Rule Change Could Cause Those Who Owe Child Support to Lose Benefits

In an effort to save money, the federal government will soon stop mailing out checks for those who receive federal benefits such as Social Security, disability and veteran's benefits. Instead, the Treasury Department will only transfer funds electronically beginning in March 2013, requiring recipients to have bank accounts to receive the money. This may have an impact on some people who owe back child support payments, since a different Treasury Department rule in place since May 2011 has allowed states the authority to freeze bank accounts of those who owe child support and receive federal benefits.

Unintended Consequences

The interaction of these two new rules may leave as many as 275,000 people completely impoverished, according to advocates. Previously, states could only garnish up to 65 percent of a parent's federal benefits before the government mailed out the check. However, now that the government will be depositing money electronically, the state can freeze the account with all of the parent's money in it, leaving the parent completely unable to access any of the funds.

In many cases, the back child support payments are actually interest that has accrued on missed payments from many years ago, and the children are grown. Often, the parent missed payments because of becoming disabled and unable to work - which is why the parent now receives federal benefits.

The money is not going to the children, but to the states as repayment for welfare the children received while growing up.

Keeping Benefits

Currently, the main way that people have protected access to at least a portion of their benefits has been to have the government send a check, rather than electronic transfer. The recipient then does not keep a bank account the state can freeze, and the recipient can pay at least some of his or her bills.

Advocates worry that when the Treasury Department eliminates checks, these benefit recipients will have no recourse and no way to access any of their money.

A spokesman for the Department of Health and Human Services acknowledged that allowing states to states to pursue child support money so vigorously that poor people lose their only means for living is against the HHS's stated policy. HHS is reportedly developing child support collection guidelines for states to prevent making already poor people destitute.