Dealing With Maintenance Arrears
Both parents share legally responsible for the financial costs of their children. If you split up, usually the parent without day-to-day care of the children is responsible for paying some level of maintenance. Any child maintenance arrears are a priority debt to be paid in full if your are in an IVA or go bankrupt.
When the parents have maintained an amicable relationship the amounts payable can be agreed through a family-based arrangement which is formalised by a court order.
If relationships become strained and the non-resident parent fails to make maintenance payments or there are other difficulties, monies can be calculated, collected and distributed by the Child Maintenance Service.
A Deduction of Earning Order is used widely if the non-payer is employed; the employer will be instructed to deduct money from wages.
Failure to pay
Falling into arrears or failing to pay has serious consequences. Almost every type of court order in the land can be used to extract payment. Enforcement charges are added onto the arrears.
I can’t afford payments
If you think you will have problems keeping up with payments notify the other party and/or the CMS as soon as possible.
If you get into arrears, the CMS may negotiate a repayment schedule with you. They aim to collect all the arrears within two years and can ask you to pay up to 40 per cent of your income, depending on your circumstances and other financial commitments.
If you are owed arrears see enforcing payment of CMS child maintenance by Gingerbread. Gingerbread is leading national charity working with single-parent families.
Child Maintenance Arrears and Personal Insolvency
When creditors lend they do so knowing that some of their customers and will not be able to pay the money back in full. Or in some cases, not at all.
This is the risk they take. So, should the borrower not able to keep to the terms of agreements and have other unsecured debts repay, solutions such as IVAs and bankruptcy and debt management plans exist to make sure a fair compromise is reached.
Child Maintenance is not like this. It’s a financial obligation and nothing to do with credit.
Maintenance Arrears in an IVA
In an IVA, ongoing child maintenance payments and any arrears are expenditure items to ensure affordability and payment in full.
In the context of an IVA, debts are referred to as either an expenditure item or included as a creditor.
An expenditure item
When entering into an IVA, a calculation is made to determine your available disposable income. This establishes how to much you to have to pay towards your non-priority debts once you've paid for your living expenses, important obligations and priority debts. Your available disposable income is how much you pay into the IVA.
So, priority debts and other important obligations are said to be excluded from an IVA but are an expenditure item used to determine the IVA payments.
Included as a creditor
A creditor in an IVA represents a negotiable debt. It is these debts which are said to be included as a creditor in the IVA and cleared once the IVA completes.
Maintenance Arrears in Bankruptcy
If you are made bankrupt you remain legally liable to pay back maintenance arrears unless the other party agrees to write them off. The CMS can also write off the debt, but only in minimal circumstances.