Modifications to Child Support Laws in 2017

The Tennessee General Assembly has been very busy this past session in addressing the issue of child support arrearage through two major modifications of the existing law on child support, one affecting the interest rate on arrearages and the other affecting the time period of accumulation of retroactive support for a child or children. Both are important when advising family law clients going forward regardless of which side of the issue they find themselves.

The first went into effect in April 2017 when an amendment was enacted by the General Assembly reducing the amount of interest, by a significant amount, that a parent must pay on an arrearage that has accrued because of unpaid child support. The previous wording of the statute had permitted up to 12 percent interest per year on all child support arrearage, and the interest, having been accrued, then was deemed to be support.

The change to the law amended Tenn. Code Ann.in several significant ways. First, it required that any existing arrearage that was already accruing interest be renewed via written order of the court. The code amendment stated that “interest shall no longer accrue on or after the effective date of this act unless the court makes a written finding that interest shall continue to accrue.”[1] Secondly, it states that a court that is reviewing the request for interest on the arrearage may elect to apply interest and set the rate of interest “after consideration of any factors the court deems relevant” without guidance as to what those factors might be and how they are useful in assisting the court to make that determination. The last and perhaps most significant change in the amendment capped the total interest rate at 4 percent per annum as to any newly accrued interest on an arrearage.[2] Obviously, this is useful information for a practitioner to know in its own right, but it is also interesting to note that both the former rate and the amended rate are different than the rates of interest that are permitted for alimony arrearage. Further, the change creates a question about how to calculate interest for child support arrearage going forward. Should the old rates apply to arrearage accrued prior to April 17, 2017, or can the entire amendment be applied retroactively to outstanding support? These issues will be explored in this article; however, it is still very close in time to the change and few if any cases have proceeded through the process, so we will see what the most likely scenario would be if you have a client on either side of this issue.

First, a brief digression into the statutory interest rates on judgments is illustrative. Tenn. Code Ann. § 47-14-121 was amended in 2012 to provide that for all judgments in Tennessee, other than ones with a statutorily prescribed interest rate amount, the interest rate shall be controlled by “formula rate per annum published by the commissioner of financial institutions.”[3] The General Assembly required that this calculation be performed, and the rate that is calculated is posted on the Administrative Office of the Courts website for usage by parties in Tennessee when calculating interest on judgments two times per year.[4] A brief survey of that rate over the course of the past five years shows that the rate is usually between 5 percent and 6 percent for other judgments in Tennessee.[5]

As noted above, this is the calculation for interest with other categories of judgments, but if there is a rate fixed specifically by statute for a particular category of judgment, then that rate applies, as it does with child support arrearage interest. The interesting point to note is that, prior to the April 17 amendment, interest on child support arrearage was more than twice as much as the standard rate of interest for other types of debts. Now, with the amendment, it is even more interesting to note that the interest rate on child support arrearage is capped at 4 percent per annum, a rate that is lower than the standard rate of interest on other types of judgments in Tennessee.

Again, it is too early to be certain, but it would stand to reason that the calculation of support would be done based on the status of the law at the time of the calculation and not adjusted retroactively to a previously accrued arrearage. If a parent owed child support from 2016 and then post-April 2017, the two different amounts would most likely be assessed interest at the two different prescribed rates for the time in which it was accrued. However, the language added requiring that the rate of interest, and even the necessity of setting interest at all, be determined by the court leaves the door open for various arguments to the court.

A first could be that the amendment contemplated retroactive interest for the entire amount and that is the reason for the change in the rate and the necessity of getting written renewal of the necessity for interest.

A second, more creative argument, and one more in keeping with the law, could be that if the General Assembly deemed the prior 12 percent per annum interest to be three times the present maximum amount, it was clearly indicated that 12 percent was far too high and, consequently, an offset for previously accrued interest under the 12 percent rate is proper and there should be no interest set going forward for a post-April 2017 judgment. Additional, valid arguments could no doubt be made regarding this new facet of the law.

A second important change to the code regarding child support amended Tenn. Code Ann. § 36-5-101(e)(1) adding subsections Tenn. Code Ann. § 36-5-101(e)(1)(I)(i)-(v). The effect of this addition to the code is to create a time limit on the accrual of child support arrearage in the form of retroactive support. The amendment went into effect on July 1, and it stated that from that date going forward, any action for the collection of retroactive child support, meaning support that is set at the initiation of a support order for support that should have been paid by a non-custodial parent up to the date of the order, “shall be not be awarded for a period of more than 5 years from the date the action for support is filed.”[6] The court is granted some leeway in this determination, however, as the court may grant retroactive support past the five-year limitation upon “good cause shown” if it is “in the interest of justice” to the parent receiving the support.[7] Further subsections go on to give a non-exclusive list of situations that may give rise to “good cause” such as intentional evasion of process by the non-custodial parent or intimidation or the potential threat of violence because of the filing of an action by the non-custodial parent.[8] Conceivably, there could be a range of additional issues that a magistrate would consider to be “good cause” that would permit a longer term of retroactive support, but the amendment’s intent is clearly to limit the time frame for retroactive support in the majority of cases.

Though this amendment only deals with situations where retroactive support is an issue, it is still a significant change in the prior law which carried no time limitation at all. On first glance, it appears to be a boon for non-custodial, and delinquent, parents. However, the change was, presumably, brought on by the issues of notice and estoppel. If parents have separated but neglected to request an order for support for the court, a greater onus is now put on the custodial parent to seek support to which they surely know they are entitled rather than permitting the meter to run until they see fit to seek it. To temper that, in situations of true, willful interference with the system of seeking support, upon adequate proof of such, the magistrate can set retroactive support as far back as justice demands.

Whatever the impetus, it is another important point for a practitioner to be aware of if a client who has long been separated from the other parent decides to seek support for some reason after a period of years.

Notes

  1. Tenn. Code Ann. § 36-5-101(f)(1).
  2. Id.
  3. Tenn. Code Ann. § 47-14-121(1)&(2).
  4. Tenn. Code Ann. § 47-14-105(1)&(2).
  5. www.tsc.state.tn.us/node/1232344.
  6. Tenn. Code Ann. § 36-5-101(e)(1)(I)(i).
  7. Id.
  8. Tenn. Code Ann. § 36-5-101(e)(1) (I)(ii)-(iv).

Marlene Moses MARLENE ESKIND MOSES is the principal and manager of MTR Family Law PLLC, a family and divorce law firm in Nashville. She is a past president of the American Academy of Matrimonial Lawyers. She has held prior presidencies with the Tennessee Board of Law Examiners, the Lawyers’ Association for Women and the Tennessee Supreme Court Historical Society. She is currently serving as a vice president of the International Academy of Matrimonial Lawyers. The National Board of Trial Advocacy has designated Moses as a Family Law Trial Specialist.

MANUEL BENJAMIN RUSS earned a bachelor of arts from Johns Hopkins University, a master of arts from University College London, and a law degree from the Emory University School of Law. He is in private practice in Nashville focusing primarily on criminal defense.

          | TBA Law Blog