Federal law mandates that periodic reporting of the names of noncustodial parents (NCPs) and child support information be made to consumer reporting agencies. In North Carolina, the trade line reporting procedure is utilized, which includes reporting the obligation amount specified by a court order, as well as any accumulated arrearages. ACTS submits this information to consumer reporting agencies on a monthly basis.
The Fair Credit Reporting Act defines a consumer reporting agency as "any person which for monetary fees, dues or on a cooperative nonprofit basis, regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer reports to third parties and which uses any means or facility of interstate commerce for the purpose of preparing or furnishing consumer reports."
These are establishments that make a business of collecting credit information about individuals and businesses for the purpose of furnishing this information (credit reports) with its subscribers (merchants, banks, etc.) Their practices are regulated by Federal and state statutes.
This type of consumer credit reporting provides information on an individual's debts and the status of those debts. Sharing court order and payment information with credit reporting agencies provides them with information on what is owed and what has been paid.
Consumer credit (trade line) reporting has the following benefits:
Child support obligations are considered to be judgments, renewable each month, and therefore, are appropriate to be reported to consumer reporting agencies. Each monthly payment satisfies the current month's obligation, but each new month begins a new obligation until child support is no longer owed, such as when the child reaches the age of emancipation. The Fair Credit Reporting Act was amended by Congress in October, 1992, to mandate consumer reporting agencies to include in their reports information on the failure of the consumer to pay overdue support.
Federal regulations require Child Enforcement Services agencies to notify NCPs who owe support in advance concerning the proposed release of information to consumer reporting and to inform NCPs of the methods available for contesting the accuracy of that information. In interstate CSS cases in which an initiating state has requested a responding state to enforce a support order, the responding state reports child support obligations to consumer reporting agencies.
Parents must be notified of the reporting either as part of the court order or through a manual notice. Court orders should include the following language indicating that the case will be reported to consumer reporting agencies at the time of establishment:
"In accordance with 42 USC 651 et seq. and its implementing regulations, the child support enforcement agency can report this obligation to the appropriate credit reporting agency."
In addition, all complaints or other prayers for relief must include a request that the CSS agency be allowed to report obligations to credit reporting agencies in accordance with 42 USC 651 et seq and its implementing regulations.
If the provision for credit bureau reporting is not included in the initial support order, the NCP must be sent a manual notice by the local CSS agency advising them of trade line reporting. It is imperative that a copy of this notice be retained on file in the local CSS office, since the information provided in this notice would be necessary if the NCP decides to appeal trade line reporting.
After an NCP has been properly notified of trade line reporting through either a court order or separate notice, no further notification of this process is required.
If initial orders and prayers for relief do not contain the recommended language indicating that the CSS case will be reported to consumer reporting agencies, free-form text fields are provided in most orders that allow the language to be added. If the document does not have space for text or if caseworkers fail to include the language in the order, the NCP must be provided with a manual notice of the reporting.
If language indicating that the CSS case will be reported to consumer credit reporting agencies is included in the support order, it is not necessary to provide the noncustodial parent (NCP) with any additional notice. The language in the order serves as the NCP’s notice. These cases are automatically reported to credit bureaus, unless the case is coded otherwise by the agency.
When an NCP is notified of the reporting by a separate notice, that NCP has sixty (60) days from the date of the notice to contest the accuracy of the information and request a hearing. However, the only grounds for contesting the reporting are:
The agency should attempt to resolve the NCPs' concerns regarding information contained in the notice before encouraging them to request a hearing. If the NCP points out an error in the calculation of the obligation or the arrearages, and the agency agrees to correct the error, the agency must ensure that the ACTS system is updated immediately so that the reporting reflects the appropriate information. However, it is important to contact the NCP in writing to explain what changes were made to the reporting.
To contest the information, the NCP must submit an original and one copy of a completed Petition For A Contested Case Hearing (DSS-4659) form to the Office of Administrative Hearings within sixty (60) days from the date of this notice and provide a copy of the Petition to the Department of Health and Human Services (DHHS). These agencies then notify the Attorney General staff assigned to the Program of the appeal. The petition can be obtained from either the local child support agency or through OAH.
Each order is reported separately to credit bureaus; a notice should be submitted for each court order if there are multiple orders and/or multiple counties are involved. The NCPs needs a separate petition to appeal for each order.
