A fugitive people within a nation is tyranny.

Posts tagged ‘U.S. Treasury’

U.S. Agency Rule Involving Child Support Debt

debtor's prison - tyrannySomebody just didn’t think it through. How else to see a new federal policy that could deprive people who owe back child support of precisely 100 percent of their federal benefits, even if that is their only income source?

The policy, set to take effect next year, is an unintended consequence of a move by the Treasury Department to pay all benefits electronically. Those payments will include Social Security, disability and veterans’ benefits.

As long as payments could be issued by mailed checks, states were limited to collecting 65 percent of a federal benefit amount.

Most of the people owing child support, of course, are male.

According to an Associated Press report, in many cases, the debts are old. The kids they were destined for have grown up. In some cases, the kids are now supporting their elderly parent.

But if states previously stepped in to make welfare payments for the kids because Dad wasn’t paying child support, the states are entitled to go after the father for the debt and accumulated interest. Most of the money garnished, in fact, will go to states, not to the children.

It doesn’t matter why the parent couldn’t make payments. He may have been in prison or another institution. He may be disabled. And, to be sure, he may be a deadbeat, able to hold a job and make payments, but who chose not to do so.

Estimates are that 275,000 men are vulnerable to the changes.

The change that wrought this debacle in the making was no act of Congress, but a rule made by a federal agency.

So, of course, it can be unmade, and somewhere in the bowels of government, we’re told, that’s in the works. But some people interviewed for the report said the policy is legally unavoidable. The dilemma is whether to restrain states trying to collect a legal debt, or depriving people of their only income.

That to us is a no-brainer. Three-fourths of parents who owe $30,000 or more either had no reported income or income less than $10,000. Earnings for many were interrupted by disability or jail. They’re considered unlikely ever to pay the debt.

We expect the rule to be amended soon. If it remains, a 19th century debtor’s prison might be preferable.

– originally published in the Oakland Daily Tribune on March 2, 2012.

The opinion of this post presumes that government actions mentioned in this article are ‘unintentional.’ I think not. This IS deliberate, but the media and the rest of the nation have caught on to the foul smell of tyranny. Whether by policy, by law, by interagency statute, the tyranny is the same. The United States is already on the fast track.

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U.S. Law with a Serious Flaw

homelessA new law is on the books that promises great harm to people that can afford it the least.

The law bars creditors from seizing Social Security payments and other federal benefits for veterans, the poor, the aged and the disabled. But banks often said they could not determine the source of customers’ deposits and allowed creditors to garnish accounts containing federal funds. The new rule adds electronic tags to automatically deposited government payments and requires banks to protect tagged deposits made in the prior two months.

Here’s the issue: The new rule will still allow seizure of all funds in an account if a state is trying to collect unpaid child support. That may seem to be a good way to get tough on deadbeat dads, but it will cause undue harm.

In a letter to the commissioner of Social Security, the National Consumer Law Center and 72 other advocacy groups pointed out that 70 percent of uncollected child support is owed by people who live below the poverty line and much of the debt arose because support obligations were not revised when the debtor became disabled, unemployed or incarcerated. Since the debts are often old, the amounts have been inflated by interest and penalties.

To both collect the debts and avoid driving these debtors into complete destitution, the law allows Social Security to withhold up to 65 percent of a benefit to cover unpaid child support — and to pay the recipient the rest. Recipients of reduced benefits have been able to shield the remainder by receiving their payment via paper check and simply cashing it. Starting next year, all government benefits will be automatically deposited. If the rule is not amended, the full amount will be subject to seizure.

The way to fix the problem is to rework the garnishment rule so that it treats child support debts the same way it treats other debts. Fixing the rule would not excuse nonpayment of child support. Rather, it would achieve what the law intended by ensuring that no one is impoverished by ruthless debt collection.

original post at New York Times: February 23, 2012

Paperless Child Support Payments May Cost Poor Fathers Only

check book slavery

Old child support debts could cost thousands of poor men their only income next year because of a policy aimed at reducing the cost to the government of mailing paper checks to pay federal benefits.

