Child support vs. Social Security

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If you owe back child support — even back child support from decades ago — your Social Security check may be garnished under new U.S. Treasury rules. This could throw a wrench in your retirement.

The new rules, which were actually written to protect Social Security recipients from garnishment of other debts, has a loophole that allows child support orders to garnish — not just part — but all of the money in your bank accounts.

Margot Saunders, an attorney with the National Consumer Law Center, explains that under normal circumstances, federal law limits the maximum amount that can be administratively seized for both past-due and current child support to 65 percent of Social Security benefits. But under the new rule, states are required to establish quarterly, automatic, computerized analyses of all bank accounts to determine whether any child support debtors have assets. When an account is matched, a garnishment order is automatically issued, and the account seized. These bank sweeps and garnishments occur independently of the administrative seizures of Social Security.

The result is that 65 percent of the recipient’s benefits will be withheld by administrative seizure and paid directly to the child support office.  The remaining 35 percent will be deposited into the beneficiary’s bank account, where it will be seized in full through a bank garnishment.

If your immediate reaction is that these mopes’ retirement planning was pretty lousy and they should have paid their child support promptly and in full to begin with, Saunders begs to differ. She says most of these debts were incurred years ago, and they might have been caused by record-keeping errors. Moreover, the National Consumer Law Center isn’t advocating that the debts be erased. It is urging that the rule be revised so collection is limited to a percentage that will leave debtors with money to live on.

An estimated 500,000 people identified as being in this situation live on nothing other than Social Security, and even a small child support shortfall of $1,000 incurred 20 years ago would have had penalties and interest added to it so that by this year, it will have snowballed into more than $20,000 in debt. As Saunders says, “This may sound macabre, but if these people end up penniless, homeless and dying, there won’t be any money to collect.”

If you fear you might find yourself in this dilemma, the best thing to do is to face the problem head on — apply for an adjustment or forgiveness — or  just pay the bill.