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Report to Congressional Committees: 

United States Government Accountability Office: 
GAO: 

January 2008: 

Bankruptcy And Child Support Enforcement: 

Improved Information Sharing Possible without Routine Data Matching: 

GAO-08-100: 

GAO Highlights: 

Highlights of GAO-08-100, a report to congressional committees. 

Why GAO Did This Study: 

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. 

What GAO Found: 

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. 

What GAO Recommends: 

To improve the current trustee notification system, the executive and 
judicial branch entities responsible for bankruptcy case trustees 
should take steps to address the needs of state agencies for full SSNs 
to better identify bankruptcy filers; these entities agreed. 

To view the full product, including the scope and methodology, click on 
[hyperlink, http://www.GAO-08-100]. For more information, contact Kay 
E. Brown at (202) 512-7215 or BrownKE@gao.gov. 

[End of section] 

Contents: 

Letter: 

Results in Brief: 

Background: 

About 7 Percent of Those Who Filed for Bankruptcy Have Orders to Pay 
Child Support and Most Are Part of the CSE Program: 

A Routine, National Data Match Might Identify Filers Who Do Not Report 
Their Support Obligations and Reduce the Workload Associated with the 
Current Process: 

Although a Data Match Is Technically Feasible, There Would Be 
Substantial Start-Up Costs as well as Some Policy Considerations: 

Conclusion: 

Recommendations for Executive and Judicial Branch Action: 

Agency Comments and Our Evaluation: 

Appendix I: Objectives, Scope, and Methodology: 

Appendix II: Comments from the Department of Justice: 

Appendix III: GAO Contact and Staff Acknowledgments: 

Table: 

Table 1: Comparison of Bankruptcy Filers Who Are Noncustodial Parents 
with Orders with All Bankruptcy Filers: 

Figures: 

Figure 1: Overview of Bankruptcy System: 

Figure 2: Current Court and Bankruptcy Case Trustee Notification 
Processes: 

Figure 3: Federal Parent Locator Service: 

Abbreviations: 

CSE: Child Support Enforcement: 

DSO: Domestic Support Obligation: 

EOUST: Executive Office for U.S. Trustees: 

HHS: Department of Health and Human Services: 

OCSE: Office of Child Support Enforcement: 

SSN: Social Security Number: 

TANF: Temporary Assistance for Needy Families: 

[End of section] 

United States Government Accountability Office: 
Washington, DC 20548: 

January 23, 2008: 

Congressional Committees: 

Millions of parents nationwide do not live with one or more of their 
minor children. For many of these children and the households they live 
in, child support payments from noncustodial parents can be an 
important source of income. In fiscal year 2006 alone, almost $24 
billion in child support payments was collected and distributed through 
the federal/state child support enforcement (CSE) program. In 
recognition of the importance of child support to these families, the 
Bankruptcy Abuse Prevention and Consumer Protection Act (also known as 
the Bankruptcy Reform Act)--which was signed into law in April 2005 and 
addresses, among other things, certain factors viewed as contributing 
to an escalation in bankruptcy filings--included new provisions to help 
better ensure that child support is given a high priority in 
bankruptcy. 

Specifically, to help ensure that child support payments are made to 
custodial parents, bankruptcy filers are to disclose their support 
obligations on certain bankruptcy forms. The act amended the Bankruptcy 
Code to require bankruptcy case trustees--generally private individuals 
who are appointed by the federal government to administer individual 
bankruptcy cases--to notify child support claimants, such as custodial 
parents to whom support payments are owed by an individual filing for 
bankruptcy, as well as state CSE agencies that might be involved. This 
is designed to allow custodial parents and state CSE agencies to have 
an opportunity to be party to any bankruptcy proceedings. Nationwide, 
most parents with child support orders receive child support 
enforcement services through state CSE agencies while the remainder 
rely on private arrangements. 

The ability to identify bankruptcy filers who have child support 
obligations is essential for many of the new provisions in the act to 
work. While the federal bankruptcy system and the CSE program have 
national databases, none identify bankruptcy filers who owe or pay 
child support. The Bankruptcy Reform Act, therefore, required that we 
study and report on the feasibility, effectiveness, and cost of 
identifying such filers through database matching of bankruptcy records 
with child support enforcement records.[Footnote 1] (The names of 
addressees are listed at the end of this letter.) 

To respond to this statutory requirement, we addressed the following 
questions: (1) What percent of bankruptcy filers are parents who have 
orders to pay child support? (2) In what ways, if any, might matching 
of national bankruptcy and child support enforcement data on a routine 
basis facilitate the identification of bankruptcy filers with orders to 
pay child support? (3) What is the feasibility and estimated cost of 
conducting such a data match on a routine basis? 

To address these objectives, we used several different methodologies. 
To identify the percent of bankruptcy filers with orders to pay child 
support, we worked with the U.S. Department of Health and Human 
Services' (HHS) Office of Child Support Enforcement (OCSE)--the entity 
overseeing state CSE agencies[Footnote 2]--to match its national child 
support enforcement data with a national extract of data on bankruptcy 
filers that we obtained from the Administrative Office of the United 
States Courts (Administrative Office). The Administrative Office 
provides support for federal courts and is supervised by the Judicial 
Conference of the United States. The HHS data comprised all parents in 
its national-level database with current orders to pay child support as 
of June 29, 2007, and the Administrative Office data comprised all 
individuals that filed for consumer bankruptcy between October 17, 
2005, and October 17, 2006,[Footnote 3] the first year of 
implementation under the Bankruptcy Reform Act.[Footnote 4] For more 
information on scope and methodology, see appendix I. 

