Counseling clients to pay support by having their bank mail the support check can be a useful prophylactic for defending false claims of late payments.
Most of my child support and alimony-paying clients hate paying through the courts. This hatred is completely justified. The 5% fee associated with paying support through the South Carolina clerks of court is a significant and often unjustified “tax.” While ostensibly designed to compensate county governments for the labor of child support collection, the fee isn’t per support check processed but on a percentage basis. I am aware of folks paying over $3,500 per year in “fees” because they pay support through the court. Meanwhile support payments made through the court cannot be made by personal check so it requires obligors to either obtain certified funds or come to the courthouse to pay cash.
Thus, my clients rarely want to pay support through the family court. Instead they prefer to pay the obligee directly. In South Carolina, when the family courts allow direct pay, they typically put in a provision authorizing the obligee to file an ex-parte affidavit and order to have support be paid through the court if the obligor is ever more than five days late. In the past year I have handled four disputes in which my client alleges his or her support payments have been made timely while the other party claims otherwise. Often the other party uses this claim of late payment to force support to be paid through the court.
If an obligor has routinely paid support within 5-10 days of its due date, paying through the court is not going to result in quicker delivery of support to the obligee. The family courts rarely seek enforcement until support is weeks, even months, behind. Further, the family courts take a few days to turn support deposits into support payments. Forcing the obligor to pay through the court makes sense when the obligor simply isn’t paying or is routinely months late–as the family court will bring collection proceedings that won’t require the obligee to obtain an attorney. However having support go through the court when an obligor is 5-15 days late rarely results in payments arriving quicker.
Yet, when the obligee dislikes the obligor, the obligee will often try to have support go through the court merely to impose the 5% fee on the obligor as a form of “punishment.” This desire to punish the obligor leads to disputes over when support has been mailed and when its been received. The easiest way to resolve these disputes is to have support paid via direct deposit into the obligee’s account but some obligees balk at allowing this (whether it’s from a desire to cause unnecessary conflict or an unwarranted fear that such direct deposits allow the obligor access to the obligee’s account is impossible to determine). Thus, the recurring disputes as to when support was actually paid.
Last year I litigated a situation in which my client was served with an ex-parte order to pay his support through the court after his ex-wife filed an ex-parte affidavit claiming he had been more than five days late on two occasions. He hired me to overturn the order. This was one of those cases in which when support was mailed and received was disputed by the parties. However, my client had done something that was then unique in my experience: he had paid his support by having his bank debit his account and mail the support checks directly to his ex-wife. Thus he had a perfect record of when the support was mailed. And it was routinely mailed five days before the due date (which would be ten days before it triggered the ex-parte provision).
It’s possible to prove when an obligee deposited a support check but it’s impossible for an obligor to prove when the obligee received it. Here the ex-wife claimed she received the support late but my client, through his bank records, was able to prove that he mailed the support five days before it was due. The court found he wasn’t late making his support payments, rescinded the order requiring him to pay support through the court, and made the ex-wife reimburse him my fees and his court costs–including the 5% fees he paid before the order was rescinded.
Now when I encounter disputes regarding the timeliness of support payments, my advice to obligors whose obligees won’t let them pay support through direct deposit is to have the bank issue the support check. One can’t control or prove when an opposing party receives support but if one can prove support was mailed five days before it was due, I doubt any court would find the obligor was late paying support. Having the bank mail the check completely undermines a vindictive obligee’s ability to force support through the court based on false allegations of late payment.
Greg, this is not really your topic but I always believed that the “five day” provision is an unconstitutional delegation of judicial authority. I oppose those provisions regardless of whether I represent the payor or the payee. My position is that if support is not timely paid, then the payee may seek enforcement through the contempt power of the court, payment of future support through the clerk of court, and payment of attorney’s fees for the proceeding. I started to say this is my “two cents’ worth” but either the 5% fee or an award of attorney’s fees is a lot more than two cents.
When my clients are under the “5 day rule” (and even when the other part is), I typically suggest that they pay into the payee’s bank account. Then you have the bank (a neutral third party) keeping a record of when payment was received. The payor can’t access the account otherwise (to withdraw, find out the balance, etc.), but can make deposits and have a record. I’ve never had a problem with this situation
Direct pay into the obligee’s bank account is ideal but, as the blog notes, sometimes obligees won’t allow it. These are often the same obligees getting into factual disputes about late payments. I assume their goal is to force payment through the court by claiming a late payment that the obligor can’t successfully defend. That’s why I suggest having the obligor’s bank issue the support payments.
If you’re audited, direct payment into the recipient’s account is not the ideal method of payment. I was told by the IRS that their preferred method of alimony payment is by check or money order so that the payer can provide them with copies of cancelled checks as proof of payment. According to the IRS, if making alimony payments using any indirect form of payment such as automated debit from your bank account or wages, the documentation of payment must identify the recipient by name or docket number of the divorce or separation agreement.
My ex didn’t claim all of the alimony she had received on her taxes, and I was audited. Even with documentation from my employer, the IRS refused all of the alimony I had paid directly from my wages each week by direct deposit, because the direct deposit documentation from my employer only showed her bank account and routing numbers, not her name. $2,200+ to a tax attorney and almost a year later, the IRS tax court attorney sided with me 100%, but it was a year from hell and I’m out the legal fees.
At the beginning of the audit, when I learned of the IRS’ preference for cancelled checks, I ended direct deposit to her from my wages. I set up a second checking account soley for alimony payment, and had the weekly payment direct deposited to it, instead of her. I then began having my bank mail her a check each week as part of their free automatic pay billing service. This came in very handing when she recently decided to claim I had missed multiple alimony payments. I was able to respond with statements from my bank showing when every weekly check had been mailed, and since she had even cashed some of the “missing” checks, I was able to provide copies of the signed and cancelled checks. I would never go back to direct deposit.