An American Carol Review

October 3, 2008
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“An American Carol didn’t miss a beat, brilliantly showcasing the absurdity of those who oppose everything I believe makes this Country so great. This movie will exceed you expectations as much as Sarah Palin did in her debate. If you bleed red, white and blue, now is the time to get off your lazy butt and spend some money at the theaters. Show all those anti-American filmmakers that this is the kind of movie you support. Bravo to David Zucker and the entire cast and crew for creating a movie that reinforced my faith in the entertainment community. ” ~Greta Perry~

Here is my podcast with Kevin Farley, who plays Michael Malone in An American Carol (the second half).

*This post can also be found at Hooah Wife and Kiss MyGumbo.

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CHILD SUPPORT ENFORCEMENT:JOAN ENTMACHER

Congressional Testimony May 18, 2000 00-00-0000 May 18, 2000 Statement of Joan Entmacher, Vice President and Director, Family Economic Security, National Women’s Law Center Testimony Before the Subcommittee on Human Resources of the House Committee on Ways and Means Hearing on Child Support Enforcement Reforms Chairwoman Johnson and Members of the Human Resources Subcommittee, thank you for this opportunity to testify on behalf of the National Women’ s Law Center. The Center is a nonprofit organization that has worked since 1972 to advance and protect women’s legal rights. It has been a strong advocate of improved child support enforcement for more than two decades. I and other Center staff have presented testimony on child support issues to this subcommittee on several occasions, commented on child support regulations of the Department of Health and Human Services, litigated child support cases and met with officials in the Administration, Congress and the states in furtherance of the Center’s efforts to improve child support enforcement. The Center also provides information to women across the country in English and Spanish on how to exercise their rights to child support through state child support offices, and assists low-income women in the District of Columbia with child support and family law issues.

Since the creation of the child support enforcement program under Title IV-D of the Social Security Act in 1975 (the “IV-D program”), the program has evolved in important ways. Initially, the primary mission of the program was to recover welfare costs, though it also provided services to families that had never received public assistance. Today, the majority of families served by IV-D have not received public assistance, but most are low and moderate income. (1) Since the passage of the the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996, the number of families receiving public assistance has declined sharply. More single mothers are working, but they are still struggling to make ends meet. It is time to complete the transformation of the IV-D program into a program that helps families achieve greater economic security by securing child support for children.

Some of the proposals the Subcommittee is considering represent significant steps toward this goal, giving greater priority to the child support claims of families over government claims for welfare reimbursement. Unfortunately, the proposal to allow states to increase the powers of private collection companies and non-IV-D agencies (Title III of H.R. 4469, the Child Support Distribution Act of 2000) would move in exactly the opposite direction. Those provisions would increase the profits of private child support collection companies at the expense of children and undermine the IV-D child support enforcement program which members of this subcommittee and staff have worked hard, on a bipartisan basis, to develop over the years.

Assignment and Distribution Reforms The Center strongly supports the assignment and distribution changes proposed in Title I of H.R. 4469, and H.R. 3824, the Child Support for Children Act. PRWORA gave families that had left public assistance increased claims to child support arrearages, but fell short of a true “Families First” distribution policy. Under PRWORA, collections made through the federal tax refund intercept, the single most effective technique for collecting arrearages, continue to go first to the state. Even after the PRWORA distribution changes are fully phased in, families applying for Temporary Assistance to Needy Families (TANF) still will be required to temporarily assign to the state their rights to pre-TANF child support arrears. These and other exceptions to “Families First” distribution create a complex, expensive- to-administer, and virtually inexplicable distribution system.

The assignment and distribution reforms in Title I of H.R. 4469 would give families that have left TANF more of the child support paid on their behalf. They also would simplify the administration of the IV-D program, reducing delays in distributing funds to families and freeing resources for other activities. The requirement in Title II that IV-D programs review the cases of families leaving TANF also would help families secure the child support they need to achieve self-sufficiency.