To determine in what ways matching bankruptcy and child support data 
might facilitate the identification of bankruptcy filers with child 
support obligations as well as to assess the feasibility and estimated 
costs of matching on a recurring basis, we interviewed officials in 
both the federal/state CSE program and bankruptcy system. We 
interviewed officials at OCSE as well as officials at state agencies in 
Alabama, California, Illinois, New York, Texas, and West Virginia. We 
chose these six states for their diverse geography, caseload sizes, and 
administrative structures. More specifically, to illustrate whether a 
routine match could facilitate the identification of bankruptcy filers 
who fail to report their child support obligations, we conducted a 
match of national bankruptcy filings with child support enforcement 
data from the Texas state CSE agency to identify all bankruptcy filers 
between October 17, 2005, and October 17, 2006, who had a child support 
order in Texas open at any time during this same time period.[Footnote 
5] Using the matched results, we then reviewed publicly accessible 
bankruptcy files of a simple random sample of 100 to determine whether 
they had reported their child support obligation in their bankruptcy 
filing. The results of this case study cannot be generalized 
nationwide; however, they can be generalized to the population of 1,931 
noncustodial parents who filed for bankruptcy nationwide and also had 
child support orders in Texas. 

We assessed the reliability of both the bankruptcy and child support 
enforcement data by reviewing documentation about the systems that 
produced them, interviewing agency officials knowledgeable about the 
data, and performing electronic testing of the relevant data elements. 
Because HHS conducted the test match of the bankruptcy data and 
national child support enforcement data itself, we were unable to 
conduct electronic testing as a part of our data reliability 
assessment. However, HHS performed the analysis to meet certain 
specifications we provided and included some information to allow us to 
assess the work performed. We determined that these data were 
sufficiently reliable for the purposes of this report. 

Additionally, we interviewed officials of the executive branch's United 
States Trustee Program at the Department of Justice and the judicial 
branch's Bankruptcy Administrator Program, which share responsibility 
for bankruptcy case trustees. For the U.S. Trustee Program that covers 
bankruptcy districts in all but two states, we talked with officials 
from the Executive Office for U.S. Trustees (EOUST) and 5 regional U.S. 
Trustees as well as 15 bankruptcy case trustees participating in this 
program in five of the states we selected. Separate from the U.S. 
Trustee Program, the judicial branch Bankruptcy Administrator Program 
has bankruptcy administrators who operate in the remaining two states 
(Alabama and North Carolina) who perform duties similar to those of the 
U.S. Trustees, including maintaining a panel of private bankruptcy case 
trustees. In Alabama, we interviewed one bankruptcy administrator and 
one case trustee who reports to this bankruptcy administrator. 

We conducted this performance audit from December 2006 to January 2008 
with generally accepted government auditing standards. Those standards 
require that we plan and perform the audit to obtain sufficient, 
appropriate evidence to provide a reasonable basis for our findings and 
conclusions based on our audit objectives. We believe that the evidence 
obtained provides a reasonable basis for our findings and conclusions 
based on our audit objectives. 

Results in Brief: 

A data match between bankruptcy and child support data found that about 
7.2 percent of the 628,537 individuals who filed for bankruptcy 
nationwide between October 17, 2005, and October 17, 2006, the first 
year of the Bankruptcy Reform Act's implementation, were noncustodial 
parents with orders to pay child support. 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 nevertheless represented 45,346 adults and at least as many 
children. About three-quarters (33,958) of these noncustodial parents 
received services through the CSE program in various states and the 
remainder relied on private arrangements. Of the bankruptcy filers with 
child support orders served through the CSE program, at least one-half 
were past due on their child support payments. 

A national bankruptcy and child support data match conducted on a 
recurring basis might facilitate the identification of additional 
filers with child support orders than through the current notification 
process and reduce the state agency workload associated with processing 
paper notices received from bankruptcy case trustees. Based on our 
review of a random sample of national bankruptcy filings involving 
child support cases in Texas, we estimate that 2 percent (the 95- 
percent confidence interval ranges from less than 1 percent to 7 
percent) may not have reported their child support obligations in their 
bankruptcy paperwork. (The results could be higher or lower in other 
states.) This suggests that matching between bankruptcy and child 
support data could provide a check on filers' child support status when 
not self-reported, although in this particular case we found that 
almost everyone had reported their obligation. In addition, the results 
of a data match would reduce the workload for state agencies by 
providing positive identification of bankruptcy filers with child 
support orders under the states' purview by comparing the full SSNs of 
individuals in both databases. This step would allow state agencies to 
more quickly and accurately identify relevant individuals in their 
records. Officials at the six state agencies we reviewed said the 
notices they receive from bankruptcy case trustees do not always 
include the full 9-digit SSNs of the bankruptcy filers. In three of 
these states, officials estimated that about half or more of the 
notices they received contained only partial SSNs. According to state 
officials, this results in more work for staff to locate the 
individuals in their databases that use SSNs as key identifiers. The 
regional U.S. and case trustees as well as a bankruptcy administrator 
we spoke with said that some case trustees do not provide the full 
number for a variety of reasons, a few related to privacy. For case 
trustees participating in the U.S. Trustee Program, we found this to be 
the case, even though EOUST guidance--covering 84 of the 90 bankruptcy 
districts--calls for case trustees to provide the full SSN in notices 
sent to state agencies. EOUST officials told us they do not have 
authority to directly require individual case trustees to provide the 
number in full, but that they did develop trustee guidance for doing so 
following their discussions with OCSE about the importance of the full 
SSN for effective processing of notices by state agencies. The EOUST 
officials noted that the use of full SSNs in these notices, which are 
not part of any public record, is consistent with executive branch 
policies designed to guard privacy. For the judicial branch Bankruptcy 
Administrator Program in the remaining six bankruptcy districts, which 
are in Alabama and North Carolina, some case trustees also do not 
provide the full SSN of filers in the notices to the state agency. 
Neither the Judicial Conference nor the Administrative Office has 
developed guidance for these case trustees on notifications. 

