Monday: Breakout Session 2 Workshop A Time: 2:45 p.m. - 4:00 p.m. Location: Regency 1 ERICSA 47th Annual Training Conference & Exposition Lexington, Kentucky ‘10 ARREARS MANAGEMENT: ADDRESSING THE CRISIS OF PAST-DUE SUPPORT (CLE) PAID Initiatives across the country are paving the way to increasing child support collections and preventing accumulated debt for non-custodial parents. Join this workshop to learn about some exciting new PAID practices that can help you increase collections and prevent debt while helping families work together. This workshop will examine the PAID Initiative – where and why it started, where we are today, and what we can do in the future, especially given the challenges that we face during the economic downturn. Learn about several new PAID efforts that are currently under way in Ohio, Illinois, and North Dakota. Presenters: Kim Newsome Bridges Executive Director Ohio CSEA Directors’ Association (OCDA) Columbus, OH James Fleming Deputy Director and Chief Legal Counsel North Dakota Child Support Enforcement Program Bismarck, ND Mary Morrow Assistant Deputy Administrator Cook County Administrative and Interstate Operations Illinois Department of Healthcare and Family Services, Division of CSE Chicago, IL Moderator: Wendy Gray Senior Associate The Center for the Support of Families (CSF) Washington, DC My Notes....
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Monday: Breakout Session 2Workshop A
Time: 2:45 p.m. - 4:00 p.m.Location: Regency 1
ERICSA 47th Annual Training Conference & Exposition Lexington, Kentucky ‘10
ARREARS MANAGEMENT: ADDRESSING THE CRISIS OF PAST-DUE SUPPORT (CLE)
PAID Initiatives across the country are paving the way to increasing child support collections andpreventing accumulated debt for non-custodial parents. Join this workshop to learn about some excitingnew PAID practices that can help you increase collections and prevent debt while helping families worktogether. This workshop will examine the PAID Initiative – where and why it started, where we are today,and what we can do in the future, especially given the challenges that we face during the economicdownturn. Learn about several new PAID efforts that are currently under way in Ohio, Illinois, and NorthDakota.
Presenters: Kim Newsome BridgesExecutive DirectorOhio CSEA Directors’ Association (OCDA)Columbus, OH
James FlemingDeputy Director and Chief Legal Counsel North Dakota Child Support Enforcement ProgramBismarck, ND
Mary MorrowAssistant Deputy AdministratorCook County Administrative and Interstate OperationsIllinois Department of Healthcare and Family Services, Division of CSEChicago, IL
Moderator: Wendy GraySenior AssociateThe Center for the Support of Families (CSF)Washington, DC
“The best way to reduce the total national child support debt is to avoid accumulating arrears in the first place. The best ways to avoid the accumulation of arrears are to set appropriate orders initially, modify orders via simple procedures promptly when family circumstances change, and immediately intervene when current support is not paid.” Office of Child Support Enforcement, The Story Behind the Numbers – Who Owes the Child Support Debt? (July 2004).
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Arrears Management
TOTAL ARREARS
MOTIVATIONPREVENTION
COLLECTIBILITY
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Arrears Management
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Three Step Approach
• Prevention – Build a habit of paying current support
• Motivation/Collection – Collect arrears in sustainable amounts
• “Don’t shoot your milk cow!”
• Collectibility – Stop wasting time trying to collect the uncollectible
• If you are banging your head against the wall – BACK UP!
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Practical Approach
• How important is arrears management?
• How much SHOULD an obligor be expected to pay each month?• Have faith in the child support guidelines
• The ideal is to rise and fall with the obligor’s monthly income
• Collect the amount due for purposes of income withholding
• The motivation/collection dilemma for “good” payers: Do I take an action or not rock the boat?
