PARENT'S RIGHTS NOW!

IS SOUTH CAROLINA PROPERLY CALCULATING CHILD SUPPORT ARREARAGES?

In "Contingency Fees and Interest in Collecting Back Child Support and Alimony," South Carolina attorney Gregory Forman writes:

The case of Thornton v. Thornton, 328 S.C. 96, 492 S.E.2d 86, 96 (1997), held that each past due support payment is a judgment and interest on arrears begins to accrue from time that each payment becomes due. Judgment interest is fourteen percent per annum prior to December 31, 2000 and twelve percent per year as of January 1, 2001. S.C. Code Ann. § 34-31-20.

There is an unresolved issue as to whether support payments due on or after January 1, 2001 for orders issued prior to December 31, 2000 accrue interest at 14% or 12%. Because Thornton notes that each support payment becomes a judgment when due, my view is that support obligations after January 1, 2001 accrue interest at 12%, even if the order predates January 1, 2001.

There is another unresolved issue as to whether judgment interest is compound or simple. The general thinking in Family Court was that judgement interest did not compound. See e.g., Gardner v. Gardner, 253 S.C. 296, 170 S.E.2d 372, 374 (1969). However in Gardner the party awarded interest did not appeal the award of simple interest and no reported South Carolina case resolves the issue of whether interest under the statute is simple or compound. A couple of 19th century cases held that interest “per annum” or “annually” compounds. Carolina Sav. Bank v Parrott, 30 S.C. 61, 8 S.E. 199, 201 (1888); Bowen v Barksdale, 33 S.C. 142, 11 S.E. 640, 641 (1890). No cases since 1890 have ruled on the issue of whether interest compounds or is simple.

“So what does all this have to do with calculating child support arrearages?” one may ask. And the answer is simple. Leaving aside the "unresolved questions" of whether past due child support accumulates interest at the rate of 12% or 14% and whether the interest is simple or compound, according to the cases cited by Mr. Forman, some interest accumulates on the past due payments. Therefore, unless the Family Court's computer system is set up to include the interest in the arrearage calculations, those calculations are incorrect. More important, this means that the aggregate arrearage is increasing by at least 12% per annum and thus, is substantially higher than the $1.2 Billion reported. Most important, at least some portion of the 5% fee that the Court deducts from the support payments for "Court Costs" rightfully belongs to the custodial parent and the children.