A new policy that requires electronic deposits may allow state governments to take federal benefit money from people who are delinquent in child support payments. This policy may cause financial challenges for some Texas parents because many poor and disabled people could lose their only source of income due to a technical loophole that allows the states to freeze bank accounts containing federal benefit money. The new legal process may leave upwards of 275,000 people in dire financial straits.

The rule grants state governments the ability to take every dollar gained by federal benefits when freezing the bank account of those who owe back or delinquent child support. The new regulation may feasibly take every cent of income from these parents if it is not amended before the changes are scheduled to take place beginning in 2013. To make matters worse, some say that the seized money will not even go toward the benefit of covered children but instead to the governments who may have previously provided welfare benefits.

In the past, some recipients chose paper checks as a safeguard against this type of process. However, in 2013 paper checks will no longer be issued due to the new Treasury Department rules. Payments will be deposited electronically into bank accounts or loaded onto a debit card, thereby creating an opportunity for money to be seized for back support payments.

The new policy appears to be a catch-22 situation. Either deprive the states of the ability to pursue delinquent child support or strip all of the income for those who owe it. Parents in Texas who fall under these guidelines may wish to explore their legal options to avoid these potentially damaging financial challenges, including the possibility of applying to the appropriate court for a modification of an existing child support order when a substantial change in circumstances can be documented. While it is certainly in the best interests of children to receive the child support they are owed, depleting the bank accounts of those who owe it may create an equally undesirable situation.

Source: The Washington Post, “Poor who owe child support could lose federal benefits,” Feb. 26, 2012