Back Child Support Now Waivable Due to Change in Tennessee Child Support Law
New Tennessee child support law in 2015: If parents and judge agree, back child support owed and in arrears may be waived as part of a settlement agreement if all requirements met. This makes elimination of back child support owed in arrears is now legally possible. An important piece of Tennessee child support legislation was recently signed into law by Governor Haslam. Public Chapter No. 200 represents a significant change in the payment of child support arrearages for parents under child support orders.
Tennessee Compromise and Settlement of Child Support Arrearages
State of Tennessee Public Chapter No. 200, which goes into effect July 1, 2015, allows some parents under a child support order to compromise and settle child support arrearages when specific conditions are met. Public Chapter No. 200 amends T.C.A. § 36-5-101(f).
In Tennessee, arrearages are considered to be child support, too. An arrearage is delinquent child support which, so long as unpaid, accrues interest at the rate of 12% under Tennessee child support law. With the new statutory language, any such compromise is not against public policy if it accomplishes three things: it serves the child’s best interests, it considers the Alternative Residential Parent’s (ARP’s) ability to pay, and it receives the court’s approval.
Under What Circumstances Can Child Support Arrearages Be Forgiven?
The obligor-parent who owes past child support (is in arrears) must be current on child support payments for a minimum of 12 consecutive months. If the ARP makes child support payments in full and on time, as ordered, for a full year with no lapses, then that parent is eligible for a compromise and settlement of the arrearage. Compromise and settlement is limited to money owed to the Primary Residential Parent (PRP) and is not an option when arrears are owed to the State of Tennessee or some other state.
Assuming the ARP’s child support payments are flawless for 12 consecutive months or more, parents may voluntarily enter into a “compromise and settlement” of the arrearage, including both principal and interest. If the PRP agrees to compromise and settle the arrears, then it must be done in a signed document. A verbal agreement is insufficient and unenforceable. The court must approve the compromise and settlement before it is binding on the parties. As with all child support matters, the court will take into consideration the child’s needs and the ARP’s ability to pay.
What Is Meant By Compromise and Settlement?
Compromise and settlement allows the obligee-parent, the PRP who is owed the money, to accept less than what is legally owed by the obligor-parent, or ARP. Arrearages add up quickly and, when interest is added, can become a barrier to full payment. In some cases, the better approach may be to take less money than what is owed in order to get some money sooner rather than later.
Example 1: Frank, the father of two and ARP, owes $25,000 in back arrears and pays only $100 per month. He can borrow $18,000 and pay the mother now, but he wants a discount. Iris, the children’s mother, wants to buy a new car. Frank and Iris agree to compromise and the court approves it, essentially wiping out the $7,000 owed in child support arrears. Prior to the new law going into effect, Tennessee courts did not have the authority to eliminate back child support owed.
Example 2: Tina is earning $200,000 per year, yet she owes $35,000 in back child support. Her former husband, Scott, is the PRP of their three teenage boys. In a compromise and settlement, Scott consented to accept $10,000 and forgive the rest just to get money for the children now. When considering what is in the best interests of the children and Tina’s ability to pay, the court might object to the proposed compromise and settlement because Tina should be able to eventually pay the entire arrearage due to her high earnings.
What If Compromise and Settlement Is Followed By More Arrearages?
When compromise and settlement resolved an earlier arrearage, but the ARP again falls behind on child support and has a new arrearage, then that new arrearage must be paid in full. Compromise and settlement under the new law is a one-time event. In other words, when it comes to settling child support arrearages, the ARP has only one bite at the apple.
In addition to compromise and settlement of child support arrears, new legislation also amended Tennessee property division law. Two important changes to the division of retirement assets in divorce go into effect on July 1, 2015. First, Public Chapter No. 202 changes how certain premarital employment fringe benefits and pensions are divided as assets in Tennessee divorce. Second, for firefighters, teachers, police, and local government employees, Public Chapter No. 440 changes how government pensions are divided in Tennessee divorce.