A national data match done on a recurring basis is technically 
feasible, but would be a complex and costly undertaking, and is also 
accompanied by certain statutory and policy considerations. Regarding 
technical feasibility, both the federal bankruptcy system and the CSE 
program use full SSNs as key identifiers in their automated systems 
that could be used to match bankruptcy filers with individuals who have 
child support orders, as our one-time data match demonstrated. With 
regard to notifying state agencies of the match results, OCSE officials 
said that HHS' national automated system could disseminate this 
information after modifications to federal and state systems. Although 
data sharing across government agencies is not uncommon, the 
modifications it requires to systems are costly, involving many steps 
for effective development, implementation, and maintenance. Overall, 
OCSE officials estimate that their development costs to conduct this 
match would be between $2 million and $2.5 million and would take 
between 15 and 18 months to implement. Another factor that could affect 
cost is the possible duplication of efforts. Bankruptcy and CSE program 
officials expressed concern that using an automated system for 
notifying state agencies would duplicate the current Bankruptcy Code 
requirement for case trustees to send notices to relevant state 
agencies. In addition, there is no existing mechanism that could 
readily be used or modified to notify custodial parents based on match 
results; like state agencies, custodial parents currently receive 
mailed notifications from case trustees. Bankruptcy officials from the 
Administrative Office and EOUST also cited some statutory and policy 
considerations with sharing data for matching purposes that would need 
to be addressed for matching on a recurring basis to take place. For 
example, officials at the Administrative Office cited a policy against 
releasing and disseminating its bankruptcy data to OCSE on the grounds 
that the judicial branch must remain an independent and objective 
adjudicator of creditor claims. 

While matching federal bankruptcy data with child support records on a 
recurring basis might afford some modest improvements to the current 
system, it is not clear that instituting a routine data matching system 
is warranted, given the costs, efforts, and policy considerations that 
would be involved. However, improved information sharing appears 
possible with additional attention to the existing process for 
notifying state agencies. As a result, we recommend that the Attorney 
General direct the Director of the Executive Office for U.S. Trustees 
to more actively encourage bankruptcy case trustees to provide state 
agencies with full SSNs, while recognizing the need to do so in a 
manner that preserves the security of the information. In addition, we 
recommend that the Judicial Conference of the United States work with 
bankruptcy administrators in the six bankruptcy court districts in 
Alabama and North Carolina to examine whether case trustees should 
provide state agencies with the full SSNs of bankruptcy filers. In 
responding to a draft of this report, officials of the U.S. Trustee 
Program at Justice and officials from the Administrative Office of 
United States Courts, which work with the bankruptcy administrators in 
Alabama and North Carolina, said they would take steps to address the 
recommendations. 

Background: 

Bankruptcy is a federal court procedure designed to help both 
individuals and businesses address debts they cannot fully repay as 
well as help creditors receive some payment in an equitable manner. 
Individuals usually file for bankruptcy under one of two chapters of 
the Bankruptcy Code. Under Chapter 7, the filer's eligible nonexempt 
assets are reduced to cash and distributed to creditors in accordance 
with distribution priorities and procedures set out in the Bankruptcy 
Code. Under Chapter 13, filers submit a repayment plan to the court 
agreeing to pay part or all of their debts over time, usually 3 to 5 
years. Upon the successful completion of both Chapter 7 and 13 cases, 
the filer's personal liability for eligible debts is discharged at the 
end of the bankruptcy process, which means that creditors may take no 
further action against the individual to collect the debt. Child 
support is not a debt eligible for discharge. 

The Bankruptcy Reform Act, among other things, amended the Bankruptcy 
Code to require those filers with the ability to pay some of their 
debts to enter into repayment plans under Chapter 13 of the Bankruptcy 
Code instead of liquidating their assets under Chapter 7 and granting 
the debtor a discharge from eligible debts. During the first year of 
implementation under the Bankruptcy Reform Act, about 628,537 
individuals filed for bankruptcy, based on the Administrative Office 
bankruptcy data we used for our national data match. 

The Bankruptcy System: 

The bankruptcy system is complex and involves many entities in the 
judicial and executive branches of the federal government. (See fig. 
1.) 

Figure 1: Overview of Bankruptcy System: 

[See PDF for image] 

The following data is depicted: 

Judicial branch[A]: 
Judicial Conference of the United States; 
U.S. bankruptcy courts; 
Administrative Office of the U.S. Courts. 

Executive branch: 
Department of Justice; 
Executive Office of U.S. Trustees; 
U.S.Trustees. 

Source: GAO analysis. 

[A] While not shown in this graphic, the Judicial Branch oversees case 
trustees in a small number of bankruptcy court districts. 

[End of figure] 

Within the judicial branch, 90 federal bankruptcy courts have 
jurisdiction over bankruptcy cases. The Administrative Office is the 
central support entity for federal courts, including bankruptcy courts, 
providing a wide range of administrative, legal, financial, management, 
and information technology services. It also maintains the U.S. Party/ 
Case Index, which contains information collected from all 90 federal 
bankruptcy courts and allows courts to identify parties involved in 
federal litigation almost anywhere in the nation. The Director of the 
Administrative Office is supervised by the Judicial Conference of the 
United States. The Judicial Conference also considers administrative 
problems and policy issues affecting the federal judiciary and makes 
recommendations to Congress concerning legislation affecting the 
federal judicial system. 

The bankruptcy courts share responsibility for bankruptcy cases with 
the United States Trustee Program, which is part of the executive 
branch's U.S. Department of Justice (Justice). In all but six 
bankruptcy court districts in Alabama and North Carolina, the U.S. 
Trustee Program is responsible for appointing and supervising private 
bankruptcy case trustees who manage many aspects of individual 
bankruptcy cases.[Footnote 6] The Executive Office for U.S. Trustees at 
Justice provides general policy and legal guidance, oversees 
operations, and handles administrative functions for the U.S. Trustee 
Program. It also manages the Automated Case Management System, which 
functions as the U.S. Trustee Program's system for administering 
bankruptcy cases. Separate from the U.S. Trustee Program, the remaining 
six districts have judicial branch bankruptcy administrators (referred 
to as the Bankruptcy Administrator Program) who perform duties similar 
to those of the U.S. Trustees, including overseeing the administration 
of bankruptcy cases, maintaining a panel of private case trustees, and 
monitoring the transactions and conduct of parties in bankruptcy in 
those states. 