Because the state, not the county, is the entity submitting the NCP to consumer reporting agencies, a member of the Attorney General's staff assigned to the program provides legal representation for these hearings. The responsible county is contacted by the state's attorney, advised that a hearing will be held, and instructed as to what documentation is needed from the agent responsible for the CSS case. The agent then compiles the requested information and forwards it to the attorney within ten (10) days of receipt of the request. Such information can include requests for certified copies of orders and modifications. The hearing is held where the hearing officer deems appropriate.
If the NCP does contest the reporting, the case is not reported until the matter has been resolved. If the findings indicate that the case should be reported, the system refers the case the next month. If OAH decides that the information is inaccurate, CSS either can appeal the decision or correct the CSS records, whichever is appropriate for the case findings. If the agency decides to correct its records, the case should not be coded to report until the correction is made.
If the NCP does not request a hearing within sixty (60) days, then the right to contest is deemed waived and the obligation is reported to consumer credit agencies the following month after the 60-day period has passed.
Consumer credit (trade line) reporting is not appropriate when any of following conditions exist:
NOTE: If a judge orders that CSS NOT report the NCP to credit bureau agencies OR that the NCP only be reported if arrearages accrue, please consult with the local CSS Attorney. The CSS agency should probably appeal the case in these situations. Any questions regarding this issue can be directed from the local CSS Attorney to the Attorney General's staff assigned to the CSS program.
Once trade line reporting begins, the NCP must contact the credit bureau if there are disputes regarding the accuracy or completeness of information contained in the file. If the NCP contacts the local CSS agency after the initial reporting begins, the individual can be directed to contact the credit bureaus directly. The credit bureau then contacts the Trade Line Reporting Coordinator in the Tax Intercept Unit at the CSS Central Office. This individual is responsible for resolving the discrepancy and contacts local agencies to request information. Such disputes could include whether the debt is owed by the NCP or the debt has been paid since first reported. If the agency can confirm the information, the credit bureau ends its investigation.
If the information is not verified by the CSS agency within thirty (30) days, the credit bureau can delete all or part of the file from the report. If the entire file is deleted, the Trade Line Coordinator notifies the local CSS agency that the file has been deleted. The NCP must be sent a new manual notice regarding trade line in order to begin reporting again.
If the dispute is not resolved in favor of the NCP, the NCP has the right to file a statement with the consumer reporting agency, explaining the nature of the dispute. This information is provided to any person requesting the NCP's file. Once given proper notice of trade line reporting, the NCP does not have the ability to prevent CSS from reporting the status of the child support account or the right to appeal placement of the information concerning past due support through the trade line reporting process.
CSS agencies are required to provide arrearage information to a consumer reporting agency upon request if the NCP's arrearages are greater than $500.00. If the NCP's total arrearages in all cases are more than $500.00, a notice is sent to the NCP, indicating the amount of the total arrearages and the impending release of the information to the requesting agency. If the NCP does not contest within fifteen (15) days, the information is then released to the credit bureau. If the arrearages are less than $500.00, CSS notifies the requesting agency that the case does not meet the criteria for the release of information.
ACTS reports payment and subaccount information to consumer reporting agencies (Experian and Innovis) on a monthly basis, regardless of whether the NCP has an arrearage balance or not. A consumer reporting agency gathers this payment history data in order to report the individual's status to credit bureaus. This status can be good or bad, just like an individual's mortgage or credit card payment history. It is not always a negative credit report.
ACTS reports the account status of the noncustodial parent’s (NCP's) subaccounts for his/her CSS cases that are in the Collection Processing Status. There are four (4) possible statuses:
NOTE: Remember that a CSS case moves to the Delinquency Processing status in ACTS when a current support subaccount or an arrearage subaccount with a frequency amount due is behind by an amount equal to one (1) month's support, based on the balances on the court order screens. Therefore, a CSS could be "delinquent" in ACTS, but still in "good standing" when reported to the credit bureaus, if less than sixty (60) days delinquent.
Arrearage subaccounts with no frequency amount due are included in the amounts submitted to the consumer reporting agencies. However, the account statuses for these arrearages are reported in "good standing."
