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TREASURY RULE COULD AFFECT CHILD SUPPORT DEBTORS

A recent U.S. Treasury decision to begin paying federal benefits electronically in March 2013 could inadvertently leave those Washington state residents who owe back due child support with no income. The decision is touted as a cost-saving measure as it would eliminate the need for paper checks, which cost money to send out. However, states are allowed to freeze the bank accounts of those who owe child support, meaning that many in this situation would be unable to collect their federal benefits.

According to research conducted by the Department for Health and Human Services (HHS), many who owe large amounts of child support are poor or disabled. About three-quarters of those who owe $30,000 or more either had no reported income or had an income of less than $10,000. As such, many of these people rely on federal benefits such as Social Security Disability in order to provide for themselves.

Under current law, states can garnish 65 percent of the paper checks that one receives from the federal government. This leaves only 35 percent for them to pay for food and shelter. However, even that amount may be put in jeopardy if the treasury rule is put in place. If the state has frozen their bank account, then they may be left with no means of collecting federal benefits.

Moreover, in some cases, the money is not going to the child or to the custodial parent, but rather directly to the state. Indeed, the adult children are sometimes finding themselves having to take care of the very person who purportedly owes child support on their behalf. However, the decision may change as it is still under review, although it certainly bears watching for any future developments. In the meantime, those Washington state residents owing child support who are facing economic hardship may be able to secure a reduction in the amount owed based upon a showing of their financial circumstances.

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