DOVER, Del. -- States across America have stepped up efforts to increase child support collections. After all, both parents should support their children. According to several studies, children supported by one parent are more likely to need government assistance.
Under current law, collecting child support is extremely difficult when an absent parent files for bankruptcy. The Bankruptcy Reform Act of 2000 -- which Congress is considering -- stresses the importance of parents' obligation to financially support their children.
This is done by creating significant legal protections, strengthening the ability of ex-spouses and children to collect the payments owed to them. Many state attorneys general and child support enforcement agencies across the nation support the new provisions, terming them a "veritable wish list" of effective tools to collect these obligations in bankruptcy proceedings.
States are responsible for child support enforcement. We need to continue finding effective ways for states to continue collecting child support.
The legislation assures that parents owed child support can obtain effective help from state child support collection agencies by requiring notice to the child support agency and custodial parent once bankruptcy is filed.
In addition, creditors must provide the last known address of the non-custodial parent. It equips state child support collection authorities with the tools necessary to collect child support in bankruptcy by exempting child support from the all-powerful "automatic stay" which stops all collection activity upon filing for bankruptcy.
The bill also prevents the debtor from receiving a discharge until all arrearages owed to the custodial parent are first paid. Furthermore, the bill makes all domestic support obligations non-dischargeable in bankruptcy and as a final protection for the custodial parent, makes collection by the state subordinate to collection by the custodial parent. The bill also makes an important public policy statement by moving domestic obligations from seventh payment priority to first. Credit card debt has no priority.
Despite allegations by opponents of bankruptcy reform, the legislation does not place parents and children in competition with credit cards.
Over the past 20 years, Congress and the states have created a highly sophisticated child support collection system. The central feature of this system is that states have the power to require any employer to withhold income (up to 40 percent of the debtor's net take-home wages) each pay period and pay it to the state for payment to the custodial spouse.
Since 1996, every child support order that is issued by a court or by the state child support agency setting child support obligations has, as a matter of federal law, either had to provide that the state will collect the child support by withholding from the debtor's income or the court has to certify that such collection is unnecessary.
Accordingly, collection of child support under withholding orders has continually increased. If the non-custodial parent attempts to skip a child support payment, a withholding order will promptly go into effect. A credit card company cannot compete if there is a withholding. And if there is not, it is still virtually impossible.
As one child support professional testified before Congress, " ... no support professional I know deems this concern to be serious ... non-bankruptcy law has so tilted the field in favor of support creditors that competition with financial institutions for the collection of post-discharge debts presents no problems for support collectors."
Even if the debtor is not a wage earner, support creditors have at least 11 major remedies not available to financial creditors.
Bankruptcy reform is long overdue. Congress needs to get this law on our books.
Thomas R. Carper is the governor of Delaware and is running for U.S. Senate in that state.