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Business Failure and Its Legal Impact on Child Support

The COVID-19 pandemic continues to stifle business in the United States, especially small businesses. In the Census Bureau’s Small Business Pulse Survey, data shows that a moderate negative effect of the pandemic affected 44.3 percent of businesses from January 4 to January 10, 2021, as well as from January 10 to January 16, 2022. On the extreme end of the scale, some small businesses had to close shop permanently. Others had to lay off employees or cut down salaries. Whether as business owners or employees, many people lost all or a large part of their income.

This is a huge problem for parents who are paying child support by court order. Some people do not know that failure to pay child support on time is a federal crime. The parent who is in default will need to hire a federal criminal defense lawyer to defend themselves.

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Consequences of Child Support Default

According to the Department of Justice, a parent who is delinquent in paying child support for more than one year, or has arrears amounting to more than $5,000, is committing a criminal misdemeanor. The parent can be fined and imprisoned for up to six months. If he or she crosses state lines or leaves the country to escape payments, imprisonment can be up to two years.

If the parent has been delinquent for more than two years or has arrears amounting to more than $10,000, he or she is committing a criminal felony. The parent can be fined and imprisoned for up to two years.

The court can direct employers to automatically deduct child support from a parent’s salary. Tax refunds and pandemic relief checks can also be intercepted for this purpose. Likewise, the paying parent’s property can be seized by the court for child support.

According to the National Conference of State Legislatures (NCSL), a business owner who fails to pay child support can have his or her business license revoked in 31 states. The threshold of delinquency ranges from one to six months. Depending on the state, the delinquent parent’s occupational license, professional license, driver’s license, and recreational license can also be revoked. In some states, licenses necessary to continue earning an income are temporarily allowed while the case is under review.

According to the U.S. Department of State, a paying parent who has child support arrears reaching a minimum of $2,500 is not qualified to have a U.S. passport. The U.S. Department of Health and Human Services (HHS) provides a list of such delinquents to the State Department. To be able to get a passport, the delinquent parent must pay up all the arrears with the child support enforcement agency in his or her state. After the agency reports the full payment to the HHS, it can take two to three weeks to report the removal from the list to the State Department.

Child Support Modifications

In case of economic hardship, it is not enough for the parent responsible for paying child support to simply inform the other party of his or her financial incapability to do so. Even if the other party agrees, there must be an agreement submitted to the court for approval. If the other party does not agree, the payer can seek a modification to the child support order from the court.

The court will base its decision on a review of documents showing the reduction in the payer’s income, expenses, assets, and debts. The payer must also show proof of seeking a new job or additional source of income.

During the pandemic, there may have been changes in court proceedings. It is best to check with the family court in the locality. Some hearings may be done online. Some may be postponed.

Child Support Enforcement

The Administration for Children and Families Office of Child Support Enforcement oversees child support agencies on the state and local levels. Caseworkers coordinate with families to determine fatherhood, set realistic child support orders, collect payments, send payments, and lower child support debt by helping jobless paying parents find employment. Payers who are in dire financial straits can also seek assistance in communicating with the other parent and filing for a child support modification. In 2020, the program helped 13.8 million children. They collected $34.9 billion, of which 65 percent was from paycheck deductions.

In California, the Child Support Services recognizes that a lot of paying parents are cash-strapped during the pandemic and worrying over the consequences of payments they were not able to meet. Some of the agency’s offices are closed but it has an online platform, Case Connect, where people can log in to speak with a caseworker or send an email or text message. The agency can also be reached by phone at 1-866-901-3212. The agency is flexible and encourages people to discuss their individual circumstances and troubles so that they can be evaluated on a case-by-case basis.

In any state, a paying parent in financial difficulties must contact the child support agency and exhaust all means to seek a legal solution. This is the only way to show good faith.

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