Credit scores often take a beating right after divorce, and perhaps for many years after. This can make life tough for many divorced individuals when it comes time to secure valuable assets such as a car, home or education loans. If you are a parent who is having trouble making child support payments, you may be wondering if child support arrears could end up on your credit report. In New Jersey, this question was answered in the 2014 case of Cameron v. Cameron, which found that it was inequitable to report child support arrears that were not accrued as a result of delinquency.
As a general rule, arrears that are $1,000 or over may be reported to various credit agencies as overdue debts, which can certainly hurt your chances for future credit approval. Not all arrears, however, accrue as a result of delinquency. In Cameron v. Cameron, for example, the accruals occurred while the primary custodianship changed over from the plaintiff to the defendant. Consequently, the child support obligations switched over to the plaintiff, who was ordered to pay $86 per week, which was higher than the amount that had been paid by the defendant. The plaintiff's obligation was not made official until 17 weeks after the filing, but the support increase had been set retroactive to the filing date. As a result, the plaintiff was charged with the difference between the old amount and the new amount for a period of 17 weeks, which totaled $1,499. The plaintiff was ordered to pay $14 towards the arrears, and was told that this information would be reported to the credit agencies, since the accrual was over $1,000.
The plaintiff took issue with having the information reported, since her payments were not technically “delinquent”. Her accruals were due to the fact that it took 17 weeks for the new order to be resolved, which means that while she did owe retroactive support, she was not “delinquent” in her payments. The trial court agreed, citing that N.J.S.A. 2A:17-56.21(a) and (b) only refers to the reporting of arrears as a result of delinquency, which “is only when the payments are missed or late beyond a certain pre-determined date and established due dates…” Therefore, they agreed that while the plaintiff was late in making payments, she was not delinquent.
The ruling further went on to state that “when a court of equity imposes a retroactive child support obligation resulting in newly assessed arrears for a party, the court must also logically have the equitable discretion to direct the probation department to not report such arrears to the credit reporting bureaus unless and until further notice.” While retroactive accrual is the most common reason for non-delinquent arrears, there are other qualifying reasons under which child support arrears should not be reported. For more information on support arrears and credit scores, please speak with the family law attorneys of Villani & DeLuca, P.C.