Private debt collectors are taking up to 34% of each child support payment once a custodial parent signs a debt collection contract.
Collectors take a percentage of every monthly payment generated by an income withholding order, even when an order only has to be placed once and stays in place for years.
Parents get stuck in long-term contracts, even if they are dissatisfied.
Collectors don’t tell parents that they can receive child support collection services from a governmental entity at no charge.
Collectors have taken a percentage fee on child support collected by a governmental entity.
There are no state or federal statutory restrictions on collector behavior. The basic debt collection rules do not apply.
SB 339: The solution
Caps the debt collector fee at 30% (increased from 25% by amendment of August 23, 2004), and limits how many monthly payments from an income withholding order can be subject to a fee.
Provides circumstances where custodial parent may cancel a child support collection contract.
Provides for future support orders to impose the obligation to pay collector’s fees on a non-paying, noncustodial parent.
Protects noncustodial parents from abusive collection practices by applying the basic collector behavior standards and remedies that apply to other kinds of debt collection.
SB 339 is supported by:
California Association of Collectors
California Commission on the Status of Women
Children’s Advocacy Institute
SB 339 passed the Assembly on a vote of 60 – 3.
For more information, please contact Gail Hillebrand, Consumers Union (415) 431-6747