The Department of the Treasury recently announced that federal benefits will not be paid by paper check after March 2013. Instead, the funds will be directly deposited into beneficiaries' bank accounts or loaded onto prepaid debit cards. Over the next 10 years, the move to paperless could save the government $1 billion ... and impoverish almost a quarter of a million people.
Those people are the noncustodial parents who owe back child support. The majority are men, and these noncustodial "deadbeat" dads have little in common with more high profile debtor dads, like Illinois Congressman Joe Walsh. Most of these dads got behind on their payments because they were in jail, disabled or institutionalized.
Most, too, have only federal benefits to live on. Because state governments can freeze access to bank accounts (as we discussed in our last post), most of these guys have taken to cashing the checks instead of depositing them. According to one advocate, her clients pay $15 to cash the check in order to hold on to the 35 percent that hasn't already been garnished.
What the advocate finds frustrating is that these guys may owe thousands of dollars, but they don't owe it to their kids anymore. They owe it to the government. Their kids are grown; some are caring for their indigent dads. But, the balance remains, collecting interest and accumulating fees and moving decimal points to the right every year.
Even if the kids are grown, states can go after the debtor dads, because the kids received state benefits years ago. Their appeals fall on deaf ears. Judges are unable to wipe out the debt.
As a result, the advocate says, her clients are in foreclosure, are being evicted and can't pay any other bills because state governments have continued their aggressive collection efforts. What's worse is that the federal government knows this, thanks to Department of Health and Human Services research.
We'll finish this up in our next post.
Source: Associated Press, "Child support debts may leave some with no income," Daniel Wagner, Feb. 27, 2012