The Child Support Enforcement Program: 

The federal government partners with states to operate the child 
support enforcement program, making available to parents a range of 
child support services, including establishing and enforcing child 
support orders. A child support order can be entered into voluntarily, 
ordered by a court, or established by a state agency through an 
administrative process. Once established, it generally legally requires 
a noncustodial parent to provide financial support to a custodial 
parent with at least one child. 

Nationwide, almost 10 million noncustodial parents had child support 
orders in place in June 2007, based on the Federal Case Registry 
maintained by OCSE. This registry, part of the Federal Parent Locator 
Service,[Footnote 7] contains information about individuals with child 
support cases and orders administered by state CSE agencies as well as 
individuals not part of the CSE program, but who had orders established 
after 1998. About 78 percent of these 10 million noncustodial parents 
had orders enforced through state CSE agencies; the remaining parents 
are not involved with a state agency in enforcing their orders. 

The CSE program makes services available, upon request, to any parent 
or other person with custody of a child (custodial parent) who has a 
parent living outside of the home (noncustodial parent). Parents that 
receive public assistance through the Temporary Assistance for Needy 
Families (TANF), Medicaid, and Foster Care programs receive CSE 
services free; others are charged a nominal fee not to exceed $25. TANF 
recipients are required to assign their rights to child support 
payments to the state. In fiscal year 2006, the state CSE agencies 
administered 15.8 million cases, providing a range of services, 
including establishing paternity and support orders, locating 
noncustodial parents, collecting and distributing child and medical 
support, and reviewing and modifying support orders. 

The majority of child support is collected through wage withholding, 
but state agencies also use other methods for enforcing child support 
orders. In 2006, about 69 percent of child support payments were 
collected through wage withholding, which involves employers 
withholding support from noncustodial parents' wages and sending it to 
the appropriate state agency for distribution. Other methods include 
intercepting federal and state income tax refunds; liens against 
property; as well as withholding or suspending driver's licenses, 
professional licenses, recreational and sporting licenses, and 
passports of persons who owe past-due support. During fiscal year 2006, 
total distributed collections were almost $24 billion. Program costs 
for that year totaled $5.6 billion, of which $3.7 billion was federally 
funded. 

State agencies administer the CSE program, but the federal government 
plays a major role in supporting them. At the federal level, OCSE 
within the Administration for Children and Families of HHS provides a 
majority of program funding. It also establishes enforcement policies 
and guidance, provides state agencies with technical assistance, and 
oversees and monitors state programs. 

Bankruptcy Reform Act's Treatment of Child Support: 

The Bankruptcy Reform Act included new provisions to help better ensure 
that noncustodial parents who file for bankruptcy continue paying child 
support and that child support payments are given a high priority in 
bankruptcy. One of these provisions clarifies that proceedings to 
establish or modify a domestic support obligation (e.g., child support) 
owed to a governmental unit (e.g., state CSE agencies) are exempt from 
the automatic stay. An automatic stay bars creditors from taking 
measures to collect a debt pending resolution of the bankruptcy 
proceeding. Another provision allows for the continued operation of 
wage withholding for domestic support obligations (e.g., child 
support). Further, the Bankruptcy Reform Act, for example, requires 
that noncustodial parents filing for Chapter 13 bankruptcy must be 
current on their child support obligations to confirm a repayment plan. 
In addition, the Bankruptcy Reform Act provides child support with the 
first priority for payment of unsecured claims, up from a seventh-level 
priority under previous Bankruptcy Code provisions. 

Notifying Custodial Parents and State Child Support Enforcement 
Agencies of Bankruptcies: 

The Bankruptcy Code requires bankruptcy filers to submit a list of 
their creditors, which could include a custodial parent or state CSE 
agency, in their financial disclosures. The court, in general, is to 
provide listed creditors with notice of a meeting of creditors. A filer 
who knowingly and fraudulently conceals a debt owed to a creditor is 
subject to criminal penalties. 

In addition, the Bankruptcy Reform Act amended the Bankruptcy Code to 
require that child support claimants, such as custodial parents and 
state agencies, be specifically notified of the bankruptcies of parents 
having a domestic support obligation (DSO), a designation that includes 
child support and alimony. Case trustees are to send notices of the 
bankruptcy case to these parties after bankruptcy filers report in 
their paperwork that they have a DSO. Figure 2 shows court and trustee 
notification processes based on law, regulations, and guidelines. 

Figure 2: Current Court and Bankruptcy Case Trustee Notification 
Processes: 

[See PDF for image] 

The following data is depicted: 

Filer discloses domestic support obligation in one of several places in 
bankruptcy paperwork (e.g. schedules and list of creditors): 
When a filer lists individuals or entities in list of creditors, 
bankruptcy court is to send notice to all creditors listed; 
Notice to custodial parents or state agencies, if listed on the list of 
creditors, regarding important deadlines and actions for bankruptcy 
case. Notice includes filer’s SSN. 

Filer discloses domestic support obligation in one of several places in 
bankruptcy paperwork (e.g. schedules and list of creditors): 
When a filer lists obligation in paperwork, trustee is to send notices 
to custodial parent and state agency in state where custodial parent 
lives; 
Notice to custodial parent–informs of right to participate as creditor 
in bankruptcy, as well as right to CSE services; 
Notice to state agency–includes filer’s name, SSN, and bankruptcy case 
number. 

