Friday, April 1, 2011

Unmodified Obligation

Louko v. McDonald, 2011 VT 33

A lump-sum Social Security Disability Insurance payment made directly to the beneficiary’s children can offset the beneficiary’s child-support arrearages.  It doesn’t get more exciting than this, folks. 

Mom and Dad married in 1988 and divorced in 2002.  They have two kids.  One of the kids is emancipated.  In the divorce, Mom got sole legal and physical parental rights and responsibilities for the kids and dad got a $326-per-month-child-support obligation.  Shortly after the divorce, Dad went to jail and stayed there until 2006.

The parties have been jousting in court over child support for years.  Dad built up arrearages while in jail.  When he got out, he tried to modify his obligation, and Mom along with the Office of Child Support (OCS) sought enforcement on the obligation and past-due payments.

In the meantime, Dad applied for disability from SSDI. In 2009, the Social Security Administration found that Dad was entitled to retroactive disability going back to 2007, and it awarded retroactive children’s benefits of between $14,000 and $15,000 to Mom on behalf of the remaining minor child living with her.

Now comes the tricky part.  Modifications cannot be applied retroactively.  In family court division, you are obligated to the payments that the court orders.  Even if a parent is in a car accident and paralyzed from the neck down, child support obligations will continue to accrue until a motion to modify is filed and approved.  So Dad, who had a pending motion to modify before the court when notice of the Social Security award came in, sought instead to have the retroactive children’s benefits applied as offset to his back child-support payments.  

After an initial denial, the magistrate allowed the offset, reasoning that this was not a retroactive modification, but simply a way of applying the payment to those sums that Dad should have paid but didn’t.  OCS and Mom appealed to the family court arguing that because it applied to arrearages that accumulated before the motion to modify was pending, it violated the statutory bar on retroactive modification of child support and should not be credited to Dad’s tab.  I see you scratching your head.  There are lawyers involved here—the rules of logic still exist, but in a demented Twilight-Zone-esque-it’s-an-argument-and-I-can-make-it-if-I-want-to sense (sung to the tune of It’s my Party . . .).  The family court division affirmed the magistrate’s decision and this appeal followed. 

Mom and OCS make the same argument on appeal—that the offset was a modification of the preexisting child support order and had no impact on Dad’s obligations.  Dad says, and I am paraphrasing, “Gimme a break!  It’s payment from another source.  Just take it and lemme go.”

The SCOV’s analysis begins by noting that “the underlying child support order was not modified” and “the court’s decision held that the directly paid children’s benefits constituted payment of the ordered child support amount for the period covered by the benefits.”  This illustrates the direction that the SCOV is headed.  The issue of modification is tricky because who is to say whether a modification is sought and whether payments coming independent of the modification should be brought under its umbrella.  The SCOV also notes that if Dad doesn’t get credit for the payment, Mom “will receive a windfall and the possibility of double payment.” 
I would only add to the SCOV’s analysis: such a rule is stupid. 

Let me explain my opinion slightly, lest I give the wrong impression.  Child-support arrearages and judgments rarely do any good for children—those who the payments are intended to support.  Payments, if and when they arrive, come too late to help the children, who are usually grown or emancipated.  Uncollectible judgments adversely affect OCS’s clearance rate, and in turn, reduce OCS’s federal funding.  The problem is exacerbated by the no-retroactive-modification rule.  I’m not advocating giving deadbeat parents a free ride, but a practical approach is necessary.  If—as in this case—it means applying retroactive payments to accrued arrearages (without modifying the underlying obligation) then I’m all for it.     

The SCOV concludes that “the decision to allow father a credit towards his child support arrearages for the lump-sum payment made on behalf of the child does not modify earlier support judgments—it merely results in a change in the identity of the ‘payor’ of those benefits.” Accordingly, the magistrate’s and the family division’s previous rulings were affirmed.  By doing so, the SCOV joins the majority of states, which allow such a credit.  Still, this is a far from settled issue as a minority jurisdictions do not allow this sort of credit based on a policy of penalizing and discouraging nonpayment. 

This is a straightforward decision.  In the world of child support—where there can often be a marked departure from good ol’ common sense—that’s refreshing.

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