When an overpayment occurs, Child Support Services (CSS) is responsible for recovering the overpayment from the debtor. The following describes the methods used to recover overpayments. Overpayments are recovered as follows: 25% of current support (c/s) payments and 100% of arrearage payments.
Most overpayments are recovered by auto-deduct. When a non-custodial parent (NCP) payment is logged, full credit is given for the payment, but instead of issuing the full amount to the custodial person (CP), a portion of all (25% of c/s or 100% of arrears) of the payment is used as recovery for the overpayment.
CP Direct Payments (E Distribution Code)
CP direct payments are made by CP OTC offset, CP lottery offset, or if a CP mails in a voluntary payment specifically identified for overpayment recovery. When these direct payments are logged, the entire payment will be applied to the overpayment balance although they do not impact the child support balances.
NCP Direct Payments (E Distribution Code)
If there is an active NCP Bad Debt on a case, all payments will go to undistributed (UNDL) and worked by the Center for Finance and Budget (CFB). CSS will follow the same auto-deduct percentages to recover NCP Bad Debts (25% of c/s and 100% of arrears). However, this is not an automatic process; recoveries are credited manually to NCP Bad Debts, and do not reduce child support balances.
The example below explains the process used for recovery of NCP Bad Debts:
NCP owed $200 current support and has a $100 arrearage payment. There is a $300 NCP Bad Debt. CSS collects $300 by Income Withholding Order (IWO).
- 25% of current support ($50) is logged as E/PC – this $50 will not reduce the NCP’s child support balances, only the bad debt balance.
- $150 is logged as K/WA and applies to current support.
- 100% of arrearage payments (the remaining $100) is logged as E/PC – this $100 will not reduce the NCP’s past due balances, only the bad debt balance.
CP will receive $150; and $150 will be credited to the NCP Bad Debt.
NOTE: Regardless of the payment source, the portion of the payment applied to a NCP Bad Debt will be logged with an E distribution code and a PC payment type (E/PC).
The portion of the payment applied to child support balances, however, will be logged with its actual distribution code and payment type (e.g. K/WA).
Recoveries occur on only one overpayment at a time. The overpayment chosen for recovery is based on the oldest date in the CREATED field within each type in this order:
- NCP Bad Debt
- CP Bad Debt
- Interstate Bad Debt
- Non IV-D CP Bad Debt
- Retained Support
- Erroneous Overpayment