The Treasury Department will start paying benefits electronically next March. It will stop issuing the paper checks that many people rely on to safeguard a portion of their benefits from states trying to collect back child support.

States can freeze the bank accounts of people who owe child support. A separate Treasury Department rule, in place since last May in a preliminary form, guarantees them the power to freeze Social Security, disability and veterans’ benefits that have been deposited into those accounts.

Once paper checks are eliminated, about 275,000 people could lose access to all of their income, advocates say.

“It’s kind of Orwellian, what’s being set up here for a segment of the population,” says Johnson Tyler, an attorney who represents poor and disabled people collecting federal benefits. “It’s going to be a nightmare in about a year unless something changes.”

In many cases, the bills are decades old and the children long grown. Much of the money owed is interest and fees that add up when men are unable to pay because they are disabled, institutionalized or imprisoned.

Most of the money will go to governments, not to the children of the men with child support debts, independent analyses show. States are allowed to keep child support money as repayment for welfare previously provided for those children.

In some instances, the grown children are supporting their fathers.

The rule change illustrates how a politically desirable goal like cracking down on so-called deadbeat dads can have complicated, even counterproductive, effects in practice.

“The rule doesn’t look at the fact that the money is mostly interest, the money is going to the state, the kids are usually adults, and it’s leaving the payer with nothing,” says Ashlee Highland, a legal aid attorney who works with the poor of Chicago.

Highland says her office has clients in eviction, in foreclosure and unable to pay their bills because of states’ aggressive efforts to collect back child support.

Marcial Herrera, 44, has had his bank account frozen repeatedly since 2009, blocking his access to $800 a month in government benefits. Unable to work because of a severe back injury he suffered in 2000, Herrera fell behind on child support. He owes more than $7,000 – not to his 22-year-old son, but to the state of New York, because his son received welfare years earlier.

Herrera sought help in court and had his son speak on his behalf, but the judge could not erase the thousands he already owed.

“I’m just waiting for them to lock me up,” he says. “I don’t see no other way of me repaying that debt.”

A legal aid attorney suggested Herrera collect his benefits by paper check. It costs him $15 to cash the check each month, but at least he can be sure that he will have money to pay his bills.

States have had the ability to freeze accounts for years. That’s why people like Herrera rely on paper checks to safeguard part of their income.

Starting next March, that option will disappear. The Treasury Department will deposit federal benefits directly into bank accounts or load them onto prepaid debit cards. Either way, state child support agencies will be able to seize all of it.

Electronic payments are expected to save the government $1 billion over the next 10 years, the Treasury Department says. It costs the government about $1 to mail a check, compared with about 10 cents for an electronic transfer.

The Treasury Department understands that forcing people into direct deposit could deprive them of all of their income, say officials who spoke on condition of anonymity because they were not authorized to discuss the rule-writing process.

States can garnish only 65 percent of benefits before the federal government sends them out. But the limit does not apply once the money is in an account and states ask banks to freeze it, according to a Treasury Department memo obtained by The Associated Press.

A Treasury spokesman declined to discuss the policy. The officials who spoke on condition of anonymity say they believe the policy is legally unavoidable. They described a dilemma: Restrain states trying to collect child-support debts or risk depriving thousands of people of their only income.

Treasury’s legal justification assumes that receiving a paper check is still an option, says Tyler, the Brooklyn attorney.

Letting state agencies seize the money contradicts the public stance of the Department of Health and Human Services, the federal agency in charge of child support collections. The department does not want states to collect child support so aggressively that poor people lose their only income, spokesman Ken Wolfe says.

“Child support enforcement – getting that money and passing it on to parents and children – is a measure to fight poverty, and it doesn’t make sense to accomplish that by impoverishing somebody else,” he says.

Wolfe said HHS is developing guidelines for states to “make sure we’re not putting someone into deep poverty as a result of an automatic collection.” He declined to provide details of those plans.

Lawyers from HHS agreed with Treasury’s decision to let states seize benefits, according to the Treasury memo.

