights of any judgments or awards to the state for the purposes of
the state recouping its expense on the recipient family.

Example:

Cash payment for month one: $450
Food stamps: $200
Medicaid (actual expense when
CP used ER for child's runny
nose at 10 PM since it was
"free"): $400
Section 8 Housing (difference
between payment amount
and FMV): $500
Total benefits provided for
month: $1550

Child Support grabbed by state: $600
Interest on arrears kept by state: $ 50
Total Recoup: $650

Carry Forward: $900
---
Cash payment for month two: $450
Food stamps: $200
Section 8 Housing (difference
between payment amount
and FMV): $500
Total benefits provided for
month: $1150
Carry Forward: $900
State may hold: $2050

Child Support grabbed by state: $600
Interest on arrears kept by state: $ 50
Total Recoup: $650

Carry Forward: $1400

etc...



BTW - The $50 pass-through was no longer funded by federal money after the
welfare reform of 1996. Most states dropped the pass-through when it
started coming out of state funds. My state hasn't paid it since 1997.


I did not know this.
Beverly