Both custodial and noncustodial parents also would benefit from the provisions of H.R. 4469 and H.R. 3824 that would limit the amount of the assignment while a family receives assistance and direct IV-D agencies not to collect Medicaid birthing costs. Some states require noncustodial parents to reimburse the state for birthing costs and past public assistance expenditures, creating large debts to the state that are unrelated to and far exceed their ability to pay. These practices can deter fathers from establishing paternity, discourage low-income pregnant women from seeking proper health care, and discourage both parents from working with IV-D. The proposed changes will make it easier for noncustodial parents to focus on providing support to their children, not reimbursing state debt.

H.R. 3824 would provide a more comprehensive reform of distribution than H.R. 4469. It would require states to pass through all current child support payments, including payments for families currently receiving public assistance. This would ensure that custodial parents know how much child support was being collected and eliminate the delays in payment that often occur when families leave welfare. In addition, under H.R. 3824, the federal government would share the cost if a state chose to disregard some of the child support for TANF purposes. This would encourage states to allow the child support payments made by noncustodial parents of children receiving public assistance to make a direct difference in their children’s lives. This is an important “fatherhood” — and “motherhood”– issue. (2) The Center applauds the bipartisan support for distribution reform, and hopes that real progress will be made this year.

Proposals to Allow Private Collection Companies and Public Non-IV- D Agencies Access to IV-D Information and Enforcement Tools The Center is strongly opposed to Title III of H.R. 4469, which would allow States to give private child support collection companies and non- IV-D agencies greater access to confidential information and IV-D enforcement tools. We recognize all too well that although the IV-D program has improved, progress has been painfully slow and uneven. We appreciate this Subcommittee’ s commitment to continue to explore ways of increasing support for children.

We are concerned, however, that Title III would reduce the child support actually going to children and undermine child support enforcement by:

diverting much of the child support intended for children, and actually collected by IV-D agencies, into the hands of for-profit collection companies; jeopardizing individuals’ privacy; increasing the risk of erroneous and abusive collection practices; and diverting IV-D resources away from providing services for families and re-fragmenting the child support program.

Diverting much of the child support intended for children, and actually collected by IV-D agencies, into the hands of for-profit collection companies Given the current, largely unregulated state of the private child support collection industry, increasing their access to the information and tools of the IV-D system would expand the potential for exploitation of custodial parents and children. Fees in the child support collection industry are high: 25 to 40 percent of collections, often with additional administrative fees and expenses. Some industry representatives justify these fees by saying “two-thirds of something is better than nothing.” But what happens all too often is that custodial parents pay one-third or more of their child support to a for-profit collection company for nothing — because IV-D has actually collected the money. For example (3):

A mother in Phoenix, Arizona complained that when she signed a contract with a private collection company, she was not informed that the State IV-D agency had already located the absent parent and arranged for the garnishment of his wages. “[The company] has collected 35% of my support checks for the past two years for an investigation that was already finalized.” A mother in Plano, Texas wrote that she had asked a private collection company for help in collecting past due child support from her ex- husband. She was already receiving current support through the IV-D program. She was told that the company would not intercept those payments, but would make additional efforts to get unpaid child support. Instead, she complained, the company simply took its percentage out of payments made to the IV-D agency. “They have only managed to help themselves and pay themselves for their services with money I would have gotten without their help… I am worse off financially now with their so-called help.” A Red Oak, Texas mother had an open case with the IV-D agency when she signed a contract with a private company. She complained: “They take the check. They shouldn’t be taking my money. They have not done anything on this case like they said.” In the private child support collection industry, the way to maximize profits is to take a cut of collections while letting IV- D do the work. Expanding the access of private collection companies to IV-D information and enforcement tools, as Title III would do, would only increase the ability of private companies to profit from the work of IV-D at the expense of children.

Some may think that while it is unfortunate that consumers enter into unwise contracts — especially when children owed support pay the price – – the best approach is to let the buyer beware. But contracts frequently used in this industry are confusing, even misleading. Even more disturbing, if custodial parents realize they have made a bad deal, contract provisions attempt to limit their ability to terminate the contract. Industry representatives have cited “consumer choice” as a reason to give them access to IV- D systems. But many companies try to restrict the ability of a custodial parent to choose to terminate the contract and seek services from IV-D or another entity.

