Did you know the government could review your bank and credit union accounts at least once every financial quarter? Well, if you do or could owe child support, then the state government, the federal government, or both, will.
All states have agreements with banks, credit unions and other financial institutions doing business in the state to conduct a quarterly review of their account holders against a database called the Financial Institution Data Match. Financial institutions doing business in more than one state (e.g., CitiBank and Bank of America) may conduct the review with each state or with the federal Office of Child Support Enforcement. The purpose for the review is to identify accounts belonging to parents who are delinquent in their child support payments. The parent's name, employment information, mailing and residential addresses, telephone number, even Social Security number - the information needed to open the account - are compared to the database, which lists the same identifying information for parents delinquent in child support. If the financial institution finds a match, it must forward the account information for that parent to the state agency responsible for collecting the debt.
It goes like this. If you have or open a checking account, a savings account, a time deposit account, a demand deposit account, or a money market mutual fund, then the financial institution will compare your identifying information against the database at least once every quarter. (Certain retirement accounts, military pay and government benefits accounts are excluded.)
If you are in the database, then the institution must return your name, mailing and residential address, Social Security Number, Taxpayer Identification Number and any other identifying information, such as employer and alias, to the state agency. The institution could pay or charge you a fee for nondisclosure, and the institution is not liable to you under state law or federal law for disclosing your private information to the state agency or for any of the consequences that disclosure causes, such as an over-collection of child support or a garnishment from a bank account that you intended to be a convenience account, such as an account held in your name but for your aging parent's benefit. You cannot restrict the institution from disclosing this information, and, in fact, you could be charged with fraud for asking or changing your identifying information to keep the institution from comparing it to the database.
When the state agency receives this information, it will begin collection according to state law. Collection may include a levy against the account, a lump-sum garnishment to satisfy your arrears, an order to intercept any direct deposits to the account (except certain government and military benefits), a contempt hearing for you to explain why you cannot pay the arrears from that account, and jail-time if you do not, or more. Most states begin with intercepts and garnishments because they are quick and efficient - you will receive a notice in the mail of a pending intercept or garnishment or the short time period (usually 14 days) in which you can object, before the institution scoops the money out of your account and forwards it to the agency.
What can you do to avoid the FIDM? Honestly, when you have an arrearage, not a lot, at least not legally.
You should not open convenience accounts for relatives, such as elderly family members who want you to be able to write checks for them. These accounts will be in your name, and they will be compared to the FIDM database.
You should also not falsify information to avoid a match in the database, because, once the government catches on (the database is huge, and they will), you could be charged with state and federal offenses, in addition to interest and penalties for past due child support.
And if you are facing an arrearage, try to enter into an agreement with the court, the agency and the support recipient to pay those arrearages over time. Ask your court to adopt the agreement an order. Give a copy of the order to your financial institution, and make sure everyone knows you have a plan in place and, so, should not have your accounts garnished with the quarterly review.
Finally, talk to an attorney about any agreements to pay an arrearage over time, which accounts you can safely you and how to avoid an account garnishment if you do have an arrearage.
Otherwise, it is only a matter of time before the FIDM finds you.