When an initial court order is entered in ACTS (including future orders and those entered after a Docket # Only order, but NOT orders in kind), the system generates a Trade Line Reporting Notice (DSS-4478) for the NCP, unless the NCP’s subaccount status should not be submitted to credit bureaus, a notice was included in the court order, or Good Cause is pending.
In situations when the Trade Line Reporting Notice (DSS-4478) is not automatically generated, CSS caseworkers can manually generate this document. Caseworkers should always make an additional copy of the Notice. The original is sent to the NCP, and the copy is filed at the agency, so it can be produced at the hearing. The notice informs the NCP that he/she must respond within sixty (60) days. The NCP has sixty-five (65) days to file an appeal.
NOTE: If the NCP is notified through a court order (including a VSA), the following recommended language should be included to indicate that the status of the account(s) will be reported to credit agencies:
"In accordance with 42 USC 651 et seq. and its implementing regulations, the child support enforcement agency can report this obligation to the appropriate reporting agency."
Once the NCP is notified through this court order, he/she waives the right to appeal the reporting process.
The Notice includes the responsible caseworker's name and office telephone number. If the NCP contacts the caseworker with questions or concerns regarding the Trade Line Reporting and/or the amount of the arrearage, caseworkers should discuss the arrearage with the NCP (to the extent possible.) If the NCP still does not agree with the amount of arrearages after a reasonable discussion, caseworkers should offer the NCP the option to appeal and provide a copy of the appeal form.
When NCPs want to appeal Trade Line Reporting, they must submit an original and one copy of the Petition For A Contested Case Hearing (DSS-4659) to the Office for Administrative Hearings (OAH). A copy must also be served on the process agent for the Department of Health and Human Services (DHHS). Mailing instructions are included on the appeal form.
The mailing addresses for these recipients are listed below:
Office of Administrative Hearings
6714 Mail Service Center
Raleigh, NC 27699-6714
Emery Edwards Milliken
NC Department of Health and Human Services
2001 Mail Service Center
Raleigh, NC 27699-2001
If the NCP appeals trade line reporting in more than one CSS case (or county), the Office of Administrative Hearings can consolidate the appeals into one hearing, even though the NCP has a separate petition for each CSS case.
When an NCP appeals trade line reporting, the Credit Reporting Coordinators (CRCs) at the CSS Central Office are responsible for documenting the appeal in ACTS, which prevents the CSS case from being placed on the monthly submittal tape. The CRC must also schedule the appeal hearing in ACTS. After the appeal hearing has occurred, the CRC is responsible for documenting the outcome of the appeal.
If the order has not been flagged within sixty (60) days after the generation of the Notice with a disposition code indicating not to submit, ACTS submits the court-ordered obligation to the credit bureaus during the next monthly submittal.
If the Notice is returned due to an invalid address, responsible caseworkers should then take the appropriate locate action.
If the NCP disagrees with the arrearage amount(s) after waiving his/her rights to appeal or after an appeal has been denied, the NCP must contact the credit reporting agency. The credit reporting agency then sends a request for verification of the arrearage amount(s) to the CSS Central Office. If the CSS Central Office does not meet the required 30-day time frame for verification, the credit reporting agency must pull the NCP's records from their files.
ACTS submits payments that are made by the NCP and the current support and arrearage subaccount balances that are associated with all court orders that are flagged for submittal to two (2) major credit reporting agencies (Experian and Innovis) on a monthly basis, unless Good Cause is pending for the CSS case.
When a credit bureau requests payment and/or subaccount information for a CSS case for which a Trade Line Reporting Notice (DSS-4478) has not previously been sent, responsible caseworkers must manually generate the Notice and allow the NCP sixty (60) days to appeal. If the NCP does not make an appeal in sixty (60) days, caseworkers can generate a Letter To Consumer Reporting Agency (DSS-4652).
NOTE: The local CSS agency should be careful to release only the required information for the NCP. Under no circumstances should information for the custodial parent be released to a consumer reporting agency. Legal requirements do not preclude a CSS agency from obtaining information from consumer reporting agencies that can prove valuable in location efforts.
At the end of the month in which an NCP's last case is closed, ACTS submits that NCP's account to the credit reporting agencies with a zero ($0.00) arrearage balance.
For questions or clarification on any of the policy contained in these manuals, please contact your local county office.