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YOU WON'T GET CREDIT FOR PAYING, BUT IT SUCKS WHEN YOU DON'T: THE EFFECT OF UNPAID CHILD SUPPORT ON YOUR CREDIT REPORT

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Most guys (and gals) don't mind paying child support - it's when they fall a little bit behind and can't catch a break that the problems erupt. Maybe it's the ex threatening to take him to court if he is even one day late. Maybe it's her lawyer sending him a letter that his payment is past due, completed with a "friendly reminder" that he can be held in contempt of court and tossed into jail until he pays up. Or maybe it's his son or daughter asking him why mom says we can't have x, y or z because you aren't supporting us anymore. Whatever it is, most guys dread the feeling of being labeled a "deadbeat " simply because they've fallen on hard times and can't make their payments as timely as they once did, and would if they could.

Some of those guys work really hard to pay on time. They get second or third jobs and skip other bills to pay child support. Their ex and children might appreciate it, but they won't get a glowing score on their credit report, as one might get for making timely mortgage, car and loan payments.

Worse, for those guys struggling to keep their payments current, the problems do not stop with their ex, her lawyer and their kids. Federal law allows the child support agency to report a delinquent payor who is just $1,000, and sometimes less, behind! That delinquency will appear on all three of the national credit agency reports, and although it may not necessarily prevent the payor from obtaining loans, some loan officers may require the payor to bring the support account current or provide proof of a plan to do so before lending money.

The reporting process starts with a notice. If you receive this notice, do not ignore it. You have only 21 days, at most, to contact the state child support agency before the agency sends the information for credit reporting. The notice must include your name and address, the amount of child support owed and your right to contest reporting. Check all of this information for accuracy.

Your right to contest reporting is not unfettered. Rather, you can only contest the amount claimed owed and whether you have made any payments since the child support agency mailed you the notice. If the arrears amount is correct and meets the agency's threshold for reporting, you must pay the arrears within 21 days to prevent reporting. Otherwise, on it goes to your credit report.

Try to prevail upon the agency to give you a break, and you are probably out of luck. In many states, like Michigan, where I practice, the child support agency does not have discretion to withhold reporting. In other words, once you've hit the threshold, the agency must send your information off for credit reporting - no ifs, ands or buts about it.

To avoid credit reporting if you are headed toward the threshold, you should consider:

Review and Modification - If your income is reduced, request a review or modification of child support as soon as possible. A "review" refers to an administrative adjustment of the support order without a hearing to determine whether there is a sufficient change in circumstances to warrant a support modification. For most states participating in the Title IV-D federal program, a parent may request this review once every three years. A "modification" refers to a change following a hearing at which you present evidence of a sufficient change and how the support obligation should also change. Be cautious, however, because the other parent's income may have also changed - and you could end up owing more support. You should make your request as soon as practicable because, in most states, you can only "back date" your support obligation and erase arrearages, absent the other parent's agreement, to the date you filed your request.

(Correct) Direct Pay - Do not pay child support directly unless your support order allows you to do so. We cannot overstate this rule. In most states, any direct payments are conclusively treated as gifts, and you will still owe the support you paid directly. Even if you have proof of payment, and in many states even if the other parent acknowledges receiving the payment, you will still be treated as behind in the eyes of the state. For states that do collect receipts, you can expect to take a long time at the courthouse or the support agency to correct your account. That being said, if you and the other parent can get along, or if you can arrange for automatic deposits from your pay, you might consider revising your order to allow for direct payments, however. In many states, you pay an administrative fee to make payments through the state, and you can save yourself money by making them directly.

Nunc Pro Tunc Orders - If you notice a clerical error in your support order - for example, maybe the "2" in "$250 each month" became a "5" -contact the courthouse or support agency to request a nunc pro tunc order. These are orders "from the beginning," and we use them to correct clerical errors so that the court's order reflects the court's and/or the parents' intent at the time the order was issued. Any mistakes made while the incorrect order was in existence are automatically corrected. This means, that extra $300 each month in our example that went unpaid is automatically erased from the first date support was due.

Arrears Discharge -If you have a forgiving ex, ask you ex to forgive some of the arrearages owed to her. In many states, parents can forgive all or a portion of support owed them directly for their child, even if the state cannot forgive the support owed to the state as reimbursement for government benefits. This may make it easier for you to work - without a huge support debt appearing on your credit report, for example. Some states are even suspending interest and penalty charges for parents who make good faith payments toward their support arrearages. It is worth looking into if your arrearage is insurmountable.

Whatever you do, don't let yourself slip into a pattern of late payments. Your credit score will take a serious hit.

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