The software includes a module for very precise child support arrears calculations for virtually any situation.
You can find it on the Analysis tab.
The calculation is general in that it can handle any type of arrears: child support arrears, spousal support arrears, or any other situation in which interest is charged for late payments.
You can handle:
- One obligation or many.
- Regular payments, sporadic payments, and one-time payments.
- Missed payments among regular payments.
- One interest rate or changing interest rates over time.
- A range of charging regimes (simple at end of cycle, simple using average balance, compound at end of cycle, etc.).
- A range of rules of application (interest first, principal first, current payment first, etc.)
- Official rates for your state, or your own rates.
The links at the bottom of the screen will enable you to generate a detailed report of the arrears amount and calculation.
Obligations
Typically, there is only one child support obligation in a case.
If the payment amount is changed due to a modification, you would click the link labeled “click here to add a modification.” This would not be a second obligation.
A second obligation might occur if there were a gap in time between the end of one obligation and the start of a second obligation.
Interest Rates
The software will default to using the official arrears interest rate(s) for your state, if we have it. (We have rates for about three quarters of the states.)
If they have changed over time, the calculations will change with them; we will apply the correct rate for the correct time period.
Or, you can enter rate(s) you wish to apply.
To enter a second interest rate, click the link labeled “Click here to enter another interest rate.”
Click the link labeled “Click here for more information on interest rates” for more information.
Regular Payments
On this screen, enter payments that the payer has made regularly, without missing any.
For example, if the payer paid from January through May, and then again from December through the following September, you would enter those as two separate regular payments.
Also, you can specify, for each set of payments, how that payment is to be applied:
- Interest only.
- First to interest, and then, once all interest has been paid, to principal.
- First principal, and then, if all principal is paid, to interest.
- First to the most recent payment, then to interest, then to principal.
There is no one right way to do this.
You want to use the approach that is used in your jurisdiction.
Missed Payments
You can also enter missed payments.
For example, if the payer has paid all payments from January through December, but missed March and September, you can enter a regular payment for January through December, and then enter two missed payments.
One-Time Payments
You can also enter special payments, such as holiday payments.
Occasionally, we see that people have entered every single payment that the payer made as a one-time payment.
You can do this, but it may be more efficient to enter the payments as regular payments, and then specify the missed payments.
Reports
At the bottom of the screen, you will see 2 types of reports.
The first report shows calculation of arrears showing the principle and interest accruing on each payment date.
The second report drills down on the calculation of interest payments, to show how each interest amount was calculated.
Please note that the arrears result does not update with each entry you make. You have to click a button at the bottom of the screen in order to update the calculation.
This is because the calculation is sufficiently intensive that it would slow the software down to recalculate after every entry.