Among the states that offer effective ways to manage the relationship between Private Collection Agencies (PCAs) and IV-D agencies are:
Arizona: When contacted by a PCA, the state issues a standard letter of confirmation of address change to the custodial parent (CP). The state requires that the CP return the authorization form before the change of address is made. This allows the state to verify the request. If the form is returned with a valid signature (compared to what the state has on file), then the state notifies the noncustodial parent (NCP) that he/she must continue to send payments to the state disbursement unit (SDU), and the state will forward the collection to the PCA. This allows the state to maintain the payment record and to retain assigned arrears. This also allows the NCP to know the CP is working with a PCA but reminds the NCP that the court order requires all payments to go through the SDU.
Contact: Annmarie Mena, (602) 274-7703 or firstname.lastname@example.org
Connecticut: By state law, PCAs must disburse payments to obligees within 60 days of the month in which the collection was made. No fee can be collected on support payments made through the efforts of a government agency. The agreement between the PCA and the obligee must specify that the State of Connecticut and all other states offer child support services for a minimal fee. The law has been in effect since July, 2001.
Contact: Diane Fray (860) 424-5253 or email@example.com
Maryland: Maryland has very well spelled out and articulated policy statements for staff and clients about PCAs. A CP who wishes to have case or account information and child support payments sent to him/her at the address of a PCA must provide the local IV-D agency with the following:
As mandated by federal law, Maryland never closes a case on the basis of a request by a PCA and will not "suspend" enforcement for an open case if requested to do so by a CP. A state IV-D agency may not close the case unless it satisfies the case closure criteria defined in federal regulations. In addition, state policy specifies that the IV-D agency may not require a CP to close a case based solely on the fact that the CP has entered into a legal agreement with a PCA. Support payments received on behalf of the CP will be sent to the CP at the PCA's address. The CP remains the payee for any checks issued by the IV-D agency. The state regards any payments made by the NCP directly to the PCA to be in violation of the court order. The state has been following this policy since approximately 1992.
Contact: Teresa Kaiser (410) 767-7043 or firstname.lastname@example.org
Oregon: Oregon's law, which relates to the partnership between the IV-D agency and PCAs, became effective in January 2002. CPs who enter into a contract with a PCA must send a copy of the PCA agreement and a state-issued form requesting that the PCA be added to the case. The form specifies the services the CP can receive free from the IV-D agency. The IV-D agency reviews the agreement to be certain that it complies with the criteria in the state's law. If everything is in order, the IV-D agency puts the PCA on the case and the SDU disburses all collections to the CP through the PCA from that point forward for 180 days. The obligee may then renew the request that the SDU disburse the payments to the CP through the PCA for additional 180-day periods.
If the PCA performs locate and investigative services on the case, it should report any findings to the IV-D agency. The PCA is not permitted to take any enforcement action (as defined by state law) without the advance authorization of the IV-D agency.
Contact: Ronelle Shankle (503) 986-6087 or email@example.com
Texas: Texas has a long-standing policy of cooperation with PCAs. Texas recognizes that federal law specifies that the IV-D agency has no legal authority to deny parents the right to choose a PCA, and the state believes as a matter of policy that because the need for child support is so great, no assistance should be turned away if that assistance may get more support to children who deserve it.
Texas began regulating the work of PCAs in 2002. Under the state's regulations, a PCA must register with the Texas Department of Banking to engage in business and provide a surety bond of $50,000. A PCA must maintain records of all child support payments made through the PCA to families. The records must include a copy of the child support order. If a client is dissatisfied with the service of the PCA, he/she may file a claim against the PCA with the Texas Department of Banking. The Department of Banking may revoke the registration of a registered PCA. In addition, an individual may bring a civil action, including an action for damages.
Texas recognizes that there are outstanding issues not adequately addressed by its policies. These include:
On the other hand, while some states report that mailing a payment to the PCA instead of the CP is an issue because of system restrictions (such as limits of the number of data fields available), Texas does it without a problem. Texas allows the CP to choose whether he/she wants just the payments to be sent to the PCA or wants all communications to go there as well. The CP can also change these choices at any time.