Some companies emphasize in their advertising that they help collect “past due” support. (4) However, they then claim a percentage of current support payments under difficult-to- understand contract clauses that redefine “current support” as “past due support.” (5) By applying current support payments first to the arrearage, and refusing to allow the custodial parent to cancel the contract until the arrearage is paid in full, companies can take their cut of child support indefinitely, leaving custodial parents with less child support than if they had written off the arrearage completely. (6) A custodial parent from Fort Worth, Texas told the State Attorney General she had written the company in an attempt to terminate her contract: “It was my understanding that you all would take 30% of the part that he was in arrears. It was certainly not my understanding that you would take away what I was getting currently. This is ridiculous. So cancel the proceedings.” They refused. She wrote the Texas Attorney General, “I believe that the entire agreement is very deceptive…. They’re stating that they’re getting the amount that’s late, but what I want to know is: if they are currently collecting the late part of what he owes me, what happens to the portion that he should actually be paying me now….?” A mother from Seagoville, Texas had sought help from a private company in collecting $7,130 in child support arrears. She wrote the Texas Attorney General, “The contract states…[o]nce total amount owed was collected then I would receive 100%. However that was not done — In the 4 years time I was on this contract they collected $16,000, which means they went … over the amount. I would like to have that money back. Can you help? Please help us. Please help us. Please, Please help us.” These common practices also have critics within the industry. One company representative stated, “The entire private child support collection industry needs to admit that it has been taking unfair advantage of custodial parents.” He said his company “has looked at the fee structure that is in place throughout the industry and realized that we are charging parents a sizable amount of money when we are no longer providing any viable services.” (7) In some cases, custodial parents end up getting none of the child support payments intercepted by private collection companies. The Illinois Attorney General sued one company for retaining all current support payments until its undisclosed administrative fees were reimbursed. (8) Other companies advertise their low percentage rates, failing to call attention to contract provisions that allow them to claim 100 percent of collections until administrative or legal fees are reimbursed in full. see here child support md

Finally, private child support collection is being touted as a hot, new money-making venture, attracting scam artists and individuals and companies that simply get in over their head. One company solicited individuals to become licensees:

Imagine, for less than an initial $1,000, you can actually own and operate your own prestigious business with a ready market which constantly renews itself and provides an unlimited and unending earning potential for you. (Emphasis in original) (10) Another advertises opportunities to “Own Your Own Child Support Collection Agency”:

The private child support collection industry is still growing, and it is not too late to enter into this industry as an independent agency. This is still a ground floor opportunity! … Operating a private agency can be a profitable venture that can begin as a part-time home- based business. As with any business, the more time and effort that is devoted to the business, the more it will grow, and the profits will grow accordingly. Most agencies are reporting growth rates in terms of revenue in excess of 50% each year. Annual growth of 90% or better is not uncommon in this industry. (11) Better Business Bureau records reflect complaints against companies that quickly started up and almost as quickly disappear, leaving behind frustrated custodial and noncustodial parents and no forwarding address or telephone number. (12) Custodial parents have complained of money lost to scam artists who collect application fees then vanish into the night, and to companies that collect money from the noncustodial parent — and keep it for themselves. (13) Before measures to expand the powers and encourage the growth of such companies are considered, effective prohibitions and remedies against unfair and predatory practices by the private child support collection industry should be put into effect nationwide. website child support md

Jeopardizing individuals’ privacy.

Title III of H.R. 4469 also would give States the option of expanding the access of private collection companies and public, non-IV-D agencies to confidential information. States would have the option of giving private collection companies – indeed, any individual or entity seeking to establish or collect child support – access to any information available in the State Directory of New Hires and any information obtained through data matches with any information in the expanded Federal Parent Locator Service, including the Federal New Hire Directory and Federal Case Registry. States also could make this information available to non-IV-D state and local agencies for child support activities. Private collection companies and non-IV- D agencies also could have access, at state option, to information from private financial institutions — banks, savings and loan institutions, credit unions, money-market mutual funds — under the provisions for expanding the financial institution data match.

