Interest

Child Support Arrears in Texas: Laws Allow Interest Back to Due Date of Payments

Child support arrears in Texas are significantly increased when adding interest allowed under Texas child support laws. For example, $20,000.00 in child support arrears in Texas as of 1983 would be $252,000 as of 2008. $30,000.00 in child support owed in Texas as of 1983 would be $378,000 as of 2005.

Whether your child support is owed in Houston, Dallas, San Antonio, Ft. Worth, Austin, El Paso, Galveston, Midland, Odessa, Corpus Christi, or Waco, Texas child support interest on past due payments has been established as a matter of Texas child support law back to the date of delinquency.

Texas Child Support Laws Regarding Interest on Child Support Arrears

Medrano v. Medrano, 810 S.W.2d 426, 427 (Tex. App.–San Antonio, 1991, no writ) (interest on past due support back to 1983); Castle v. Harris, 960 S.W.2d 140, 142 (Tex. App.–Corpus Christi 1997, no writ). Even if the children are now over 18 years of age and are adults, the Texas child support interest can be collected on child support arrears.

In the Interest of W.G.S., 107 S.W.3d 624 (Tex. App.– Corpus Christi, 2002, no pet.) specifically held interest is payable on child support arrears that became due prior to the enactment of the Family Code interest provisions (Interest on past due support back to1984). Family Code §157.261(a) and its predecessor, §14.41(a) state that “a child support payment not timely made constitutes a final judgment for the amount due and owing, including interest. . ..” TEX. FAM. CODE §157.261.

Family Code §157.267 and its predecessor §14.34(c) state that “Accrued interest is part of the child support obligation and child support enforcement and may be enforced by any means provided for the collection of child support” TEX. FAM. CODE §157.267.

Medrano specifically held the trial court does not have discretion to reduce interest and the obligee is entitled to interest “as a matter of right”. Medrano, 810 S.W.2d at 427; See also Castle, 960 S.W.2d at 142. In the Interest of M.C.R., H.M.R. and K.M.R. 55 S.W.3d 104 at 107, (Tex. App.-San Antonio 2001, no pet.), specifically held “accrued interest is clearly part of the child support enforcement obligation”. Prejudgment interest is generally recoverable as a matter of right where a sum certain of money can be shown to be due on (a) specific date(s) and payable prior to judgment. Castle, 960 S.W.2d at 143.

These cases concur with the general rule that prejudgment interest should be granted to prevailing plaintiffs. Id. Interest accrues on a child support enforcement at the rate that is in effect at the time the child support obligation becomes due. Coastal Industrial Water Authority vs. Trinity Portland Cement Division, 563 S.W.2d 916, 918 (Tex. 1978); Thomas Conveyor Company vs. Portec Inc. 572 S.W. 2d 361, 363- 64 (Tex. App. – Waco 1978, no writ); In the Interest of A.R.J. 97 S.W.3d 833 (Tex. App.–Dallas 2003, no pet.); In the Interest of A.B.L.,10-02-267-CV, 2003 WL 21470071 (Tex.-App.-Waco June 25, 2003, no pet.)(mem. op.); In the Interest of Silas J. Hurd & Monique C. Hurd, Minor Children, 07-02-0334-CV, 2003 WL 1961142 (Tex. App.–Amarillo 2003, no pet.)(mem. op.). Interest applies to child support collection enforcement even if the child is now over 18 years of age and an adult.

2005 Amendment to §157.265 Clarifies Applicable Interest Rate on Child Support Arrears

The legislature unequivocally intended that the 2003 amendment to §157.265 was prospective and not retroactive. HB 678 was unanimously passed by the House and the Senate without one dissenting vote in the current legislative session. 1The bill specifically provides:

(e) child support arrears in existence on January 1, 2002, that were not confirmed and reduced to a money judgment on or before that date, accrue interest as follows:

(1) before January 1, 2002, the arrearages are subject to the interest rate that applied to the arrearages before that date; and

(2) on and after January 1, 2002, the cumulative total of arrearages and interest accumulated on those arrearages described by Subdivision (1) is subject to Subsection (a), [ i.e., 6%].

