Non-payment of Child Maintenance to damage credit rating
From March 2015, the Child Maintenance Service, formally known as Child Support Agency, will be able to share information about the payment history of their clients with credit reference agencies if parliamentary approval is obtained.
From March 2015, the Child Maintenance Service, formally known as Child Support Agency, will be able to share information about the payment history of their clients with credit reference agencies if parliamentary approval is obtained. This means that separated parents who refuse to pay child maintenance and who have accumulated arrears could find that their applications for mortgages, credit cards and loans as well as other forms of financial credit are rejected.
Information may be shared once a Liability Order is made against the defaulting parent. Liability Orders are granted after an application is made to a court for legal recognition of a debt. Between April 2013 and March 2014 12,410 liability orders were granted. It is hoped that the new powers will act as a deterrent to those who otherwise choose to evade maintenance payments and will serve to ensure maintenance reaches children and families who need it.
While the majority of non-resident parents do contribute towards the maintenance they owe – with compliance reaching a high of 86.2% in June this year – this new measure is aimed at targeting the minority who fail to pay.
Steve Webb, the child maintenance minister, said
“For too long, a minority of absent parents have got away with failing to pay maintenance, leaving families without that financial support. The Government is determined to take action to tackle this kind of irresponsible behaviour. I would hope that we see this power used very little, because the deterrent effect of a possible negative mark on a person’s credit rating will convince those who have previously failed to pay towards their children’s upbringing to do the right thing.”
The powers will also mean that parents with a good payment record can also ask that this information is shared if they feel that it could boost their ability to get credit.