- How to Help Clients with Large Child Support Arrearages
- July 28, 2010
- Law Firm: Elizabeth A. Silverman P.C. - Farmington Hills Office
B accrue with surcharges B despite the statute stating that support orders shall not accrue interest. MCL 552.603(11) . Surcharges are calculated as 1% above the rate of 5 year US Treasury notes. They are added to a delinquent child support account on January 1 and July 1 of each year. Surcharges accrued prior to January 15, 2004 are compounded. Surcharges accrued subsequently are not compounded. Beginning in 2010, surcharges will no longer be automatically added to child support arrearages. Beginning in 2011, judges have discretion to order that surcharges be added to delinquent child support accounts.
When you are trying to help a client faced with a large support arrearage, it is important to know the amount which is truly child support and the portion which is surcharges. While it is true that the custodial parent suffers when child support is not paid timely, the amount of the surcharge is an independent number which should be separately identified. If there is an extensive history of non-payment, the surcharges can represent more than 50% of the arrearage.
There are two specific statutes to provide relief to clients with large support arrearages. MCL 552.603d provides for a repayment plan order which will discharge the surcharges. This statute provides for a petition to discharge the surcharges and waive future surcharges to be submitted with a payment plan for arrearages. What are the requirements?
1) The arrearage did not arise from conduct the payor engaged in exclusively to avoid paying support;
2) The payor doesn’t have the present ability or ability in the foreseeable future to pay the arrearage without waiving the surcharges.
3) The plan is reasonable based upon the payor’s current ability to pay.
More significant is MCL 552.605e which provides relief from and discharge of an arrearage. There is one catch, an arrearage owed to the custodial parent requires all of the three criteria outlined above and also requires the custodial parent’s consent.. Depending on the situation, obtaining the consent of the other parent may be highly unlikely. This statute is most helpful when the arrearage is owed to the State of Michigan. In addition to the three requirements outlined above, this requires:
1) Notice to the State of Michigan, Department of Human Services, Office of Child Support at least 56 days in advance of any hearing; and
2) The requirement that the proposed payment plan pays a reasonable portion of the arrearage over a reasonable period of time in accordance with the payor’s ability to pay. The plan must be for a period of 24 months plus 1 month for each $1,000 over the poverty level that the client earns.
While I suggest drafting your own pleadings, you may find the sample forms helpful - Motion for Payment Plan FOC 109 (2 pages) Order for Payment Plan FOC 110 and Order Discharging Arrears FOC 111.
What is reasonable? According to the Office of Child Support ("OCS"), 15% of the payor’s income or 50% of the amount owed unless extenuating circumstances exist. However, the OCS acknowledges that individual cases warrant further review by the Court. Final approval of all payment plans are within the discretion of the Court. This is another situation where it is helpful to understand the amount which is actual support and the amount of the surcharges assessed against the account. I recently completed a case where the total arrearage was $15,000 owed to the State of Michigan but approximately $10,000 of that amount was surcharges. A payment plan of $100 a month for 24 months was approved by the Court. On another case, the individual had not worked for years and offered to pay $100 a month for 24 months to wipe out a sizeable arrearage. His mother and current girlfriend were willing to commit to give him this monthly payment. The payment plan was approved by the Court.
Can the arrearage be reinstated under any circumstance? Yes. Arrearages may be reinstated on good cause . So if you client wins lottery, inherits money, obtains new employment, or is guilty of fraud or concealment of assets that Court may set aside the payment plan and reinstate the full arrearages. Assuming the plan is accepted, you must file a motion after all promised payments are made to have the Court enter the order discharging the balance of the arrearage. One word of caution, if your client has more than one case, all payments must be directed to the specific case where the payment plan is in effect. Some courts require that payments be made in person or that payments be accompanied with a document allowing it to be applied only to the case in question. Failure to safeguard that all payments are properly applied will result in the payments being spread out among all of the open cases.
Finally, there is one last impediment to helping your client, the statute does not apply if your client is being prosecuted for felony non support. This is ironic because those most in need of this relief are excluded. Based upon the current statute, MCL 750.165, assuming that there is a valid order for support and your client had notice of the support order, the fact that they did not have the ability to pay is not a defense. The statute is applicable for any failure to pay the full amount of support in a timely manner. This is a situation to be avoided at all costs. Once convicted of felony non-support, it may be difficult or impossible to find meaningful employment. Further, since no relief was obtained regarding the arrearage, the full amount is still due and owing. Presumably, a motion for relief could be brought after the felony non-support action was concluded.
Given the current economic environment, the relief available under these statutes, MCL 552.603d and 552.605e is invaluable.
Why do large arrearages accrue? People sit on their rights. People lose their job, they don’t expect to be unemployed long and do nothing. Meanwhile, every month the full amount of child support based upon what they used to earn accrues. Clients don’t notify the Friend of the Court when they are out of work. Some ignore the system until they are show caused. Some feel they can’t afford an attorney, and their lack of funds will be short term. What can you do to help a client facing an enormous arrearage that it is unlikely they will ever be able to repay? The general rule is that a support order is not subject to retroactive modification. MCL 552.603. Hopefully, this article will give you some ideas on how you can make a difference.