Posted by: koherston | May 1, 2017

Tennessee Legislature Changes Interest on Child-Support Arrearages

Those of you who read my yearly legislative-update posts know that I don’t think much of our legislature when it comes to new family-law legislation. So my thoughts on their latest foray into Tennessee family law will come as no surprise.

First, some background.

Tennessee law, codified at Tennessee Code Annotated § 36-5-101(f)(1), has long provided that interest on a child-support arrearage accrues simple, non-compounding interest at the rate of 12% per year. The interest was mandatory. The high interest rate was designed to discourage the accumulation of an arrearage in the first place and to promote the prompt payment of child-support arrearages.

The legislature amended the statute — Tennessee Code Annotated § 36-5-101(f)(6) — in 2015 to allow parties the option of agreeing to waive both the principal and interest of a child-support arrearage as long as certain criteria were met and the court found it to be the best interest of the child.

Last month the legislature passed — and the governor signed — a wholesale revision of the law regarding interest on child-support arrearages. The new statute, which went into effect on April 17, 2017, provides that

  • interest on child-support arrearages that accrued prior to April 17, 2017 will still accrue mandatory interest at a rate of of 12% per year;
  • for child-support arrearages that accrued on or after April 17, 2017, there will be no interest unless the court makes a written finding that there should be;
  • in making this finding, the court is to consider whatever factors it finds relevant; and
  • if the court finds that interest should be awarded, the interest rate cannot be more than 4% per year.

Specifically, Tennessee Code Annotated § 36-5-101(f)(1) now reads:

If the full amount of child support is not paid by the date when the ordered support is due, the unpaid amount is in arrears, shall become a judgment for the unpaid amounts, and shall accrue interest from the date of the arrearage at the rate of twelve percent (12%) per year; provided, that interest shall no longer accrue on or after the effective date of this act unless the court makes a written finding that interest shall continue to accrue. In making such finding, the court shall set the rate at which interest shall accrue after consideration of any factors the court deems relevant; provided, that the interest rate shall be no more than four percent (4%) per year. All interest that accumulates on arrearages shall be considered child support. Computation of interest shall not be the responsibility of the clerk.

What is the rationale for this gift to deadbeat parents? According to the sponsors, Rep. Mike Carter of Ooltewah and Sen. Ken Yager of Kingston, the intent is reduce the financial burden on deadbeat parents, thereby magically increasing the amount of child support their children receive.

Put another way, they claim to believe that disincentivizing the prompt payment of child support will somehow encourage the prompt payment of child support.

Watch the debate in the House for yourself.

While the Fiscal Note acknowledges that “the proposed legislation may reduce the amount of child support exchanged amongst private parties” (Ya think?), did anyone consider what happens when a parent fails to pay the financial support required to provide the essential needs of his or her child? The child suffers, and the taxpayers have to step into the breach.

To add insult to injury, Tennessee can now boast that the optional interest rate on a judgment for past-due child support is capped at almost 2% lower than the mandatory interest rate on every other type of judgment.

But hey, at least our legislators gave us a “Children First” license plate. If only they meant it.

My editorializing aside, family-law attorneys need to be aware of this important change in the law because it is now in effect. Click a share button below to spread the word.

Source: Public Chapter 145 (April 17, 2017)

Information provided by K.O. Herston: Knoxville, Tennessee Divorce and Family-Law Attorney.


Responses

  1. This change in the child support arrearage interest rate is OUTRAGEOUS!!!! What on earth are they thinking? It appears that this bad legislation started when Tennessee first decided to allow child support arrearages to be forgiven. That legislation started the slippery slide down the slope of excusing deadbeat parents from supporting their kids. If anything, why not pass a law that allows parents with child support arrearages from long ago to pay their adult children directly or pay for college, etc. directly in order to reduce their arrearages? Such a plan would make far more sense than allowing parents to forgive unpaid child support and failing and refusing to assess interest on unpaid child support.

    K.O., you are correct, this legislation is not only a burden on children and recipient parents, but also a burden on the taxpayers who foot the bill for TennCare, food stamps, etc.

    • I really wish the leaders of the family-law bar had been consulted by the legislators or at least notified about the pending legislation by the TBA. I have a hard time seeing any compelling rationale for this legislation.

  2. Of course, here in Shelby County, for example, Juvenile Court does not calculate interest. The only parents who receive interest on child support arrearages are the ones who have private attorneys who take the time to calculate it. I calculate it because it really adds up, and makes a huge difference.

