$25 Billion in Uncollected Child Support Payments

$25 Billion in Uncollected Child Support Payments

Be Careful When Using Private Companies to Collect Child Support from Ex

Have you had difficulties collecting child support from your former spouse? Some private companies have come about in response to this challenge, but with mixed reviews.

While the amount of child support payments that go uncollected continues to rise, state and federal agencies charged with enforcement continue to suffer budget and staffing cutbacks. So with as much as $25 billion in uncollected funds on the line in the United States each year, it’s not hard to understand why the number of private child support collection agencies has grown as well —“ some experts believe the number has doubled in just the past ten years to about 50 agencies nationwide, but no one really knows for sure.

What is known, though, is that there are growing warnings from legal experts, government officials and parents about predatory payment practices, shady contracts, and expensive surprises that go along with the promises of these agencies, which often operate with little or no government oversight or regulation. The state of Florida even went so far as to ban one such agency from operating in the state and fined it $250,000 for what prosecutors said amounted to outright theft of funds that were collected on behalf of clients and their children.

Collection agency agreements typically charge anywhere from 25 percent to 40 percent of the total amount collected. They often require that clients sign over rights so any payments must be made directly to the agency. Then the agency can take its cut before passing the rest on to the client. Watchdog groups and experts say some agencies add on hidden fees during this transfer and charge additional fees for ending the contract and processing the paperwork for signing payments back over to them directly.

Collection agencies and their lobbyist groups, such as the Child Support Enforcement Council and the National Child Support Enforcement Association, defend their industry and say that the fees they charge are no different than those charged by banks and other kinds of collection agencies. They also argue that because they are paying the expenses upfront to track delinquent parents and identify them, they should be able to recover those costs when payments are made.

And, they say, private collection agencies have been able to collect billions in back child support over the years that otherwise would go uncollected because government agencies have such a backlog of cases. State and federal governments spend about $5.4 a year to collect anywhere between $25 and $40 billion a year in child support thanks mostly to the legal tools granted by legislatures and courts in the past two decades. Private agencies claim to have collected more than $100 billion in the past 20 years.

Still, critics in government enforcement agencies like the U.S. Administration for Children and Families and watchdog groups such as the National Women’s Law Center say making a profit from child support takes money away from children — money that can often be the difference in keeping families and single parents from needing more government assistance and costing taxpayers more in the long run.

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Of course, some parents simply see the hidden fees and rigorous contracts as predatory. “My final words on child support agencies are: don’t do it,” according to blogger Cynthia Parker, a mother who investigated private collections agencies and posted her investigation online as a warning to others.

“When I spoke with (one agency) and explained why their answers were not satisfactory for me as a method for collecting child support arrearages, they very bluntly replied that ’68 percent was better than zero percent’ and that they would expect to hear back from me ‘when you get tired of not getting your support and want someone to aggressively pursue your case…” she relates.

“As a single mother of two in need of that court-ordered child support, I am always serious when it comes to money. Serious enough to know that if I am willing to pay what they ask to collect it for me then I must need it very badly in the first place. I hope they hold their breath because they will not hear from me at all!”

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