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Child Support and Your Credit Score

In order to ensure children receive support from both parents, New Jersey employs a number of enforcement mechanisms. These include, but are not limited to:

Income withholding
Credit reporting
Interception of lottery winnings
Tax fund offset
Seizure of assets
License suspension- driver’s, professional or recreational
Passport denial
Civil awards/settlements
Court enforcement
Warrants
Judgments
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Given the recently published case, Cameron v. Cameron, the discussion here is limited to credit reporting as a child support enforcement measure.

Our society has become more reliant on the ability to obtain credit to do things such as purchase a home, buy or lease a car, obtain loans to pay for their education, and the list goes on. Thus, having a good credit score is valuable and may entice obligors to remain current with their child support obligations. An obligor who owes over $1,000 in child support payments may have these arrears reported as an overdue debt to credit agencies. This may negatively affect the obligor’s credit rating when they attempt to borrow to purchase a home or a car, or when applying for credit cards.  However, should ALL obligors owing child support arrears be reported to credit agencies? While reporting delinquent obligors is a good tool for encouraging timely payment of child support, it is not appropriate measure when an obligor has arrears as a result of delayed resolution of a child support matter in court.

In a recently published  decision in the case of Cameron v. Cameron, the family court found that it was inequitable to report child support arrears to a credit agency where an obligor suddenly owes  arrears as the result of a retroactive increase in child support.   In the aforementioned case, after the parties divorced the plaintiff had primary residential custody of the parties’ daughter, and the defendant was required to pay child support.  Later, the parties’ child began living with the defendant.  Consequently, the defendant sought an order from the court declaring him the child’s primary residential custodian, and termination of his child support obligation.  The defendant also sought to establish the plaintiff’s weekly child support obligation to be paid to him on behalf of their daughter, as a result of the change in custody.   He also requested that the plaintiff’s support obligation be made retroactive to the filing date of the motion, July 18, 2014.

The defendant’s July 18, 2014, request for child support was not resolved by the family court until November 17, 2014, which was over seventeen weeks after the filing of his application.   The plaintiff’s child support obligation pursuant to the New Jersey Child Support Guidelines was set at $86 per week, retroactive to the filing date of the motion, July 18, 2014, payable through the county’s Probation Department. As a result of the time it took to resolve child support and the retroactivity of the child support obligation, the plaintiff’s child support arrears totaled $1,499.  Therefore, in addition to her ongoing child support obligation of $86.00 per week, the court ordered her to pay an additional $14.00 per week towards the $1,499 in arrears.   A strict reading of N.J.S.A. 2A:17-56.21(a) and (b) would require that the plaintiff’s child support arrears be reported to the credit agencies, which is what the plaintiff took issue with in court.

Although N.J.S.A. 2A:17-56.21(a) and (b) do not specify a minimum amount of arrears for mandatory reporting, generally, the child support probation department uses a minimum of $1,000 in child support arrears as a the catalyst for credit reporting. However, after a review of the legislative history of N.J.S.A. 2A:17-56.21, which states that the purpose of the statute is to address delinquent obligors, the trial court found that the statute was not intended to apply to non-delinquent obligors who owed child support arrears. The plaintiff in Cameron owed child support arrears, but she had not been delinquent with a previously established child support obligation.  Rather, her support arrears resulted from a newly imposed retroactive child support obligation. The trial court noted that “owing support” and being “delinquent on support” are not always the same. The trial court stated that, “[a] debtor may owe money without being delinquent. . . . It is only when payments are missed or late beyond a certain pre-determined date and established due dates and deadlines that the term “delinquency” begins to apply.” The plaintiff did owe support due to the retroactive application of her support obligation to July 18, 2014, but the plaintiff was not delinquent as her obligation to child pay support was not established until November 17, 2014. In other words, the plaintiff had not missed payments or been late making payments and, therefore, the trial court found that she should not be reported to a credit agency.

Due to the possible delay in resolving child support issues in court, there is concern with interpreting the language of N.J.S.A. 2A:17-56.21 to mean that the statute applies to technical arrears arising from a retroactively established or increased child support obligation when the obligor has never been delinquent with child support payments. Reporting cases such as these is misleading and may lead lenders to believe that the obligor is delinquent with court ordered obligations. Therefore, the trial court took judicial notice “that a positive credit report is one of the most important and valuable resources a party may possess” particularly after divorce. In order to address the issue raised by Cameron v. Cameron, the court stated that “when a court of equity imposes a retroactive child support obligation resulting a newly assessed arrears upon a party, the court must also logically have the equitable discretion to direct the probation department to not report such arrears to the credit reporting bureaus unless and until further notice.” The court further stated that the same principle may apply for other enforcement mechanism as a result of child support arrears that do not arise from the violation of a court order, such as suspending driving privileges.