Under Title III, states would have to devise their own methods for protecting privacy. No federal consumer protections, enforcement mechanisms or rights of action against private collectors or non-IV-D agencies would be created. Sections 311 and 321 state that private collection companies and non- IV-D agencies must “meet such requirements as the State may establish” and enter into a “binding agreement” with the state “to carry out establishment and enforcement activities with respect to the child support obligation subject to the same data security, privacy protection, and due process requirements applicable to the State agency and in accordance with procedures approved by the head of the State agency.” Section 301 of H.R. 4469 does call upon HHS to develop recommendations about how to implement expanded private and non-IV-D access, in consultation with state IV-D agencies and public and private companies knowledgeable about involving non-IV-D entities in support enforcement. However, the consultation would not consider whether expansion was feasible or appropriate, nor what consumer protections or rights of action should be developed. It would not include representatives of custodial or noncustodial parents, children, or consumers, or privacy experts. Recommendations concerning access by private collection companies would not be due until after the effective date of the provision. Most importantly, states would have no obligation to adopt the HHS recommendations or something stronger.

It is difficult to imagine how privacy rights could be protected effectively. In theory, information would only be available to private child support collectors and public non-IV-D agencies about “an individual with respect to whom [the entity] is seeking to establish or enforce a child support obligation.” In practice, however, it would be virtually impossible for a state IV-D agency to verify that requests were for the purpose of establishing or enforcing a child support obligation. There is no central registry that includes information about all non-IV-D cases. State Case Registries are only required to include information about non-IV-D support orders established or modified on or after October 1, 1998, 42 U.S.C. 654A(e)(1)(B). Registries do not include information about non-IV-D cases where orders have not yet been established. And, as of October 1, 1999, 12 states – including California, Illinois, New York and Texas – had not provided any information about non-IV-D cases to the Federal Case Registry. (14) States confronted by requests for information about hundreds or thousands of individuals purportedly for the purpose of establishing or enforcing child support could respond in different ways. To avoid the cost and burden of obtaining independent verification for every request, some states might decide to accept a general statement from the company that all of the information it requested related to child support. A decision by just one state to allow easy access to information would jeopardize the privacy of individuals across the country, including residents of states who choose not to expand access to information. State New Hire Directories contain information about individuals residing in several states, because they work for an employer located in the state. The Federal Parent Locator Service is a nation- wide system. And financial institution data matches are performed with multistate financial institutions.

Even if the information were sought for a legitimate child support purpose, protecting against its further dissemination and use will be difficult. Personal financial information is a valuable commodity, and many collection agencies seek more than child support debt; the potential for abuse is great. Apart from deliberate abuse, assuring the security of information given to multiple public non-IV-D agencies, and potentially hundreds of private companies and thousands of private attorneys and individuals, with diverse computer systems and staffs with varying degrees of training, will be difficult if not impossible.

Expanded access to information could jeopardize the safety of battered women in particular. Title IV-D requires federal and state IV-D agencies to implement special confidentiality protections to protect the safety of battered women, some of whom, despite the dangers, want to seek child support to become more financially independent. Under the proposal, thousands of individuals and entities could be authorized to request information. It will be difficult for state IV-D agencies to screen all of the requesters and all of the information requested to ensure that release of information will not jeopardize domestic violence survivors.

Ultimately, the privacy problems that are likely to result could undermine all child support enforcement efforts. Over the years, Congress has worked to increase the effectiveness of child support enforcement while protecting the privacy of individuals. In the Family Support Act of 1988 and PRWORA, Congress required the creation of the automated systems and databases essential to effective state child support enforcement, and addressed legitimate privacy concerns by carefully limiting access to and use of the information. If access to these databases is expanded, and abuses occur, a future Congress or state legislatures may conclude that the only way to protect privacy would be to dismantle these databases altogether, permanently setting back child support enforcement.

Increase the risk of erroneous and abusive collection practices.

Title III of H.R. 4469 would allow states to give private child support collectors and non-IV-D agencies access to certain child support enforcement tools now available only to IV-D agencies. These would include intercepting Federal tax refunds, credit bureau reporting, passport sanctions, financial institution data matches, and income withholding from Unemployment Insurance benefits.