• Due on arrears for purposes of income withholding• Increased collections
• Reflects current ability to pay
• Negotiated settlements – subtract negotiable interest and get 95% of principal
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Arrears: Motivation/Collection
• Make the SDU work for you
• Nontraditional payments
• Direct transfers of property
• Offsets of assigned arrears
• Payment diversion
• Waivers
• Deceased custodians – obligor has
custody
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Arrears motivation/collection
• Automatic withholding
• Administrative default O.R.C. 3123.02
– Triggers many enforcement remedies
• 20% payment on arrears
• Lump sums
• Driver license suspensions
• Professional license suspensions
• FIDM
• Etc.
• Criminal Non Support Diversion
Project Clean SlateDebt Compromise
Effective January 1, 2007
Illinois Public Act 94-0971
Allowed for past due state
assigned obligations to be reduced
in exchange for regular child
support payments to support the
family.
Implementation of the Clean Slate Pilot
• Target area – City of Chicago
• Target group – 500 NCPs
• Duration – 7 months
Pilot Results
-Distrust
-Disconnect
-Disbelief
What we learned
• Most participating NCPs did not have
income enough to pay their child
support
• Many targeted NCPs did not trust us
• Many non-participating NCPs below the
poverty level owed so much money they
did not even consider paying and did
not bother participating
What we did
Reached out to the community
Created an expedited modification review
process
Loosened the guidelines for inclusion – current
obligation no longer required
Introduced “Project Clean Slate” statewide to
NCPs of all cultural and socio-economic
backgrounds
Criteria for Inclusion
• Signed application
• Proof of current income
• Proof past due support owed to the state
accrued as a result of
-Unemployment -Incarceration
-Serious Illness -Reason beyond NCPs
control
• Signed payment agreement
Upon Approval . . .
• State’s entire portion of past due
support will be conditionally
removed from NCP’s balance
• Notes are added to case to account
for balance reduction adjustment
Payment monitoring
• Payments must be made according to
agreement on time and in full for six months
• Upon successful completion of six-month
payment agreement, past due support owed
state is PERMANENTLY removed from NCP’s
balance
• Failure to make required payments will cause
unpaid balance due to state to be reposted to
the account and NCP will be barred from
participation in the future
Suspension of Agreement
• During six month period, NCP may
request a suspension of the
agreement
• If suspension is warranted, it will
be granted for up to one year.
• NCP will be allowed to resume
agreement without penalty
Assessment of Clean Slate
RESULTS:
• 1178 NCPs have applied for the
program
• $1,212,411 in TANF debt forgiven
0
5
10
15
20
25
30
35TANF Debt Forgiven by Range
Next Steps
• Revise communication component
• Move project out of Community
Relations and into Collections
So Where Does Big Money Come From?
Broad-based program using
combination of:
• -Early intervention techniques
$12,125,210 – 16 months
• -Centralized collections
$57,948.235 – 7 months
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Arrears: Collectability
• Case Management
• Stratification – PAID Workgroup
• Aging of arrears
• Lack of jurisdiction status – If it belongs
there, put it there
• Case closure
• Does unenforceable = uncollectible?
• New closure authority for uncollectible arrears-
only?
• Create category of “dormant” IV-D cases?
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Arrears: Collectability
• Debt Management – Interest• “The child support agency may suspend or waive
judgment interest on an arrearage amnesty program, as an incentive for satisfying a child support obligation or complying with a payment plan, or if the child support agency determines that the judgment interest is not collectible through commercially reasonable efforts. This subsection applies to judgment interest accruing before July 1, 2005, only if the arrearage is assigned to the child support agency under section 50-09-06.1 or 50-24.1-02.1 or if the obligee provides written consent. Any judgment interest that is suspended or waived under this subsection may be reinstated by a court at any time or by the child support agency if the obligor has failed to comply with a payment plan.”