Source: GAO analysis. 

[End of figure] 

State agencies and custodial parents benefit from knowing about the 
bankruptcies of parents who owe child support. The notice to the 
custodial parent provides information about the state agency and his or 
her right to use its services. Knowing about the bankruptcy of a 
noncustodial parent is important so that the state agency or custodial 
parent can participate in and be a party to pertinent bankruptcy 
proceedings. Knowing about the bankruptcy also helps state agencies 
avoid violating any automatic stay that may be in place. Although the 
CSE program may continue using many of its collection tools, such as 
wage withholding, a few of these tools are still subject to the 
automatic stay. According to a state official, agencies can face 
penalties if they collect funds using tools subject to the automatic 
stay. 

About 7 Percent of Those Who Filed for Bankruptcy Have Orders to Pay 
Child Support and Most Are Part of the CSE Program: 

Our data match using the national bankruptcy and OCSE data found that 
among the 628,537 individuals who filed for bankruptcy between October 
17, 2005, and October 17, 2006, the first year of implementation of the 
Bankruptcy Reform Act, about 7.2 percent were noncustodial parents with 
orders to pay child support. This population represents just one-half 
of 1 percent of the 9.9 million noncustodial parents who have orders to 
pay child support. While these proportions are small, they nevertheless 
represent 45,346 adults with orders to pay child support and at least 
as many children. 

About three-quarters (33,958) of bankruptcy filers with orders to pay 
support were receiving services from CSE programs in various 
states.[Footnote 8] At least half of these bankruptcy filers were past 
due on their payments.[Footnote 9] While data obtained for our study 
did not include the past due amounts owed by these parents, fiscal 2004 
data reported by OCSE, the most recent available, show that of all 
noncustodial parents with orders who are part of the CSE program, the 
average total past due amount owed was about $9,400. 

A greater number of noncustodial parents filed for Chapter 7 than 
Chapter 13 bankruptcy. Nevertheless, proportionally more noncustodial 
parents filed for bankruptcy under Chapter 13 than did all filers (see 
table 1). Several experts on bankruptcy and child support as well as 
officials in some state agencies said the state agency is likely to 
play a role in Chapter 13 filings because under this chapter an 
individual repays some or all debt under a court-approved plan prior to 
a discharge. Past due child support is a debt that can be included in 
the repayment plan and state agencies may opt to continue collecting 
past due support through the state agency enforcement process or 
through the Chapter 13 repayment plan. In contrast, a large majority of 
filers under Chapter 7 have no assets available for liquidation, and 
thus no funds are available to pay creditors. Regardless of which 
chapter a noncustodial parent files under, collection of ongoing child 
support would continue if, for example, the filer had income and a wage 
withholding order in place. 

Table 1: Comparison of Bankruptcy Filers Who Are Noncustodial Parents 
with Orders with All Bankruptcy Filers: 

Bankruptcy chapter: Chapter 7; 
Bankruptcy filers who are also noncustodial parents with orders: 54% 
(24,462); 
All bankruptcy filers: 58% (363,321). 

Bankruptcy chapter: Chapter 13; 
Bankruptcy filers who are also noncustodial parents with orders: 46% 
(20,884); 
All bankruptcy filers: 42% (266,754). 

Bankruptcy chapter: Total; 
Bankruptcy filers who are also noncustodial parents with orders: 100% 
(45,346); 
All bankruptcy filers: 100% (630,075)[A]. 

Source: GAO analysis based on a match of the Administrative Office's 
bankruptcy data and HHS' CSE data. 

Note: The table is based on noncustodial parents who filed between 
October 17, 2005, and October 17, 2006. 

[A] This total double-counts the 1,538 individuals who filed for both 
Chapter 7 and Chapter 13 bankruptcy in order to provide ratios for 
noncustodial parents who filed for each chapter. 

[End of table] 

Although our study does not focus on custodial parents who are owed 
child support and who filed for bankruptcy, our match showed that a 
slightly higher percentage of bankruptcy filers were custodial parents 
than noncustodial parents. Specifically, custodial parents represented 
10 percent of all those who filed for bankruptcy while noncustodial 
parents represented 7 percent.[Footnote 10] 

A Routine, National Data Match Might Identify Filers Who Do Not Report 
Their Support Obligations and Reduce the Workload Associated with the 
Current Process: 

A national match of bankruptcy data with child support enforcement data 
conducted on a recurring basis might help identify filers who, for one 
reason or another, fail to report their child support obligations in 
their bankruptcy paperwork. The results of such a match would also 
reduce the research workload for state agencies by providing positive 
identification of bankruptcy filers with orders under the states' 
purview by comparing the full SSNs of individuals in both databases. 
This step would allow state agencies to more quickly and accurately 
identify the relevant individuals in their records. Currently, some 
case trustees do not include the full SSN of the filer in their 
notifications to the state agencies, which imposes additional work on 
the state agency staff to make a positive identification. For case 
trustees in all but six bankruptcy districts in two states, guidance 
calls for them to provide full SSNs in the notices they send to state 
agencies. 

