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