Private Collection Agencies

Because of the many state and federal systems in place to enforce child support orders, some parents may become frustrated with the “red tape,” feel intimidated by the legal and financial processes, have a desperate need to receive child support payments immediately, or simply feel they do not have the time or resources to follow through with court actions or the local CSE office.  In these or other instances, some parents may decide to use a private collection agency.

What makes a private collection agency attractive to some is the claim of faster results.  This claim is often based on the belief that a private collection agency also has the time and resources to use high-pressure tactics which might include:

  • Contacting the non-custodial parent directly;
  • Speaking directly to neighbors and co-workers of the non-custodial parent;
  • Threatening to attach liens on the non-custodial parent’s car, house or other property; and
  • Continual streams of verbal and written communications designed to wear down the non-custodial parent into paying.

It is important to note that the Children’s Rights Council neither condones nor condemns the use of a private collection agency to facilitate payment of child support arrearages.  However, there are certain essential factors that are not commonly known, but should be well-understood by a parent before entering into an agreement:

  • Most states will allow the local CSE office to “close” the case if a private collection agency is hired.
  • Some enforcement remedies are not automatically available to private collection agencies such as attaching bank accounts, intercepting tax refunds, or denying passports to custodial parents if they want to leave the country.
  • Private collection agencies typically charge a fee of 35% or more for any amounts that may be collected.  These fees are also usually charged to any money the parent might receive through direct communications with a non-paying parent, or any payments the local CSE office was able to secure.
  • Some contracts may have clauses that make the contract “self-renewing” up to six months after the last child support payment comes in. So if the non-custodial parent starts making regular monthly child support payments, a parent could end up owing the private collection agency a continuing contingency fee, whether the agency is actually involved in collection activities or not.

As with any contract, it is important to carefully review not only the document but the company with which an agreement is being made.  Before signing anything, it is highly recommended the following steps be accomplished.  If there is disagreement with any of the terms of the contract the private collection agency is offering, do not hesitate to suggest alternative terms be written into the contract.

  • Ensure the company is a reputable, and has been in business for awhile and has a phone number and physical street address where direct contact can be made;
  • Know all the fees and costs associated with the contract; and how often will they be assessed;
  • Understand under what circumstances fees and costs will be charged, and when must they be paid;
  • Familiarize yourself with the escalation of the contingency fee as child support collections increase or decrease;
  • Know how contingency fees will be assessed to any money collected from personal efforts to convince the other parent(s) to pay back child support and/or current voluntary payments;
  • If a contingency fee will be paid to the private collection agency for current child support paid through a CSE office;
  • Familiarity with how alternative ways of collecting back child support payments will be subject to any fees or costs from the private collection agency;

Finally, have the proposed contract reviewed by an independent, competent professional for errors, omissions, and acceptability of practices. As long as the terms of the contract are clearly understood and accepted, working with a private collection agency might prove to be a good opportunity to collect back child support payments which may not otherwise be available through public systems and services.