Child Support Collection Company to Pay About $900K Back

Arizona residents who may have child support issues may be interested to learn that more than 1,000 families may be recovering money from a lawsuit that alleged that a collection company illegally took from their child-support checks.

The private collection company known as Supportkids – hired by families seeking help with delinquent child support – allegedly sent orders that mislead the recipient into believing they were government-issued. This illegal practice led to money being withheld from the non-custodial parent’s paychecks, and the company would often take over 35 percent of the withheld funds.

As a result of the lawsuit in Virginia, these families could soon be seeing their share of a roughly $900,000 settlement between the state and a child support collection company. According to the report, families from other states may receive payments as well.

Supportkids, the collection company that is the subject of the 2008 lawsuit, filed for bankruptcy soon after the lawsuit was filed. However, a hedge fund that had invested money in Supportkids seized many of the company’s collection contracts and accounts prior to the bankruptcy. After entering into a consent decree with Virginia, the company and the law firm representing it returned over $900,000 to the state.

In Arizona, child support payments can either be agreed to by the parties, or must be calculated according to a specific child support formula established by law. There is a specific formula that must be followed to determine the amount of monthly payments for the child support that is owed, based on the parties’ respective incomes and other factors.

If a parent has failed to receive child support payments as required under a previous agreement approved by the court, that parent can file a motion for contempt against the non-payer. While working with a private collection agency may be appealing, based on the result of the lawsuit involving Supportkids, parents may want to consider alternatives. For example, attorney fees and costs can be recovered if a motion for contempt is successfully litigated in court.

Source: Atlanta Journal-Constitution, “Va. families to get $913K in child-support case,” Larry O’Dell, Oct. 5, 2012