State: North Dakota Practice: Automated Identification of Debt Compromise Cases and Monitoring North Dakota has an interest compromise/write off program with three goals: motivate obligors to comply with long-term payment plans; provide incentives for continuing to make full, timely payments; and eliminate uncollectible assigned arrears. The program is unique because it uses system data to create annual ad-hoc reports for cases eligible for write off and/or case closure and determines when obligors are no longer eligible for “good payer” interest suppression. The State also uses the automated system to monitor each obligor’s compliance with payment plans. Arrears: North Dakota has identified categories of cases with assigned arrears that cannot be considered collectible through reasonable collection efforts. These categories are linked to Federal case closure criteria and data captured on the automated system. Case workers receive annual ad-hoc reports using data extracted from the automated system, which often leads to removal of uncollectible debt followed by case closure. Interest: Through a combination of ad-hoc reports, automated worker alerts and system support, North Dakota compromises interest in four areas. First, when negotiating a lump-sum settlement of all existing arrears, the interest on assigned arrears and the interest that accrued on unassigned arrears after a certain date (identified in State law) is negotiable. Compromise of assigned arrears is permitted if an offer is received for at least 95 percent of the outstanding arrears balance after subtracting all negotiable interest, or 90 percent with IV-D director approval (assuming that the amount of assigned debt is equal to or greater than the amount that is compromised). Second, when an obligor enters into a payment plan to avoid license suspension or other enforcement activities, the monthly payment due under the plan is entered on the automated system. Compliance with the plan is automatically tracked on the system. Interest on the arrears does not accrue as long as the obligor is paying regularly as required in the payment plan. However, if a payment is missed, the system alerts the worker to take appropriate action, which can include immediate suspension of the obligor’s licenses and reinstatement of interest. Third, if an obligor with arrears has been making payments on a regular basis for the last 9 or 12 months (depending on whether the obligor is subject to income withholding), the worker can identify the obligor as a “good payer” whose interest should be suppressed. The worker contacts the obligor and explains that interest is not being charged as long as payments continue to be made regularly. This option is appropriate
PAIDPAIDPAIDPAID
when the worker wants to motivate the obligor to continue making those payments, and does not want to initiate a license suspension action and negotiate a payment plan just to continue the existing pattern of good payments. If the obligor does not continue to pay regularly, interest can be reinstated. One year after the date an obligor signs a payment plan, or is identified as a “good payer” and has made all required payments, any unpaid interest that had accrued before that date can be compromised. Finally, if interest is considered uncollectible for certain pre-approved reasons (such as a deceased obligor, obligor receiving SSI benefits, total arrears exceeds $50,000 and the like), the worker may prevent interest from accruing on the case in future months. The worker can request an adjustment to the payment records for any unpaid uncollectible interest that accrued. Time Frame: The debt write-off policy was issued in April 2005. The interest compromise project was implemented on a case-specific basis after the implementing legislation became effective in July 2005, and a final policy was issued in November 2006. The ad-hoc reports for “good payer” suppression started in January 2006, and full system support for payment plan suppression was activated in June 2006. Results: In 2005, the first year of the write-off project, 1,568 court cases were affected and $4.4 million in uncollectible assigned arrears was removed. In 2006, $1.2 million in principal and $1.4 million in interest was removed, with the accrual of an additional undefined amount of interest being suppressed. In 2007, $1.3 million in principal and $2.4 million in interest was removed, and in 2008, $1.4 million in principal and almost $3.9 million in interest was removed. The adjustments in 2008 involved 2,199 court files, plus an undetermined number of good payers whose interest was suppressed. Costs: The debt write-off policy was implemented using existing system data and support, so the only cost involved in addition to worker time was computer processing for the data extract, which is less than $1,000 per year. Interest suppression for payment plans was implemented as part of the system development for suspending licenses by administrative order. “Good payer” suppression and uncollectible suppression/waiver were each implemented primarily through existing system support and data, with only a nominal cost for extracting the data needed to prepare the ad-hoc reports. Contact: James Fleming [email protected] 701-328-7502 For further information on the Project to Avoid Increasing Delinquencies (PAID), please contact your Regional Program Specialist or [email protected].