UNITED STATES NEWS

Rule could cost child support debtors only income

Feb 27, 2012, 12:03 PM

AP Business Writer

WASHINGTON (AP) – Old child support debts could cost thousands of poor men their only income next year because of a policy aimed at reducing the cost to the government of mailing paper checks to pay federal benefits.

The Treasury Department will start paying benefits electronically next March. It will stop issuing the paper checks that many people rely on to safeguard a portion of their benefits from states trying to collect back child support.

States can freeze the bank accounts of people who owe child support. A separate Treasury Department rule, in place since last May in a preliminary form, guarantees them the power to freeze Social Security, disability and veterans’ benefits that have been deposited into those accounts.

Once paper checks are eliminated, about 275,000 people could lose access to all of their income, advocates say.

“It’s kind of Orwellian, what’s being set up here for a segment of the population,” says Johnson Tyler, an attorney who represents poor and disabled people collecting federal benefits. “It’s going to be a nightmare in about a year unless something changes.”

In many cases, the bills are decades old and the children long grown. Much of the money owed is interest and fees that add up when men are unable to pay because they are disabled, institutionalized or imprisoned.

Most of the money will go to governments, not to the children of the men with child support debts, independent analyses show. States are allowed to keep child support money as repayment for welfare previously provided for those children.

In some instances, the grown children are supporting their fathers.

The rule change illustrates how a politically desirable goal like cracking down on so-called deadbeat dads can have complicated, even counterproductive, effects in practice.

“The rule doesn’t look at the fact that the money is mostly interest, the money is going to the state, the kids are usually adults, and it’s leaving the payer with nothing,” says Ashlee Highland, a legal aid attorney who works with the poor of Chicago.

Highland says her office has clients in eviction, in foreclosure and unable to pay their bills because of states’ aggressive efforts to collect back child support.

Marcial Herrera, 44, has had his bank account frozen repeatedly since 2009, blocking his access to $800 a month in government benefits. Unable to work because of a severe back injury he suffered in 2000, Herrera fell behind on child support. He owes more than $7,000 _ not to his 22-year-old son, but to the state of New York, because his son received welfare years earlier.

Herrera sought help in court and had his son speak on his behalf, but the judge could not erase the thousands he already owed.

“I’m just waiting for them to lock me up,” he says. “I don’t see no other way of me repaying that debt.”

A legal aid attorney suggested Herrera collect his benefits by paper check. It costs him $15 to cash the check each month, but at least he can be sure that he will have money to pay his bills.

States have had the ability to freeze accounts for years. That’s why people like Herrera rely on paper checks to safeguard part of their income.

Starting next March, that option will disappear. The Treasury Department will deposit federal benefits directly into bank accounts or load them onto prepaid debit cards. Either way, state child support agencies will be able to seize all of it.

Electronic payments are expected to save the government $1 billion over the next 10 years, the Treasury Department says. It costs the government about $1 to mail a check, compared with about 10 cents for an electronic transfer.

The Treasury Department understands that forcing people into direct deposit could deprive them of all of their income, say officials who spoke on condition of anonymity because they were not authorized to discuss the rule-writing process.

States can garnish only 65 percent of benefits before the federal government sends them out. But the limit does not apply once the money is in an account and states ask banks to freeze it, according to a Treasury Department memo obtained by The Associated Press.

A Treasury spokesman declined to discuss the policy. The officials who spoke on condition of anonymity say they believe the policy is legally unavoidable. They described a dilemma: Restrain states trying to collect child-support debts or risk depriving thousands of people of their only income.

Treasury’s legal justification assumes that receiving a paper check is still an option, says Tyler, the Brooklyn attorney.

Letting state agencies seize the money contradicts the public stance of the Department of Health and Human Services, the federal agency in charge of child support collections. The department does not want states to collect child support so aggressively that poor people lose their only income, spokesman Ken Wolfe says.

“Child support enforcement _ getting that money and passing it on to parents and children _ is a measure to fight poverty, and it doesn’t make sense to accomplish that by impoverishing somebody else,” he says.

Wolfe said HHS is developing guidelines for states to “make sure we’re not putting someone into deep poverty as a result of an automatic collection.” He declined to provide details of those plans.

Lawyers from HHS agreed with Treasury’s decision to let states seize benefits, according to the Treasury memo.

An early version of the Treasury department rule protected people from having their federal benefits frozen by debt collectors _ including private collection agencies and states seeking back child support.

State child support agencies replied in public comments on the proposed rule that blocking their access to people’s benefits would cause great harm to parents and children receiving child support.

HHS research suggests the policy could deepen the hardship for people who collect benefits as well.

People who owe large amounts of child support are almost universally poor. Among those owing $30,000 or more, three-fourths had no reported income or income of less than $10,000, HHS says. Many had their earnings interrupted by disability or jail time and are unlikely to repay the child support debt, the government-sponsored research says.

