There are little arguments from child support collection agencies, both public and private, about their main goal being the collection of child support payments from noncustodial parents. There may be a change on the horizon related to the authority of private child support agencies when enforcing child support laws and collection policies. The distribution process practiced by private agencies is one that leaves The Department of Health and Human Services or HHS questioning their procedures. One of the major issues, as outlined by HHS (2014), are the difficulties that families encounter when child support payments are disbursed directly to the private collection agencies.
Families could complain about the difficulties that they experience when attempting to collect child support monies from the state collection and disbursement agencies and centers.
According to the National Conference of State Legislatures (2015), under federal law, states are allowed to retain collected child support to reimburse themselves and the federal government for any welfare (Temporary Assistance for Needy Families or TANF) payments to the family. There are very few limits to how much and for how long the government can retain payments in order to repay a TANF grant, which is being treated as a loan.
The main differences between the two entities are slight and may only be a matter of if and how a private agency is being regulated by the federal government.
The HHS lists the failure to regulate private agencies as one of the most critical problems with these agencies. The Federal Trade Commission (FTC) has determined that child support collections are not subject to the Fair Debt Collection Practices Act, §15 U.S.C., (HHS, 2014). Some of these prohibited acts are eerily similar to those practiced by government agencies when attempting to collect child support payments and arrears. The HHS lists the fact the child support debt is not considered consumer debt and is, therefore, subject to different collection practices.
One area in which private agencies have been accused of violating the rights of parents is by practicing deceptive advertising, (HHS, 2014). There are states and local law enforcement departments that use deception when pursuing parents that owe child support debt. Besides the fact that people are often arrested due to owing thousands of dollars of debt, which consists of interest, late fees, court costs, and restitution, the police have offered prizes to debtors’ under false pretenses. Florida has used this underhanded strategies when pursing delinquent parents. These deceptive practices have led to arresting people by luring them to locations with promises of some type of winnings.
According to Joel Marino of the Sun Sentinel (2009), convinced they were picking up money being given away by a government agency, people were instead picked up by police. This is no different than what the HHS is complaining about when dealing with private agencies. There are no distinctions made between parents who willfully fail to pay support or those that simply cannot afford to pay support when these sneaky raids are perpetrated against people. This illusive practice is not unusual for many public agencies to use in pursuit of alleged ‘deadbeat’ parents.
The same underhanded tactic used in Florida was practiced by the Alabama County police in August of 2011 using tickets as bait. The Huffington Post (2011), reported that they (suspects) were promised a free football game, but they got handcuffed instead. The tickets were for the Iron Bowl and people were arrested upon arrival in a sting labeled the Iron Snare. This practice is no different from the way that private collection agencies deceive parents except this deception is legally permitted by the government. For instance, §807 of the Fair Debt Collection Act states that a debt collector may not use any false, deceptive, or misleading representation or means with the collection of any debt, (FTC, 1996).
The government regularly uses these misleading maneuvers as demonstrated in Florida and Alabama and the same applies to private agencies. The Children’s Rights Council (CRC) points out that agencies threaten to attach liens on the noncustodial parent’s care, house, and other property. This threat is misleading as private collection agencies do not possess the same power and authority to execute such severe collection methods. According to Supportkids, a private collection agency, their collectors use collection tools and techniques including garnishing wages or placing liens on property and assets.
It seems that the government may want to limit the use of private agencies because of the amount of money these agencies charge parents for collection money on their behalf. Not only does this decrease the amount of money that the government collects which optimizes performance measures, private collection agencies are decreasing the amount of child support money that can be retained by the states. Supportkids deducts a case development fee of $475 from the first $475 collected on a case. This charge can easily be compared to the money retained on current and former TANF cases as well as collection fees that are charged to the noncustodial parents account. After the Case Development fee has been collected, Supportkids charges a service fee of 34% of each payment received, (Supportkids).
The government, both state and federal, collect shares from child support money. During 2013 alone, the amounts collected by the states and the District of Columbia in state and federal shares totaled $626,957,254 and $791,239,835 respectively. This is a significantly larger amount of money being charged in collection fees in comparison to the money charged by private collection agencies. The proposed restrictions initiated by the federal government are nothing more than a ploy to further monopolize child support collections in America.
The Federal Register mentions that private collection agencies enforce perpetual service contracts that require direct payment to the company and prohibits cancellation, (HHS, 2014). This may be true with some private agencies but this complaint is not far removed from the complaints of never ending child support debt owed by noncustodial parents. The CRC explains that some contracts may have clauses that make the contract ‘self-renewing’ for up to six months after the last child support payment comes in. Some parents may complain about lengthy service contracts, but these contract will have an end date eventually. This is unlike public child support collectors, court orders, and child support debt that seems to last for an eternity. Low-income parents are even more unlikely to pay the child support arrears over a course of two decades because of the extraordinary amounts owed.
To reiterate the extremely enormous amount of arrears owed by parents, the Administration for Children and Families or ACF (2014) reported that the total amount of arrears owed by noncustodial parents, as of 2013, equaled a whopping $116,149,340,011. This is money largely owed to the government and not to the families. A significant amount of this money will, in all likelihood, be owed long after the child reaches the age of emancipation which can therefore be compared to a lifelong debt. The main difference between these two long-term contracts comes down to the agreement between the noncustodial parent and the collection agency.
The public child support contract does not require a signature from the noncustodial parent in order for the contract (court order) to be legally binding in a court of law, whereas, the private agency acquires a signature from the noncustodial parent agreeing to make payments. The perpetual debt owed to the states is so severe to low-income parents that the average amount of arrears owed in Racine County Wisconsin, as of February 28, 2013, equaled $13,512.50, (Stephanie Jones, 2013). Couple overdue child support debt with interest being charged on late payments, the debt owed can accumulate at an alarmingly quick rate. States such as Wisconsin, Colorado, and Kentucky charge its citizens 12% on late payments.
