By DANIEL WAGNER, Associated Press
WASHINGTON (AP) — Old child support debts could cost thousands of poor men their only income next year because of a policy aimed at reducing the cost to the government of mailing paper checks to pay federal benefits.
The Treasury Department will start paying benefits electronically next March. It will stop issuing the paper checks that many people rely on to safeguard a portion of their benefits from states trying to collect back child support.
States can freeze the bank accounts of people who owe child support. A separate Treasury Department rule, in place since last May in a preliminary form, guarantees them the power to freeze Social Security, disability and veterans' benefits that have been deposited into those accounts.
Once paper checks are eliminated, about 275,000 people could lose access to all of their income, advocates say.
"It's kind of Orwellian, what's being set up here for a segment of the population," says Johnson Tyler, an attorney who represents poor and disabled people collecting federal benefits. "It's going to be a nightmare in about a year unless something changes."
In many cases, the bills are decades old and the children long grown. Much of the money owed is interest and fees that add up when men are unable to pay because they are disabled, institutionalized or imprisoned.
Most of the money will go to governments, not to the children of the men with child support debts, independent analyses show. States are allowed to keep child support money as repayment for welfare previously provided for those children.
In some instances, the grown children are supporting their fathers.
The rule change illustrates how a politically desirable goal like cracking down on so-called deadbeat dads can have complicated, even counterproductive, effects in practice.
"The rule doesn't look at the fact that the money is mostly interest, the money is going to the state, the kids are usually adults, and it's leaving the payer with nothing," says Ashlee Highland, a legal aid attorney who works with the poor of Chicago.
Highland says her office has clients in eviction, in foreclosure and unable to pay their bills because of states' aggressive efforts to collect back child support.
Marcial Herrera, 44, has had his bank account frozen repeatedly since 2009, blocking his access to $800 a month in government benefits. Unable to work because of a severe back injury he suffered in 2000, Herrera fell behind on child support. He owes more than $7,000 — not to his 22-year-old son, but to the state of New York, because his son received welfare years earlier.
Herrera sought help in court and had his son speak on his behalf, but the judge could not erase the thousands he already owed.
"I'm just waiting for them to lock me up," he says. "I don't see no other way of me repaying that debt."
A legal aid attorney suggested Herrera collect his benefits by paper check. It costs him $15 to cash the check each month, but at least he can be sure that he will have money to pay his bills.
States have had the ability to freeze accounts for years. That's why people like Herrera rely on paper checks to safeguard part of their income.
Starting next March, that option will disappear. The Treasury Department will deposit federal benefits directly into bank accounts or load them onto prepaid debit cards. Either way, state child support agencies will be able to seize all of it.
Electronic payments are expected to save the government $1 billion over the next 10 years, the Treasury Department says. It costs the government about $1 to mail a check, compared with about 10 cents for an electronic transfer.
The Treasury Department understands that forcing people into direct deposit could deprive them of all of their income, say officials who spoke on condition of anonymity because they were not authorized to discuss the rule-writing process.
States can garnish only 65 percent of benefits before the federal government sends them out. But the limit does not apply once the money is in an account and states ask banks to freeze it, according to a Treasury Department memo obtained by The Associated Press.