Bankruptcy and Child Support Enforcement:
Improved Information Sharing Possible without Routine Data Matching
GAO-08-100: Published: Jan 23, 2008. Publicly Released: Jan 23, 2008.
Recognizing the importance of child support, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 requires that if a parent with child support obligations files for bankruptcy, a bankruptcy trustee must notify the relevant custodial parent and state child support enforcement agency so that they may participate in the case. The act also required GAO to study the feasibility of matching bankruptcy records with child support records to assure that filers with child support obligations are identified. GAO therefore (1) identified the percent of bankruptcy filers with obligations nationwide, (2) examined the potential for routine data matching to facilitate the identification of filers with child support obligations, and (3) studied the feasibility and cost of doing so. GAO interviewed child support enforcement and bankruptcy officials at the federal level and in six states. GAO also conducted a nationwide test data match and reviewed national bankruptcy filings for people with support obligations in Texas for an indication of whether filers are failing to provide this information.
Nationwide, about 7 percent of individuals who filed for bankruptcy between October 17, 2005, and October 17, 2006--the first year of the bankruptcy act implementation--were noncustodial parents with child support orders. They, in turn, represented about one-half of 1 percent of the 9.9 million noncustodial parents with orders to pay child support. While these proportions are small, they represented 45,346 adults and at least as many children. Routine data matching might identify individuals who have not reported their child support obligations. However, GAO estimated from a random sample file review that 98 percent of noncustodial parents nationwide with orders in Texas had volunteered this information when they filed. (The results could be higher or lower in other states.) Another potential benefit would be to reduce the workload for state child support agencies by providing positive identification of bankruptcy filers with orders under the states' purview by comparing the full social security numbers (SSNs) of individuals in both bankruptcy and child support databases. This would help address the current situation state agency officials described, in which significant numbers of the notices they receive from bankruptcy trustees included only partial SSNs of the named person, imposing additional work on staff to make a positive identification in their databases. For bankruptcy case trustees participating in the U.S. Trustee Program, we found this to be the case, even though program guidance--covering 84 of the 90 bankruptcy districts--calls for case trustees to provide full SSNs in notices sent to state agencies. These notices are not part of any public record and trustee program officials said this use of the full SSNs is consistent with executive branch policies designed to guard privacy. For the remaining six districts, administered under a separate program, no guidance has been developed. A data matching system is technically feasible, but it would be a complex and costly undertaking, and would involve addressing some statutory and policy considerations. Regarding notifying state agencies of the match results, federal child support enforcement officials said that their national automated system could disseminate this data after modifications to federal and state systems. However, a data matching system would not offer a comprehensive alternative to the trustee notification system, because it would not transmit information to custodial parents. Regarding cost, bankruptcy and child support enforcement officials said that the development and implementation of an automated interface between two separate databases is a complex and costly undertaking, requiring modifications to each, with many steps required to assure that the matching system is developed and deployed without critical flaws and allowing for the secure exchange of data. Also, bankruptcy officials cited some statutory and policy considerations to releasing their own data or to performing a data match. It would also duplicate a portion of the current trustee notification process. In view of these findings, instituting a data matching system may not be warranted, especially if the case trustees can provide full SSNs of bankruptcy filers when notifying state agencies.
Recommendations for Executive Action
Status: Closed - Implemented
Comments: The Executive Office for U.S. Trustees (EOUST) agreed with the recommendation and reissued its guidance and revised its policy handbook to case trustees about the importance of providing full SSNs to state agencies as well as raising awareness of this issue through training. Further, EOUST modified its existing statements of work for trustee audits to ensure that auditors review domestic support obligation notices to ensure that case trustees are providing full SSNs of debtors to state agencies in compliance with the trustee handbook.
Recommendation: To help improve the bankruptcy trustee notification process for state child support enforcement agencies called for under the Bankruptcy Reform Act, the Attorney General should direct the Director of the Executive Office for U.S. Trustees to more actively encourage case trustees to provide state agencies the full SSNs of bankruptcy filers. This could be accomplished, for example, by working with case trustees to identify and address any issues related to implementation of the current guidance, such as lack of clarity in the guidance or concerns about preserving the security of SSNs.
Agency Affected: Department of Justice
Status: Closed - Implemented
Comments: The Judicial Conference agreed with our recommendation and sent the GAO report to the bankruptcy courts and bankruptcy administrators in Alabama and North Carolina. Further, the Judicial Conference sent a letter to the relevant state-child support agencies inviting them to provide suggestions to make the interaction between the bankruptcy process and the child support enforcement system more effective. These actions will help ensure the identification of bankruptcy filers with child support obligations and improve the current system for notifying state agencies.
Recommendation: To help improve the bankruptcy trustee notification process for state child support enforcement agencies called for under the Bankruptcy Reform Act, the Judicial Conference of the United States should work with bankruptcy administrators in the six bankruptcy court districts in Alabama and North Carolina not subject to Executive Office of U.S. Trustees guidance to examine whether case trustees should provide state agencies with the full SSN of bankruptcy filers. This might be done in the following ways: (1) inform bankruptcy administrators and the bankruptcy court judges in those six districts about the importance of including the full SSN, how this information would be used by state agencies if provided, and to do so in a way that preserves the security of the information; and (2) work with the bankruptcy administrators and bankruptcy court judges in those six districts to identify and if possible, address any issues or concerns, including the security of the information, related to the use of full SSNs in the notices.
Agency Affected: Judicial Conference of the United States