H. J. of TEX., 79th Leg., Reg. Sess. 3637 (2005) [Exhibit A].

The bill was signed by Governor Perry on May 27, 2005 and took effect immediately. 2

The House bill analysis states: In 2001, Section 157.265, of the Family Code was amended to reduce the interest rate on unpaid child support accruing after January 1, 2002 from 12% to 6%. HB 678 attempts to clarify the application of the effective date of this amendment by providing that any unpaid child support that accrued before January 1, 2002 accrued at the interest rate in effect at the time the child support became delinquent.

The Fifth, Seventh, and Tenth District Court of Appeals held that the change in interest rate applied prospectively only. See In re A.B.L., 2003 WL 21470071, 5-6 (Tex. App.-Waco 2003, no pet.) (mem.op.); In re Hurd, 2003 WL 1961142, 6 and 2 (Tex.App.-Amarillo 2003, no pet.) (mem.op.); In re A.R.J., 97 S.W.3d 833, 835 (Tex.App.-Dallas 2003, no pet.).

The Second District Court of Appeals held the opposite and requires that all of the earlier child support obligations be recalculated. In re M.C.C., 142 S.W.3d 504, 521 (Tex.App.-Fort Worth, pet. filed). As a result, child support is being paid at different rates in different parts of the State even thought the enactment language of the 2001 amendment stated that the interest rate change was prospective only.

HOUSE COMM. ON JUVENILE JUSTICE & FAMILY ISSUES, Tex. H.B. 678 (2005). [Exhibit B].

The bill analysis went on to state if the 6% interest were applied retroactively, there would be “serious constitutional infirmities.” Id.

HB 678 ensures that the calculation of the change in interest charged on delinquent child support enforcement is made in a simple, straightforward manner. Moreover, the bill provides that any unpaid child support that accrued before January 1, 2002 accrued at the interest rate in effect at the time the child support became delinquent.

There can be no doubt in light of HB 678 that the Legislature intended that the 2001 amendment to Section 157.265 was to be prospective only, as the Courts in A.B.L., Hurd and A.R.J. have so ruled. It is clear that the Legislature also intended that the interest rate in effect at the time the child support enforcement obligation became due is the interest rate that applies in calculating the arrearages. It is also clear that the balance of child support arrears, including interest, as of January 1, 2002, then accrue interest at the 6% rate set forth in the 2001 amendment to Section 157.265. This conclusion was compelling even before HB 678. It is now unequivocal.

The Supreme Court of Texas held that the change in the interest rates on child support enforcement was prospective and not retroactive. In Re M.C.C. 187 S.W.3d 3383 (TEX. 2006). The 6% interest rate only applies to child support payments due after January 1, 2002.

Conclusion

A parent is entitled to a determination of child support enforcement arrearages pursuant to §157.323 and §158.309 for child support arrearages. It is clear that the interest on child support arrears in Texas should be calculated and have been calculated pursuant to the provisions of §157.265 (HB 678), whether the child support enforcement was in Houston, Dallas, San Antonio, Ft. Worth, El Paso, Galveston, Midland, or Odessa, Texas.

1 House Record Vote #311, 4/19/2005, found at  http://www.capitol.state.tx.us/cgi-bin/db2www/tlo/billhist/actions.d2w /report?LEG=79&SESS=R&CHAMBER=H&BILLTYPE=B&BILLSUFFIX=00678;  S.J. OF TEX., 79th Leg., Reg. Sess. ___(5/12/2005), found at http://www.capitol.state.tx.us/sjrnl/79r/pdf/sj05-12-f1.pdf#page=3

2 Tex. H.B. 678, 79th Leg., Reg. Sess., found at http://www.capitol.state.tx.us/cgi-bin/db2www/tlo/billhist/actions.d2w /report?LEG=79&SESS=R&CHAMBER=H&BILLTYPE=B&BILLSUFFIX=00678

Published by Steven Sinkin on 2013-08-13