The usual methods of collecting back child support often don’t work with the poor. States typically start by garnishing wages. If that doesn’t work, they can suspend driver’s licenses, revoke passports and take away professional credentials.

Those measures have little effect on poor people without jobs who rely on federal benefits. They have no wages to garnish and no passports. Many can’t afford a car and do not need a driver’s license.

State child support agencies echo the HHS view that child support enforcement should not be so draconian that people end up with nothing.

“You don’t want the noncustodial parent to go out and be living on the streets. You’re not going to collect anything at that point,” says Tom Shanahan, spokesman for the Idaho Department of Health and Welfare.

The Idaho department requires people who owe child support to show good faith by paying a minimum amount and seeking jobs when they are out of work, Shanahan says.

The White House is reviewing the final version of the rule. Its impact so far has been limited, legal-aid lawyers say, because people can still use paper checks. A White House spokeswoman did not respond a request for comment.

In a letter sent last week, the National Consumer Law Center and dozens of other groups called on the head of the Social Security Administration to withdraw his support for the rule.

“While both current and past due child support orders should be paid,” the letter said, it should not result “in the complete impoverishment of recipients” of federal benefits.

The issue has failed to raise alarm in part because most people feel little in common with men labeled deadbeat dads, says John Vail, an attorney with the Center for Constitutional Litigation who provided legal services for the poor for decades.

“There’s not a lot of sympathy for deadbeat dads, and justly so,” Vail says. “But everybody’s got limits, and I think people who have never walked a mile in some of those old, worn-out shoes are a little quick to rush to judgment about what that life might be like.”

___

AP Business Writer Christina Rexrode contributed to this report.

___

Follow Daniel Wagner at
http://www.twitter.com/wagnerreports.

(Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)

United States News

Associated Press

United flight diverted to Chicago due to reported bomb threat

CHICAGO (AP) — A cross-country United Airlines flight was forced to land in Chicago Wednesday as a result of what local media reports, citing a preliminary police report, called a bomb threat. United said only that flight 1533 from Newark to Los Angeles landed safely at O’Hare Airport as the result of a “security issue.” […]

30 minutes ago

Associated Press

Parts of a Martin Luther King Jr. memorial in Denver have been stolen

DENVER (AP) — A large Martin Luther King Jr. memorial in Denver’s City Park was vandalized, and police are trying to determine if racial bias was involved. Several pieces of the marble and bronze “I Have a Dream” memorial were stolen sometime Tuesday. The missing pieces include a bronze torch and angel, as well as […]

36 minutes ago

Associated Press

Toyota recalls 280,000 pickups and SUVs because transmissions can deliver power even when in neutral

DETROIT (AP) — Toyota is recalling about 280,000 pickup trucks and SUVs in the U.S. to fix a transmission problem that can let the vehicles creep forward while in neutral. The recall covers certain Toyota Tundra pickups and Lexus LX 600 SUVs from the 2022 and 2023 model years. Also included are 2023 and 2024 […]

1 hour ago

Associated Press

United Airlines says after a ‘detailed safety analysis’ it will restart flights to Israel in March

CHICAGO (AP) — United Airlines says it plans to resume flights to Israel next month, reviving a route that was suspended in October at the start of the Israel-Hamas war. The airline said Wednesday that it will start flights from Newark, New Jersey, to Tel Aviv with a stop in Munich on March 2 and […]

2 hours ago

Associated Press

Wisconsin school district releases tape of Black superintendent’s comments that led to resignation

MADISON, Wis. (AP) — The Green Bay school district on Wednesday released the recording of its first Black superintendent’s appearance on an Atlanta radio show in which he made blunt comments about race relations, criticized the community and derided one of the district’s principals. Claude Tiller Jr. resigned on Saturday after a closed-door meeting with […]

2 hours ago

Associated Press

Seattle police officer who struck and killed graduate student from India won’t face felony charges

SEATTLE (AP) — Prosecutors in Washington state said Wednesday they will not file felony charges against a Seattle police officer who struck and killed a graduate student from India while responding to an overdose call — a case that attracted widespread attention after another officer was recorded making callous remarks about it. Officer Kevin Dave […]

2 hours ago

Sponsored Articles

...

DISC Desert Institute for Spine Care

Sciatica pain is treatable but surgery may be required

Sciatica pain is one of the most common ailments a person can face, and if not taken seriously, it could become one of the most harmful.

...

Fiesta Bowl Foundation

The 51st annual Vrbo Fiesta Bowl Parade is excitingly upon us

The 51st annual Vrbo Fiesta Bowl Parade presented by Lerner & Rowe is upon us! The attraction honors Arizona and the history of the game.

...

FanDuel

The 2023 Diamondbacks are a good example to count on the underdog

The Arizona Diamondbacks made the World Series as a surprise. That they made the playoffs at all, got past the Milwaukee Brewers in the NL Wild Card round, swept the Los Angeles Dodgers in the NLDS and won two road games in Philadelphia to close out a full seven-game NLCS went against every expectation. Now, […]

Rule could cost child support debtors only income