A National Match of Federal Bankruptcy with Child Support Enforcement 
Data Might Identify Some Filers Who Do Not Report a Child Support 
Obligation: 

Conducting a national bankruptcy and child support enforcement data 
match on a recurring basis might identify some additional filers who 
have orders to pay child support but who do not report this obligation, 
as required, when they file for bankruptcy. In a test review of 
bankruptcy filings involving orders to pay child support in Texas, we 
found that an estimated 2 percent of filers who completed all of their 
bankruptcy paperwork may not have reported their child support 
obligations.[Footnote 11] (The results could be higher or lower in 
other states.) For these and other filers who fail to report their 
obligations in their paperwork, they may subsequently report these 
obligations at a later stage in the bankruptcy process when case 
trustees ask them under oath whether they have a domestic obligation. 
Almost all of the 16 case trustees we spoke with for this review said 
they always ask debtors this question under oath[Footnote 12].: 

A Data Match Might Readily Provide State Agencies with Positive 
Identifications and Reduce the Workload Associated with the Current 
Trustee Notification Process: 

A data matching process in which OCSE conveys results to state agencies 
that positively identify bankruptcy filers would allow state agencies 
to process the information more efficiently and accurately than the 
current process, reducing state agency workload. State agency officials 
reported that their staff currently take steps when they receive 
notices from case trustees to determine whether the named individual is 
in their agency's database.[Footnote 13] A significant portion of the 
notices a state agency receives may pertain to noncustodial parents who 
are not part of that state's CSE program. For example, our national 
data match analysis identified about one-quarter of noncustodial parent 
filers with orders not administered as part of any state agency. Match 
results distributed to state agencies by OCSE would, in effect, pre- 
sort the orders, only sending to state agencies the information on 
bankruptcy filers whose orders are under their purview. Also, agency 
staff can have difficulty distinguishing among the noncustodial parents 
in their caseload with similar names when the notices do not contain 
the full SSNs. Federal agencies often use full SSNs when data matching 
or other information-sharing is used to help them meet program goals, 
such as improving collections or minimizing fraud, as long as they take 
the required steps to safeguard the personally-identifiable information 
in their possession. 

We found that it is not always the practice for case trustees to 
include full SSNs in their bankruptcy notices to state agencies, even 
though some guidance has been issued on this. In our selected six 
states, state agency officials said that trustee notices did not always 
contain full SSNs. In Alabama, Illinois, and New York, for example, 
agency officials estimate that half or more of the trustee notices they 
receive contain the filer's partial SSN. Of the 16 case trustees we 
interviewed, 5 said they do not include the full SSN in the notices 
they send to state agencies. Four of these five case trustees 
participating in the U.S. Trustee Program expressed a variety of 
reasons for not providing full SSNs, such as administrative convenience 
or some concerns about privacy,[Footnote 14] despite EOUST guidance 
instructing them to do so. In Alabama, where a bankruptcy administrator 
rather than a regional U.S. Trustee oversees case trustees, a trustee 
and the bankruptcy administrator said that their policy is to provide 
only a partial SSN to the custodial parent and state agency. 

In developing guidance for trustee noticing under the U.S. Trustee 
Program, EOUST officials told us that they worked closely with OCSE 
regarding what information to include in the notices going to state 
agencies. The guidance notes that state child support agencies have 
requested that the notices identify bankruptcy filers by name and SSN. 
The guidance also includes sample notices that trustees can use that 
indicate that the full SSN should be included for notifying the state 
agencies. EOUST officials told us that OCSE officials emphasized the 
importance of the full SSN for effective processing of notices. EOUST 
officials also said that providing the full SSN to state agencies is 
consistent with the Bankruptcy Reform Act. In addition, EOUST officials 
said that they provided training about the notices to case trustees, 
through the regional U.S. Trustees, as part of training on all aspects 
of the new bankruptcy reform provisions and posted the guidance on 
their external and internal Web sites. 

EOUST officials also said they had considered executive branch policies 
about privacy and security of personal identifiers and determined that 
its guidance was consistent with these policies. It is important to 
note that the notices from case trustees are not made available to the 
public and are not part of the bankruptcy case docket, which is 
publicly available. Officials from state agencies said similarly that 
they do not make this information in the notices publicly available. We 
have previously reported that SSNs can be useful tools to enhance 
program integrity through data matching; however, government agencies 
and courts need to take steps to prevent the improper disclosure of 
SSNs, including limiting the use and display of SSNs in public records 
(e.g., SSN truncation in all lien records).[Footnote 15] 

While EOUST officials acknowledged the importance of full SSNs in 
notices, they told us that they do not have authority to require case 
trustees to provide them. They said that case trustees are not directly 
supervised by, or employees of, EOUST. The EOUST officials also said 
that case trustees are required to administer a bankruptcy estate in 
accordance with applicable state laws. 

For case trustees who are overseen by judicial branch bankruptcy 
administrators in the six bankruptcy districts in Alabama and North 
Carolina, neither the Judicial Conference nor the Administrative Office 
has established an explicit policy about case trustees providing the 
filer's full 9-digit SSN in the notices sent to custodial parents and 
the state child support enforcement agencies. 

In addition to reducing state agencies' workload, a routine data match 
would have the additional advantage of identifying those parents who 
may be part of the CSE program, but whose cases are administered by an 
agency in another state.[Footnote 16] In some cases the notices could 
go to the wrong state because the Bankruptcy Reform Act requires that 
notices be sent to the state in which the child support claimant, such 
as a custodial parent, lives, although some may live in a state other 
than the one administering CSE services. Also, more than one state may 
be involved in some case activity. For example, according to OCSE 
officials, a January 2000 national analysis showed that, of 
noncustodial parents with orders to pay child support, and who were 
past due on their payments, 24 percent resided in a state other than 
the state seeking collection of these payments. 

Although a Data Match Is Technically Feasible, There Would Be 
Substantial Start-Up Costs as well as Some Policy Considerations: 

A national data match conducted on a recurring basis is technically 
feasible, although it would require modifications to existing systems 
at national and state levels, including many steps for effectively 
developing and implementing data matching that are costly. Moreover, 
bankruptcy and CSE program officials expressed concern about 
implementing an automated system that provides notification of 
noncustodial parent filers to state agencies because of potential 
duplication between any new automated system and the existing trustee 
notification process that was implemented as a result of the Bankruptcy 
Reform Act. In addition to these costs, bankruptcy officials cited some 
statutory and policy considerations to releasing their own data or to 
performing a data match. Weighing these factors and concerns against 
the benefits of conducting a data match is an important consideration. 

