Falling behind on child support payments is one of the quickest ways fathers can cripple their finances, especially in states that apply interest charges.
Child support debt can quickly snowball and lead to wage garnishment and in some cases even prison. Inherently, the child support system is especially harsh on low-income parents, so it is easy to fall behind.
When your bills start to add up and your child support debt grows, you might wonder if child support debt consolidation is possible.
If you find yourself falling into child support debt, it is critical that you act quickly to remedy to situation. A lot of divorced fathers are unsure what action to take. If that is the situation you find yourself in, you should get in touch with your divorce attorney so they can assess your options and help you decide on the best course of action.
What are child support arrears?
Child support arrears is a term referring to past due child support owed to a custodial parent. Federal law allows states to apply interest charges if you owe child support arrears. Currently, 35 states apply interest charges. The interest rate varies by state, but can go as high as 12 percent.
Failing to make your court-assigned child support payments can lead to a range of consequences. Some common penalties for nonpayment include:
- Warrant issued for arrest
- Jail time
- Garnishment of wages
- Denial of tax refunds
- Suspension of driver’s license
- Exclusion from certain government benefits
- Revocation of passport
Child support debt consolidation
If you find yourself stuck paying back child support, it might be worth considering consolidating your child support debt. If you are in a state like Colorado or Vermont, which charge 12 percent interest on child support arrears, your debt can quickly snowball, so it is a wise financial choice to utilize a low-interest-rate loan.
This is a fairly straightforward process. You take out a loan at an interest rate that is determined by your credit score and you adjust the term loan to get monthly payments you can afford. A longer-term loan will have lower monthly payments, but higher interest charges, while a shorter-term loan has more expensive payments but decreases the overall cost since interest is not as high.
After you are approved for a loan, you use those funds to pay off your child support arrears and avoid the penalties listed above. Then you pay off the loan and stay up-to-date on your child support payments to avoid new interest charges.
Personal consolidation loan
The best way to consolidate child support debt is with an unsecured personal debt consolidation loan. The reason an unsecured loan is such a good option is because it does not trade one risk for another.
Since it is unsecured, there is no collateral. If you fall behind on your loan payments, the debt goes to a collector who can take you to civil court, where you could be ordered to pay. However, the worst that can happen is wage or tax refund garnishment, so you are not facing potential jail time as you did while owing child support arrears.
Of course, as long as you keep up with the payments, it does not matter whether your loan is secured or unsecured. But if you have fallen behind on child support, money is likely tight, so that risk probably exists.
Qualifying for a loan to pay off child support
Qualifying for a personal loan to pay off child support all depends on your credit score. As long as you have decent credit, you should not have trouble getting approval. However, your credit score determines the amount you can receive and the interest rate.
Even if you qualify, that does not necessarily mean this is the best way to pay off your child support debt. First, you need to do some calculating:
- Figure the total amount of back child support you owe.
- Find out what the interest rate applied to child support arrears in your state. This will tell you how much money you need to apply for with the loan.
- After you apply, the lender will tell you the rate you qualify for during the underwriting process.
If you are unable to qualify for a loan large enough to cover your owed child support, this might not be the best option. If you can’t get a rate lower than the interest rate applied to your arrears, then there is even less benefit in consolidating. However, consolidation could be used to avoid jail time, and that might be enough incentive depending on your situation.
While it is important to act quickly when it comes to paying child support arrears, it is also critical that you know what you are getting yourself into before you take out a loan. This is a topic you should discuss with your divorce lawyer to determine whether child support debt consolidation is the most effective way for you to pay off your child support debt.
One comment on “Is Child Support Debt Consolidation Possible?”
Great advise! One question I have though. How does this work with GAL fees? Seeing that some states look at GAL fees as equal to Child Support it is likely that one who is not behind in support could be thrown behind due to legal fees if assessed as child support. I had a GAL in Illinois where the judge refused to review the billing by the GAL and the GAL did not even file for fees as required by law until at least a year later. To complicate matters she and the judge tried to fraudulently inflate my income to finance the GAL fees through my ex. The appellate court ruled in my favor that what they were doing was illegal and asked the judge to resolve the issue with ‘reasonable fees.’ Due to being caught he doubled the fees and since then the GAL as tacked on both interest and penalties unapproved by the court. What was originally $8000 is now $28,000. One additional issue was during the majority of the fees I was found indigent by the court absolving me from any court costs or attorney fees by law, but the judge refused to consider the order to sue for indigency.
Just curious on how one should handle GAL/Attorney fees that may be classified as ‘child support’ as this is something that could seriously spiral out of control if not handled properly.