We are finishing up our discussion of a federal regulation set to take effect in March 2013. The rule could have a dramatic effect on noncustodial parents who receive federal benefits and who owe child support payments. The rule comes from the Department of the Treasury, because it writes the checks. The rule will affect clients of the Department of Health and Human Services, though, and advocates are saying the two should talk.
As we have discussed in the last few posts, Treasury is anxious to save money by going paperless. Rather than mailing checks to benefit recipients, the department will deposit the funds directly in a checking account or load the funds onto a cash card. By doing so, the department makes the money available to states that are collecting back support payments.
The majority of people who survive solely on federal benefits live well below the poverty line. They tend to have physical or mental disabilities that keep them from working full-time. When the regulation kicks in, states will be allowed to garnish every dime the debtors have.
According to HHS research, about 75 percent of noncustodial parents who owe more than $30,000 in back child support reported incomes of less than $10,000; many reported having no income at all. The typical enforcement measures -- like garnishing wages, suspending drivers' licenses and revoking passports -- have no effect on these debtors. With disabilities or criminal records, these debtors are unlikely ever to repay what they owe.
The position of HHS has long been that states should not collect past due support so aggressively that debtors lose their only source of income. The reason states collect in the first place is to keep the recipients out of poverty -- this new policy, critics say, risks impoverishing Peter to pay Paul or, in many cases, Paul's state government.
The White House is expected to review the Treasury Department's policy as well as the rule that allows states to freeze all of the funds -- even federal benefits -- in the accounts of noncustodial parents with child support balances. Advocates are urging lawmakers at every level to rethink regulations like this one that look innocent enough on the surface but in truth contravene public policy.
Source: Associated Press, "Child support debts may leave some with no income," Daniel Wagner, Feb. 27, 2012