An early version of the Treasury department rule protected people from having their federal benefits frozen by debt collectors – including private collection agencies and states seeking back child support.

State child support agencies replied in public comments on the proposed rule that blocking their access to people’s benefits would cause great harm to parents and children receiving child support.

HHS research suggests the policy could deepen the hardship for people who collect benefits as well.

People who owe large amounts of child support are almost universally poor. Among those owing $30,000 or more, three-fourths had no reported income or income of less than $10,000, HHS says. Many had their earnings interrupted by disability or jail time and are unlikely to repay the child support debt, the government-sponsored research says.

The usual methods of collecting back child support often don’t work with the poor. States typically start by garnishing wages. If that doesn’t work, they can suspend driver’s licenses, revoke passports and take away professional credentials.

Those measures have little effect on poor people without jobs who rely on federal benefits. They have no wages to garnish and no passports. Many can’t afford a car and do not need a driver’s license.

State child support agencies echo the HHS view that child support enforcement should not be so draconian that people end up with nothing.

“You don’t want the noncustodial parent to go out and be living on the streets. You’re not going to collect anything at that point,” says Tom Shanahan, spokesman for the Idaho Department of Health and Welfare.

The Idaho department requires people who owe child support to show good faith by paying a minimum amount and seeking jobs when they are out of work, Shanahan says.

The White House is reviewing the final version of the rule. Its impact so far has been limited, legal-aid lawyers say, because people can still use paper checks. A White House spokeswoman did not respond a request for comment.

In a letter sent last week, the National Consumer Law Center and dozens of other groups called on the head of the Social Security Administration to withdraw his support for the rule.

“While both current and past due child support orders should be paid,” the letter said, it should not result “in the complete impoverishment of recipients” of federal benefits.

The issue has failed to raise alarm in part because most people feel little in common with men labeled deadbeat dads, says John Vail, an attorney with the Center for Constitutional Litigation who provided legal services for the poor for decades.

“There’s not a lot of sympathy for deadbeat dads, and justly so,” Vail says. “But everybody’s got limits, and I think people who have never walked a mile in some of those old, worn-out shoes are a little quick to rush to judgment about what that life might be like.”

from the Huffington Post

Child Support: New Wrinkle to Garnishing Your Social Security

decisions about wealth and lifestyleHere’s an off-the-wall retirement planning wrinkle.

New rules take affect May 1 that make it much harder for creditors to garnish Social Security, veterans pensions, Supplemental Security Income and Social Security Disability from recipients who owe them money.

The new U.S. Treasury rule requires all banks to determine whether an account contains these protected funds. If an account contains protected funds, the bank is required to protect two months’ of benefit payments from garnishment. Protection of more than two months’ of benefit payments requires additional court filings and in practice, makes these funds immune from seizure by creditors, says Margot Saunders, an attorney for the National Consumer Law Center.

It works like this. You fail to pay your car payment and the car dealer comes and takes the car, then he sues and gets a judgment against you for the remainder of what you owe him. He goes to the bank and attempts to garnish your money. Under the new rule, the creditor can pick any day he wants for the garnishment and the bank must respond by looking at your account for the previous 60 days. Let’s say you received a $1,100 Social Security payment one month and another $1,100 Social Security payment the next month. That $2,200 is protected. If there is any other money above and beyond that amount that has been deposited in the account during that period and is still sitting there, the creditor gets it. If there is no other money, the creditor is out of luck. He gets bupkis.

There are two exceptions, Saunders says: money you owe Uncle Sam and money you owe in child support. If you have these kind of debts, an attorney or the IRS can petition Social Security directly and collect.

If a debt collector begs to differ, Saunders points them to this statement on the Social Security website. She says garnishment of Social Security has always been against the law, but creditors have found ways around it. This change in the rule should eliminate those loopholes. On the other hand, if you fear you might find yourself in this kind of debt-collection dilemma during your retirement, the best way to protect yourself is to have your Social Security check deposited into an account that you don’t use for anything else.

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