Recession Resulted in First Yearly Decrease in Child Support Payments Ever Recorded

To no one’s great surprise, child support payments fell in 2009 and likely did so again in 2010 although statistics aren’t yet available for the latter year.  What’s remarkable is that the drop is the first on record.  Here’s one article on the subject (AOL, 1/1/11).

State and federal governments collected $26.4 billion in child-support payments for the fiscal year that ended Sept. 30, 2009, down 0.7% from a year earlier, according to the Department of Health and Human Service’s Office of Child Support Enforcement. The decrease was the first since such records began being kept in 1976. Payments average about $250 a month nationwide.

That’s testimony to the lousy economy that squeezes custodial and non-custodial parents alike.  The numbers in some areas are alarming.  In California, for example, some 57% of obligors were in arrears at some time during the year.  Amazingly, that actually compares well with Illinois where 88% of non-custodial parents were behind on their payments at some point during the year.

Christmas-season retail sales were better than expected, so I suspect that there was more temporary hiring during the holidays.  I further suspect that the bump in holiday sales accounted in part for the drop in unemployment to 9.4% from 9.8%.  I further expect that number to tick up in the first months of 2011.

But beyond what I believe to be only temporary good news, the economic outlook is pretty bleak.

[T]he underemployment rate, which includes both the unemployed and those working part-time who are seeking full-time jobs, held steady at a staggering 17%, while the number of people out of work for at least six months increased to 6.3 million…

Personal bankruptcies are on the rise. Over the first nine months of 2010, nonbusiness bankruptcies hit 1.054 million, 12% more than during the same period of 2009, and third-quarter filings were up 6.7%, according to U.S. Bankruptcy Courts statistics.

As a result, more noncustodial parents are faced with the dilemma of either going through the months-long process of getting a court order to temporarily reduce their payments until they find a new job, or having as much as 25% of their unemployment checks garnished by state regulators. Either way, custodial parents receive smaller checks each month.

Given all that, it has never been clearer than it is now that states must provide summary procedures by which non-custodial parents can have their support levels reduced to reflect job loss, or other reasons for reductions in wages.

It has never made sense that state courts throw up barriers to downward support modifications.  In many states, motions for downward modifications take months to be heard and even then imputation of income can be used by courts to deny meritiorious claims.  And that doesn’t even take into consideration the fact that hiring an attorney is often necessary to win a downward modification.  Filing and service fees offer additional financial obstacles to reducing support levels.

And of course, during all that time, support arrearages build up and up.  Tack on interest and fees and it doesn’t take long for a non-custodial dad who’s on the financial brink anyway to be buried under a mountain of debt that he can, realistically speaking, never pay.

As we’ve seen twice in the last year, when the State of New Jersey conducted a “sweep” of child support obligors who were behind on their payments, they collected grand totals of, in the first sweep, six cents for every dollar owed and in the second, 1.2 cents.  Those were parents who, faced with the choice of jail or payment, still couldn’t pay.

And, speaking of interest, most states charge it on arrearages.  California for example charges 10% per annum.  Now, where can you find an investment that pays 10% these days?  Show me a bond with better than the worst possible rating that pays anything close to that?  How about a preferred stock?  Good luck.

And yet the State of California thinks that it’s reasonable to expect non-custodial parents who can’t pay their obligations anyway to pay in addition a rate of interest that the wealthiest corporation (or the most desperate one) in the world wouldn’t dream of offering.

How does any of this make sense?  Does it help children for daddy to be in jail?  Does it assist Mommy in some way? 

The system as it currently stands is designed to produce permanent arrearages.  How else can we explain a process that throws up countless obstacles to any effort to modify support to reflect changed circumstances and then, having done so, charge interest rates on the arrearages found, for all practical purposes, nowhere else in the world?

I’ve said it before; there are simple, commonsense solutions to these problems.  Specifically, family courts should employ special masters who deal solely with child support modifications – both increases and decreases.  There should be enough of those masters to make getting a hearing easy and quick.  Parents should be encouraged to represent themselves and given clear, written instructions on how to do so.  Those instructions should include lists of evidence (such as letters from employers, pay stubs, etc.) that would be required to prove or disprove a case for modification.  Masters should actively encourage agreement between the parties.

None of this is rocket science.  It is far past time that we stopped pretending that every dad behind on his payments is a deadbeat.  Especially in these alarming economic times, we should start treating non-custodial parents, 84% of whom are dads, like the human beings they are.

Thanks to Don for the heads-up.

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