A Data Match with Transmission of Results to State Agencies Is 
Technically Feasible, Though It Would Not Replace Notifications to 
Custodial Parents: 

Officials from the Administrative Office, EOUST, and CSE agencies said 
that it is technically feasible to provide information in their 
databases to the other system and then match records between the two 
systems on a routine basis. They also brought up legal and policy 
considerations, which we discuss in more detail later. The bankruptcy 
system and CSE program each have federal databases that use SSNs as key 
identifiers and contain the information that potentially can be used to 
identify, on a routine basis, bankruptcy filers with orders to pay 
child support. Both the Administrative Office and EOUST databases 
contain the full SSNs of filers for consumer bankruptcies.[Footnote 17] 
The EOUST database does not include bankruptcy filers in Alabama and 
North Carolina because these two states do not participate in the U.S. 
Trustee Program. OCSE maintains the Federal Case Registry, a national 
automated system containing limited data of noncustodial parents with 
orders to pay child support that are enforced through state CSE 
programs and those that are not, among other information. OCSE also 
maintains the Federal Offset Program file that contains information on 
individuals who owe past due child support who are part of the state 
CSE programs. 

Using the Federal Case Registry and its other automated systems, OCSE 
currently conducts routine data matches with other entities to help 
state agencies locate parents and enforce child support orders. For 
example, the registry helps state agencies identify noncustodial 
parents who are located or working in other states. By matching its 
data with data held by other agencies, such as the Social Security 
Administration, the Department of Defense, the Federal Bureau of 
Investigation, and the Internal Revenue Service, it can locate the 
parent's employer for state agencies, allowing them to issue income- 
withholding orders, among other actions. Moreover, an OCSE analysis 
estimated that its National Directory of New Hires Database matches 
result in about $400 million in child support collected 
annually.[Footnote 18] Typically, OCSE conducts matches with entities 
that have information common among many individuals in its target 
population or that are expected to yield significant results. See 
figure 3. 

Figure 3: Federal Parent Locator Service: 

[See PDF for image] 

The following data is depicted: 

Federal Parent Locator Service: 
National system to assist states in locating noncustodial and custodial 
parties to: 
* establish paternity and child support orders; 
* enforce and modify orders; 
* identify orders or cases involving the same parties in different 
states. 

Developed in cooperation with the states, employers, federal agencies 
and the judiciary, and has been expanded by welfare reform to include: 

* National Directory of New Hires (NDNH): 
- contains individual employment, unemployment insurance, and wage data 
from state directories of new hires, state workforce agencies, and 
federal agencies. 

* Federal Case Registry (FCR): 
- Contains all state agency child support cases and all legal child 
support orders established or modified on or after October 1, 1998; 
- Populated with data from state agencies, the FCR is used to receive 
and pass FPLS data to states. 

[NDNH matches with FCR, providing the primary source for employment 
data]. 

Interfacing with the FCR: 
* State Case Registry (SCR): 
- Each of 54 state agencies has statewide automated systems; 
- Provides IV-D cases and Non-IV-D orders to FCR. 

The following currently locate matches with the Federal Parent Locator 
Service and vise versa: 
Social Security Administration; 
Department of Defense; 
Internal Revenue Service; 
Veterans Affairs; 
Federal Bureau of Investigation; 
National Security Agency. 

Source: GAO analysis. 

[End of figure] 

With regard to using the results of a data match, current technical 
capability differs among agencies. OCSE and some state agency officials 
we spoke with said that OCSE's Federal Case Registry could disseminate 
this information to the 54 state agencies after modifications to this 
system and state systems. Upon receiving an electronic notification 
that a noncustodial parent in their caseload has filed for bankruptcy, 
state agencies would also be able to identify custodial parents in 
their caseloads who are associated with these noncustodial parent 
filers. However, notifying the custodial parent about the bankruptcy is 
not currently part of the state agencies' or OCSE's duties. Also, these 
agencies do not have much information on custodial parents who are not 
part of their state CSE programs. Alternatively, case trustees could 
use the match results to continue carrying out their statutorily 
required duty to notify these parents. However, EOUST officials told us 
they would need to build the capacity to transmit the match results 
from EOUST to case trustees who participate in the U.S. Trustee 
Program. 

A Data Match Would Likely Involve Substantial Start-up Costs and Would 
also Duplicate a Part of the Current Notification System: 

Although electronic data sharing across government agencies is not 
uncommon,[Footnote 19] it can be a complex and costly undertaking. Data 
matching would need to be done frequently (e.g., weekly) to be useful, 
according to some state agency officials, and would likely involve 
developing automated interfaces to exchange data effectively on a 
recurring basis. In developing such systems, to reduce the risks to 
acceptable levels,[Footnote 20] following and effectively implementing 
accepted best practices in systems development and implementation 
(commonly referred to as disciplined processes) is important. It would 
include at a minimum: 

* defining the detailed requirements for the new or modified systems 
and interfaces, and: 

* thorough and complete testing to determine that new or modified 
systems will work as intended. 

Even when the agencies have effectively implemented the disciplined 
processes necessary to reduce risks to acceptable levels, a framework 
is needed to guide a data sharing project such as this. Specifically, 
agencies generally enter into written agreements when they share 
information for conducting data matches. Based on their experience, 
OCSE officials estimate that developing such agreements generally 
requires many months. 

Officials from OCSE and EOUST believe that system modifications that 
would precede data sharing would involve significant costs. They said, 
for example, they would need to build an exchange method that would 
allow for the secure exchange of data. Overall, OCSE officials estimate 
that their development costs would be between $2 million and $2.5 
million and would take between 15 and 18 months to implement. 