Contact: Cynthia Bryant (512) 460-6122 or Cynthia.Bryant@cs.oag.state.tx.us
Sample Letters Used by State IV-D Agencies Regarding Custodial Parent Requests to Send Payments to the Address of a PCA
We are including copies of letters from several state IV-D agencies (New Hampshire, Oregon, Rhode Island, and Wisconsin) concerning a parent's request to receive payments through a PCA. We do not endorse any one of these letters over others, nor do we mean to imply that letters not shown are unsatisfactory. We welcome copies of any letters that states find effective.
Several customer service-oriented features of the sample letters include:
INFORMATION THAT PARENTS SHOULD CONSIDER BEFORE HIRING A CHILD SUPPORT PRIVATE COLLECTION AGENCY (PCA)
Some customers choose to hire private, for-profit, collection agencies in addition to, or instead of, the State Child Support Enforcement Agency (CSEA). The choice whether to pursue support enforcement with a public or private entity rests with you. If you are receiving public assistance, foster care maintenance, or Medicaid, the CSEA will be required to pursue support enforcement on your behalf.
We want to help you make an informed choice, with full knowledge of the fees and other terms and conditions levied by the private entity. This publication answers commonly asked questions about PCAs and provides you with a list of helpful hints to assist you in deciding whether a PCA is right for you.
What is a Private Collection Agency?
A private collection agency (PCA) is a privately-owned, for-profit business that, for a fee, helps parents collect child support.
Can I hire a PCA even if I already receive services from the State Child Support Enforcement Agency?
Yes. You are entitled to receive services from your State CSEA even if you also retain a PCA.
How much does a PCA cost and how do I pay?
Fee arrangements vary from company to company. Most PCAs are paid on a "contingency fee" basis. This means that you are not required to pay the PCA for its services in advance, but the PCA will take a percentage of the child support it receives on your behalf after a contract is signed.
These contingency fee rates generally range from 25 to 33 percent. Depending on the contract, a PCA may collect fees on any amounts received by the PCA, even if the money was collected as a result of the work of the State CSEA or if the PCA received the money as current, rather than past, support. However, some agencies will not take a fee on current child support if the NCP has made payments on a regular basis for a certain period of time prior to your case being placed with the PCA.
PCAs may also charge application or processing fees or charge additional fees, for example, if they need to use a lawyer for your case. You should read the contract carefully to make sure that you understand how the PCA will be paid.
How long is the PCA contract in force?
The duration of the contract should be defined clearly in the contract. Many PCA contracts last until a stated, total dollar amount of child support is collected. Based on the information you give to the PCA, it can provide you with an initial estimate of the total amount of support to be collected. Most PCAs will continue to receive this fee until all arrearages, plus interest as allowed by state law, have been paid in full.
Can I get out of my contract if I am unhappy with the service that I receive?
Your right to cancel the agreement depends upon the terms of the contract and any state laws governing such contracts. Most PCAs will permit unconditional cancellation (or "rescission") of a contract for a limited period of time after you have initially signed the contract. Likewise, a PCA may allow you to cancel the contract after the rescission period, but only if they are unsuccessful in collecting child support for a certain length of time. Be sure that you understand how you can cancel the contract and any penalties or other liabilities that you may face if you cancel the contract.
Do I have to close my case with the State Child Support Enforcement Agency to hire a PCA?
This decision is up to you. A PCA may require that you close your case with the State CSEA as a condition of your contract. However, as noted above, State CSEAs do not require that you close your case if you hire a PCA.
Can I hire a PCA if I am or have been a recipient of Temporary Assistance for Needy Families (TANF)?
Yes. You may retain a PCA if you are a current or former recipient of TANF or Aid to Families with Dependent Children (AFDC). This is also true if you receive foster care maintenance or Medicaid. However, under Federal law, the State is entitled to receive child support payments as reimbursement for any public assistance received for your child. Therefore, while you are receiving assistance, you may only be entitled to receive child support collected by the State in excess of amounts received as current support in a given month. Check with your CSEA for additional details.
Are PCAs regulated by the government?
PCAs' practices generally are not regulated by state or federal authorities. Some states regulate the practices of PCAs, including requiring a collection license or capping the contingency fee rates that they can charge. Ask your State CSEA or Better Business Bureau for more information.
HELPFUL HINTS FOR CUSTODIAL PARENTS
CONSIDERING HIRING A PRIVATE COLLECTION AGENCY