Interest charges are another way too add money to the often nonconsensual contract between state and parent.
Many of the parents are ex-offenders that accrue child support arrears while incarcerated. Almost every state views incarceration as voluntary unemployment and will therefore grant judges the freedom to deny a petition for a child support modification. For a father in Racine County, the max owed in back child support was $50,000, (Jones, 2013).
There are virtually no realistic ways that can guarantee that the full amount of debt can be paid by an ex-offender who, in all likelihood, is unemployed or underemployed after release. As long as the debt is outstanding, interest can be charged along with late fees and penalties. This proves that public and private child support collection agencies are quite similar when dealing with never ending contracts. The public agencies hold lifelong contracts for low-income, noncustodial parents.
Another complaint listed on The Federal Register in relation to private collection agency tactics when collecting child support money is that they demand money that is not owed by the noncustodial parents. This is a concern that can be attributed to both private and public collection agencies. According to CRC, private collection agencies typically charge a fee of 35% or more for any amounts that may be collected. This means that if a noncustodial parent is ordered to pay $200 a month, the private agency is entitled to at least $68 of the payment.
These fees are usually charged to any money the parent might receive through direct communication with the non-paying parent, (CRC). This collection and retention practice is not dissimilar to the pass-through and disregard policies enforced by almost half of the United States, including Washington D.C. A pass-through, as defined by Lippold Nichols, and Sorenson of the Urban Institute (2010) are state child support federally regulated programs which allows states to distribute child support payments to TANF families and not count those payments when calculating their TANF benefits. For the payments that are not disregarded or passed-through, the state retains that money to repay TANF benefits and help reimburse the state for collection practices and enforcements.
Although there are 21 states that claim to pass-through or disregard child support payments, not all of these states adhere to their own policies.
For example, according to Michael Vinson and Vicki Turesky (2009), Alaska is supposed to pass-through up to $50 of the child support payment collected while the amount is disregarded for purposes of eligibility and benefits. However, the state did not pass-through or disregard one dollar during 2009 and 2013, (ACF, 2014). This is money that noncustodial parents are being charged for alleged child support services and enforcement that is not legally owed by the parents.
The TANF money, when paid to the family, is a grant and does not require repayment. Not to mention, custodial parents must complete a work or school program in order to qualify for TANF benefits. This means that benefits have already been paid for through the work completed by the custodial parents. Alaska is not the only state guilty of charging and collecting money from noncustodial parents that is not owed.
Vermont is supposed to pass-through all current support with the first $50 disregarded (Vinson and Turetsky, 2009). Unfortunately, the families of the “Freedom and Unity” state are being deceived and robbed by their government. ACF (2014) reported that Vermont pass-through a total of $0 between 2009 and 2013. Again, the state is collecting money that is, technically, owed from the noncustodial parent and pocketing the payments. The federal and state governments are actually committing deceptive acts in the name of child support collections.
The Federal Register also lists falsely representing the business as a government office and demanding payments from grandparents as two other problems with private collection agencies. One could argue that both private and public agencies practice the same collection tactics when pursuing noncustodial parents for payments, but the public agencies are worse. This can be explained by observing the many comparisons that have been listed in this writing, numerous news articles, and by government official themselves when presenting evidence of the bully tactics exercised by government and nongovernment collection agencies.
There does not seem to be a real drive to change the child support collection policies or agency behaviors.
The issues presented in The Federal Registry may be an indication of future legislation that may be drafted in an attempt to dismantle the private child support collection industry. There are no significant differences between the private and the public entities. Even though the public sector is supposed to adhere to federal collection laws, the people enforcing the law use illegal tactics when seeking payment. The harassment, the embarrassing of debt holders, and the issuing of arrest warrants are but a few constitutional violations under the laws that are supposed to protect citizens during the attempts to collect a debt. Until we, as American citizens, force the government to adhere to the same laws by which we are forced to abide by, citizens will continue to lose our rights and our freedoms.
Children Right’s Council. (n.d.). Private collection agencies | Children’s rights council. Retrieved from http://www.crckids.org/child-support/using-a-private-collection-agency/
Department of Health and Human Services. (2014). Flexibility, efficiency, and modernization in child support enforcement programs: Proposed rule. Federal Register, 79(221), 68547-68587. Retrieved from http://www.gpo.gov/fdsys/pkg/FR-2014-11-17/html/2014-26822.htm
Fair debt collection practices A\act | Federal trade commission. (1996, September 30). Retrieved from http://www.ftc.gov/enforcement/rules/rulemaking-regulatory-reform-proceedings/fair-debt-collection-practices-act-text
Lippold, K., Nichols, A., & Sorenson, E. (2010). Evaluation of the $150 child support pass-through and disregard policy in the District of Columbia. Project report. Retrieved from http://www. urban.org/publications/412779.html
National Conference of State Legislatures. (n.d.). Child support 101.2. Retrieved from www.ncsl.org/research/human–services/enforcement-collecting-and-distributing-support.aspxservices/enforcement-collecting-and-distributing-support.aspx
Office of the Administration for Children & Families. (2015, April 1). FY2013 Preliminary Report – Table P-30 | Office of Child Support Enforcement | Administration for Children and Families. Retrieved from http://www.acf.hhs.gov/programs/css/resource/fy2013-preliminary-report-table-p-30
Supportkids Services, Inc. (2015). Supportkids – How we work. Retrieved from http://www.supportkids.com/how-we-work/
Vinson, M., & Turetsky, V. (2009, June 12). State child support pass-through policies. Retrieved from http://www.clasp.org/issues/child-support-and-fathers/highlights/state-child-support-pass-through-policies