Expanding the powers of private child support collection companies would open the door to further abuse. The industry is largely unregulated; courts have ruled that child support collection activities are not covered by the federal Fair Debt Collection Practices Act, which prevents harassment or deception. (15) Noncustodial parents, employers, IV-D representatives and others have complained about deception (e.g., falsely representing oneself as a state IV-D representative or law enforcement officer; claiming powers not granted by law; generating or altering wage withholding orders and presenting them as court orders); harassing collection practices against the obligor and his family; demands that noncustodial parents make payments directly to the collection agency, rather than to the court or IV- D agency, resulting in the failure of the noncustodial parent to get credit for payments made; and inability to reach company representatives to resolve questions or complaints. (16) Title V of H.R. 4469 encourages programs applying for “fatherhood” grants to work with IV-D agencies to help fathers reduce the arrearages owed to the state if they maintain a consistent payment schedule, and to help cooperating fathers improve their credit rating. But Title III, by encouraging greater use of private collection companies, would make it harder to accomplish those goals. Fathers making regular child support payments under a plan approved by IV-D could be harassed at work by private collection companies seeking full payment, or reported to credit bureaus by the private companies.

State IV-D agencies are subject to constitutional and statutory due process requirements. For example, before notifying the Secretary of the Treasury that an individual owes past-due support and initiating the tax intercept process, IV-D must notify the individual of the possible withholding, and instruct the individual on how to contest the determination of the amount of arrearage and how, in the case of a joint return, to protect the share of the refund which may be payable to another person, 42 U.S.C. 664(a)(3)(A). To initiate passport sanctions, IV-D must certify that each individual concerned has been notified of the determination that there is an arrearage sufficient to initiate the sanction, of the consequences of that determination, and an opportunity to contest the determination, 42 U.S.C. 654(31). Arrearages may be reported by IV-D to credit bureaus only after the noncustodial parent has been afforded all due process required under state law, including notice and a reasonable opportunity to contest the accuracy of such information, 42 U.S.C. 666(a)(7).

Although H.R. 4469 says that to have access to these remedies, private child support collectors and non-IV-D agencies must make a “binding commitment” to carry out their activities subject to the same due process requirements and procedures applicable to the state agency, it is unclear what this means. “Due process” is not a concept that has meaning against private companies. It is unclear if, or how, IV-D is supposed to verify arrearage balances or the amounts of withholding orders submitted by private child support collectors or public, non-IV-D agencies before forwarding this information on for federal tax refund intercept, passport sanctions, unemployment withholding, credit bureau reporting, or financial institution data match. Verification of arrearages could require time-consuming, case-by-case investigation. Federal and state case registries are not required to maintain payment records for any non-IV-D cases, 42 U.S.C. 654A(e)(4).

Under H.R. 4469, it is unclear if the responsibility for providing notice and a hearing in case of disputes would rest with IV-D, or with the private company or non-IV-D agency requesting the enforcement action. It is difficult to see how a “hearing” before a representative of a private collection company could provide meaningful due process protection. And even if the private company or non-IV-D agency agreed to create some type of procedure, it is unclear whether IV-D — which would be transmitting the requests for use of these tools — could avoid responsibility and liability for their misuse.

An increase in erroneous, unfair or abusive child support collection practices would hurt noncustodial parents most directly. But the adverse effects of these practices would be felt more broadly. They can create increased tensions between noncustodial and custodial parents, who may be unaware of the tactics being used or the fact that payments were made. They also can undermine the whole IV-D system by discrediting child support enforcement efforts; causing employers to doubt and refuse to comply with legitimate wage withholding orders; creating confusion about when child support payments have been made; and undermining support for tough enforcement tools.

Diverting IV-D resources away from providing services to families and re-fragmenting the child support system Encouraging the growth of private collection companies and non-IV- D agencies would increase, not relieve, the burdens on the IV-D program, making it more difficult for state child support agencies to provide the enforcement services families need. As discussed above, any IV-D agency that seriously tried to prevent privacy abuses or misuse of enforcement tools would have to devote substantial resources to the task. The potential burdens posed by the public, non-IV-D provisions would be less than those posed by the private access provisions, but there still is no apparent rationale for them. The IV-D system has developed effective, automated enforcement procedures; there is no reason to duplicate those systems in non-IV-D agencies.

After struggling to overcome the historic problem of fragmentation of child support enforcement services, the IV-D program is finally moving toward the automated, integrated, nationwide system envisioned by PRWORA. The centralized computer systems and new databases that make IV-D automated case processing and data matching work are producing results. That is why representatives of for-profit companies and non-IV-D agencies want access to IV-D tools. But allowing the IV-D system to be used in that way could destroy it, and undermine child support enforcement efforts now and for years to come.

