Electronic federal benefits switch to result in back child support payments

There was an interesting article in the Washington Post a couple of days ago about coming changes in federal benefits. In order to reduce costs, the government will next year begin paying benefits such as Social Security, veterans and disability by electronic means rather than with paper checks.

That change could mean Missouri will seize federal benefits payments from thousands of parents owing back child support.

A Treasury Department rule now allows states to freeze those benefits once they’ve been deposited in bank accounts.

Because electronic deposits go into bank accounts automatically, while paper checks can be cashed rather than deposited, approximately 275,000 people nationwide might see their benefits go to their children, or state governments, for back child support.

In many cases, advocates say, the child support bills are gone unpaid for decades and the children involved are now adults. Much of the money owed, say the advocates, is comprised of interest payments and fees that piled up over the years when the men were unable to pay because of disabilities, institutionalization or incarceration.

According to the Post, a majority of the funds to be seized will go to various government entities, rather than to the children it was originally intended for. That’s because states are allowed to seize back child support as repayment for any welfare assistance those children received.

An Illinois attorney said of the coming electronic funds transfer change, “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.”

We’ll have more on these changes affecting child support in our next post.

Source: Washington Post: “Move to electronic benefits could leave thousands who owe child support with no income,” Feb. 26, 2012