    • Us, too. We have a nice spreadsheet that does all the work. Now we’ll have to adjust it to reflect variable interest.

  3. With the interest rate now so low, or non-existent, this encourages the parent in arrearages to pay other financial obligations (those having higher interest rates) first. This is unlikely to be in the best interests of the child.

    • It’s not difficult to envision someone making the economically rational decision to withhold child support in order to pay down other debts that carry higher interest rates.

  4. First I would like to thank you for the majority of your postings.

    Your disregard and disgust with this new legislation is absolutely one sided and extraordinarily biased to one demographic of people: parents who made about the same amount of money; who are poor to blue collar working class; and who use the welfare system to make ends meet if child support is not paid properly. Look at the ongoing statistics of the majority of divorces and absurd child support orders which go well above and beyond merely meeting a child’s needs. One parent is completely impoverished and practically homeless, while another parent, not the children, is enriched and in most cases living wealthier than when married. What’s your solution in those circumstances when one makes just above the poverty line to obtain any assistance to live but cannot afford living quarters for the time they do want and have with their children because of overwhelming child support orders? Scenario: Mother was a stay at home mother. Father traveled for work and mother had to give up career to tend to children. Mother became ill with brain tumor during divorce process and agreed MDA and parenting plan without a child support order was made. Judge unilaterally strikes non payment of child support wihout a hearing on an agreed plan and orders mother to pay $773 a month on a $2450 a month salary with father salary being more than $8500 a month. Judge doesn’t consider the agreement made not to pay one another child support in lieu of mother giving up rights to 401K, house equity, and Military pension (which mother gave up her military career so husband could finish his and get a retirement pay). Judge agrees to section VIII of MDA not to pay child support to one another; and simultaneously changes parenting plan without written reasoning to pay $773 a month taken from a child support worksheet date stamped one day after mother’s signature is on the parenting plan and MDA. Five years go by, step mother crosses major boundaries, no child support is paid to one another, and suddenly when a petition to modify the parenting plan is submitted an arrearage of $60K is ordered, again without trial or evidentiary hearing. Mother’s bank account has been garnished 100% twice, each time a motion is filed to fix the issue and obtain relief. This leaves mother with no money to help feed her children or for a roof over her head. At what point do you look at this situation and not think, this is completely wrong? And yet, in Sumner County, it happens every single day and people are being forced by the government to become homeless. Where does it end? Seems to me this new legislation should require less broad language and be more specific to each demographic to insure fair justice.

  5. I don’t know at this point. I have a child support case in Shelby County. I’m a mother of 9 children. I’m also a nurse. I share joint custody of a 15 and 16 year old. We were never married. Initially I put him on child support. He was court ordered to pay 500/month. We came to an agreement .I took him off child support and agreed to joint custody in 2004. I moved to Georgia in 2011.In 2015 a court order was put in place by default for child support and he received arrears that dated all the way back to 2004 the initial day we received joint custody. Financially I couldn’t afford the drive to Memphis. I was actually living in a shelter at the time. He did everything to hide his income from the courts. He only informed the courts about his disability which is 100%.He failed to inform them that he was gainfully self employed for 17 years with a moving service in which is the exact same business he owned with a name change. The same income in which was used to calculate his child support to pay me as ordered. He was awarded 59,000 back child support .This has been a complete disaster. I have tried everything in my power to co-parent . My children are willing to tell what has really happened. He has rooming houses (4) and also4 moving trucks , a lawn service. He use to be a paralegal in the Marine Corp but never served in a war and has frauded the government to get disability. This court order is a mess . My drivers license has been suspended. I think my nursing license has been suspended in Tennessee .I can’t get a passport and my name is already sent for Federal tax offset. The problem is with me filing and claiming my other 7 dependents that I am solely responsible for .I won’t get a dime of my return and we really need it. I’ve had to file bankruptcy and me and children are currently are being evicted now living in an extended stay hotel. I have always had insurance. I’ve always provided for my children. My children told me he made them go before the courts and say I didn’t provide for them. They are now willing to speak about it. The court order was put in place and is now an Interstate case with Tennessee having jurisdiction. Georgia has to enforce. Our time with our children before 2011 was 50/50. My children have lived with me in Georgia as well. I We have another hearing in Sept where I get to plead my case that the arrears be modified of reconsidered .He did commit perjury and his attorney was aware. I was able to get pictures of his properties and trucks to show even proof that his business never closed. Georgia was able to get this hearing set . Any suggestions??


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