The GAO, in its Report to Congress, Validates the need for Private Collectors to Collect Child Support Payments

The ineffectiveness of our government agencies in enforcing child support programs has often been a topic of discussion by debt collection industry professionals. The GAO validates this condition in its March 2002 report to Congress, and has arrived at some conclusions that are important to all in the debt collection industry.

The GAO’s investigation found that private collection agencies play an important role for parents who have trouble collecting upon the difficult types of interstate, self-employed and older child support cases. The GAO report made a strong recommendation for improved collaboration and communication between government offices and private companies.

We have made this full (46 page) report available in its entirety for those of you who are interested. We have asked Jim Durham of National Child Support, a long time advocate of change, to review the report and provide some highlights for a relatively quick read. Jim’s recap follows.

Download the Complete GAO Report (PDF Format 460kb).

With Government collections efforts falling further and further behind, private collection companies are urgently needed to help parents. According to the OCSE Annual Report to Congress (FY 2000 data), government offices in FY 2000 only made a collection (of some amount) in 41.6 percent of the 17.4 million cases in its caseload. This means that 59% of the parents received nothing. With respect to support dollars collected out of what was owed in current and past years’ support, in FY 2000 the program collected just 19 percent ($20 billion) out of the $107 billion in support owed in that year. Keep in mind that, according to Census Bureau and OCSE data, only about 63 percent of child support eligible families are in the government program. That means there are a lot more families owed child support than the amounts government figures represent. All of this points to the tremendous unmet need that exists for child support enforcement.

• The amount in default has grown from 45 billion to 89 billion dollars in the last four years. This number only includes cases that state child support agencies are actively pursuing. It does not include cases that have been closed by the government.
• Government offices close millions of cases annually (according to the OCSE Annual Report to Congress) because they cannot locate the defaulting parent. The arrearages due on these cases do not get counted, nor do the cases where a parent with custody has never “signed up” with a government office for service. From studies NCS has performed, we believe the actual dollar figures in default to be closer to 300 billion, versus the 89 billion reported.
• Overall, the percentage of what is being collected (versus what is owed) continues to decrease.
• 92 % of parents hire collection agencies because of their “frustration” with the lack of service they receive with government offices.
• Private companies are much more diligent than government offices and use numerous additional (and more effective) techniques to collect the back support.
• Private collection companies work only the oldest and “toughest” cases. These include the “self-employed” defaulters, or the defaulters who run across state lines.
• Many of these parents have nowhere else to turn. If a child is over 18 years of age, half of the government offices in America will not even accept a parent’s case.
• The balances worked by collection agencies are over 7 times as large as those worked by government offices.
• The private collection agencies could be much more effective if barriers would be removed. These barriers are restrictive state laws that have been passed, government offices that refuse cooperation and disobey a custodial parent’s direct instructions, and confusing policies and procedures. The GAO strongly recommends that this be changed so that more private collection companies can begin to help with the problem.
• One of the largest problems is locating the defaulter. The report found that private collection agencies use much more effective tools. The report also found that private collection companies should be given access to location data (i.e. new employment information) that the custodial parent or his/her agents are already authorized to receive. Essentially, it does not make a difference whether a parent is going through a government or private office ? the parents and their agents are already allowed access to data, forms use etc.
• The ability for a private collection agency to use authorized “income withholding forms” needs to be clarified so that more child support can be collected.
• Accurate “balance due” data should be supplied to the private collection agency as agent to the custodial parent. Sadly, many times this data is withheld.

To communicate with Jim on this issue, contact him at:

James L. Durham
President-Founder
National Child Support
11260 Cornell Park # 706
Cincinnati, Ohio 45242
800-736-6272 ext: 211
j_durham@nationalchildsupport.com

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