Endnotes 1. A recent analysis by the Assistant Secretary for Planning and Evaluation, “Characteristics of Families Using Title IV-D Services in 1995″ (May 1999), found that 63% of custodial parents eligible for child support used the IV-D system. Only 23% of custodial parent families in the IV-D system had family incomes of 250% of poverty or above (in 1995, 250% of poverty was $30,395). Over half (53%) of the custodial parent families not using the IV-D system had incomes of 250% of poverty or greater.

2. The National Women’s Law Center and the Center on Fathers, Families, and Public Policy in Madison, Wisconsin have collaborated in the ” Common Ground” project to bring together practitioners, advocates, and researchers that work with low- income mothers and fathers to develop public policy recommendations to increase the likelihood that children will receive financial and emotional support from both parents. Participants have emphasized that policies that direct all of the child support paid by the noncustodial parents of children receiving public assistance to the state not only deprive poor children and custodial parents of needed economic resources, but increase conflict and stress within the family.

3. Examples are taken from complaints on file with State Attorneys General, collected by Amy Collins and Vicki Turetsky, Center for Law and Social Policy. For additional examples, see Testimony of Vicki Turetsky to the Subcommittee on Human Resources, May 18, 2000 and Testimony of Joan Entmacher to the Subcommittee on Human Resources, October 5, 1999.

4. See, for example, the website of CSE* Child Support Enforcement (supportkids.com): “Founded in 1991, Supportkids.com has achieved unprecedented success in collecting past-due child support….” The CSE contract begins, “I am asking CSE to enforce and collect “Past-Due Support Owed….” 5. For example, the standard contract of CSE* Child Support Enforcement, Co. (supportkids.com), states: “‘Past-Due Support Owed’ also includes any support and interest that become past-due after the first payment is received by CSE. Regardless of how payments are designated by NCP, a party making payments on behalf of NCP, court records, or any other documents, it is sp ecifically agreed that any and all amounts received by CSE will be first credited to reduce ‘Past-Due Support Owed.'” 6. See, for example, the termination clauses in the standard contracts of CSE* Child Support Enforcement, Co. (supportkids.com)(available on-line), NationalChildSupport.com (available on-line), KIDS, Ltd. (available on-line from their website, collectchildsupport.com). For an explanation of how such provisions can leave custodial parents with less child support than they would have had if they had written off the arrearage completely, see Testimony of Joan Entmacher to the Subcommittee of Human Resources of the House Committee on Ways and Means, October 5, 1999.

8. Office of Attorney General Jim Ryan, Press Release dated September 28, 1999.

9. For example, the website of KIDS, Ltd. of San Antonio, Texas (www.collectchildsupport.com) announces, “Lowest rate and no set up fees!” “We even pay the attorneys’ fees for you, in some cases.” But paragraph 8 of the “Exclusive Agency Contract” available on-line states, “That if the AGENCY has made any advanced distribution on behalf of the APPLICANT for attorney fees, court cost, filing fees, and or any other cost of enforcement, that said fees will be reimbursed from the initial proceeds until paid.” 10. Advertisement by Child Support Collection Agency of America, Inc.

12. Information from Better Business Bureau files in the National Information System compiled by Amy Collins and Vicki Turetsky, Center for Law and Social Policy, 1999.

13. Office of Attorney General Jim Ryan, Press Release dated September 9, 1999; Testimony of Geraldine Jensen, President of Association for Children For Enforcement of Support, Inc. (ACES) to the Human Resources Subcommittee, Nov. 7, 1997.

14. HHS, Office of Child Support Enforcement, FY FCR [Federal Case Registry] Statistics.

15. See, e.g., Mabe v. G.C. Services Limited Partnership, 32 F.3d 86 (4th Cir. 1994)(child support is not a consumer debt within the meaning of the Fair Debt Collection Practices Act, 15 U.S.C. 1692-1692o).

16. A summary of such complaints is included in the testimony of Vicki Turetsky, Center for Law and Social Policy, to the Human Resources Subcommittee, May 18, 2000.

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