Once a matching process is established, disseminating match results 
would not be a cost-free proposition. EOUST officials said that it 
would take a considerable effort to establish an internal process, 
either manual or automated, for disseminating the match results to the 
case trustees. While state agencies could accept match results from 
OCSE using an existing system, OCSE officials said that this would 
require building this capability into the state agencies' respective 
automated systems. States would incur some of these up-front costs, 
according to these officials. Additional costs may be incurred at the 
county level, with officials at one state agency saying that counties, 
and not just the state, might need to modify their systems to receive 
matched data.[Footnote 21] 

Once the necessary interfaces and system changes have been developed 
and effectively implemented, there are ongoing operation and 
maintenance costs to consider. OCSE estimates annual costs of between 
$35,000 and $50,000, depending on which entity conducts the match. 
These costs would include computer processing time and staff resources 
for managing data transactions. For example, EOUST currently employs 
two full-time staffers to extract bankruptcy data weekly from the 
Administrative Office's bankruptcy case database, and a data match 
between the bankruptcy system and CSE program would likely involve 
staffing.[Footnote 22] 

Some Administrative Office, EOUST, and CSE officials expressed concern 
about implementing an automated system providing notification of 
noncustodial parent filers to state agencies because of potential 
duplication between any new automated system and the existing paper 
system, which was implemented as a result of the Bankruptcy Reform Act. 
If a new system duplicates the notices that state agencies now receive 
from bankruptcy case trustees, it could add to their workload. That is, 
state agencies would be receiving information about bankruptcy filers 
with child support obligations from both trustees and OCSE unless the 
Bankruptcy Code is amended. 

Overall, officials from several of the state agencies we talked with 
said that while conducting electronic matching and sending the results 
to their agencies could be useful to them, the costs might not warrant 
such a match. Moreover, according to OCSE officials, state agency 
directors they have communicated with about a potential data match have 
similarly noted this trade-off. 

Officials of the Administrative Office Say That Their Current Policy 
Does Not Allow for a Data Match while Officials from Other Programs Say 
It Could Be Acceptable: 

Officials from the Administrative Office said that their current policy 
does not allow a data match while officials from EOUST and OCSE said 
that a data match would be acceptable if the match met specific privacy 
guidelines. Officials at the Administrative Office cited a policy 
against releasing and disseminating their bankruptcy data to OCSE. This 
federal judiciary policy specifically bars release of the names and 
SSNs of bankruptcy filers to HHS on the grounds that the judicial 
branch must remain an independent and objective adjudicator of creditor 
claims. Administrative Office officials also noted that data on 
bankruptcy filers is available at EOUST, which is responsible for 
managing bankruptcy cases and ensuring compliance with applicable laws 
and procedures.[Footnote 23] 

For their part, officials at EOUST stated that their policy on data 
sharing is guided by the Privacy Act--the federal law governing federal 
agencies' use and disclosure of records containing individuals' 
personal information.[Footnote 24] The officials said that EOUST's 
current policy implementing the routine use exception of the Privacy 
Act does not support a match with the system of records in which the 
bankruptcy data are kept, because identifying bankruptcy filers with 
child support obligations is not part of its mission. However, if OCSE 
requested the bankruptcy data from EOUST and EOUST determined that this 
request falls within the law enforcement agency exception of the 
Privacy Act, then EOUST officials said that it could share its data 
with OCSE. 

According to OCSE officials, it would be acceptable for OCSE data to be 
matched with bankruptcy data and for OCSE to disseminate the results to 
state agencies on a recurring basis. However, OCSE officials noted that 
the match results could only be used for CSE program purposes. That is, 
EOUST or the Administrative Office could perform a match using CSE data 
and bankruptcy data and return the results to OCSE, but these entities 
could not use the CSE data or match results for their own purposes, 
such as sending match results to case trustees. With respect to sending 
match results to custodial parents outside the CSE program, OCSE 
officials said that OCSE would not be the appropriate entity to do this 
because it is neither authorized nor funded to interact with these 
parents in this way. 

Conclusion: 

While matching federal bankruptcy data with child support records might 
facilitate the identification of some additional bankruptcy filers with 
child support obligations and improve the current system for notifying 
state agencies, these potential improvements seem modest in comparison 
to the costs, efforts, and statutory and policy considerations involved 
in implementing and maintaining a data matching system. As a result, it 
appears that instituting a routine data matching system may not be 
warranted. A relatively small percentage of bankruptcy filers have 
orders to pay child support. In addition, a process is currently in 
place to identify and notify custodial parents and state agencies of 
bankruptcy proceedings, as called for under the Bankruptcy Reform Act. 
Moreover, a data matching system with results transmitting 
electronically to state agencies would not offer a comprehensive 
alternative to the trustee notification system insofar as it would not 
transmit information to custodial parents and would partially duplicate 
the trustee notification process. Finally, legal and policy 
considerations would need to be addressed to institute data matching 
between these two systems. 

Although these challenges are not insurmountable and data matching can 
be a useful tool, in this case, there is an alternative that should 
improve information sharing between case trustees and state child 
support agencies within the current system of trustee notices. 
Notwithstanding EOUST guidance calling for case trustees to provide the 
full SSNs, some case trustees only provide partial SSNs. Although EOUST 
cannot require case trustees to provide the full SSN, its examination 
of the trustee notification process might identify reasons for case 
trustees not providing the full SSNs as well as measures to help 
encourage the provision of full SSNs in notices to state agencies. 
Without EOUST more actively encouraging case trustees to provide full 
SSNs, state agencies may continue to experience more difficulties than 
necessary in accomplishing the child support goals of the Bankruptcy 
Reform Act. While neither the Judicial Conference nor the 
Administrative Office has developed similar guidance for bankruptcy 
administrators, the same reasons exist for state agencies having full 
SSNs, regardless of which program supervises case trustees. These 
reasons warrant some examination of the trustee notification process in 
the bankruptcy administrator districts. 

Recommendations for Executive and Judicial Branch Action: 

To help improve the bankruptcy trustee notification process for state 
child support enforcement agencies called for under the Bankruptcy 
Reform Act, we are making two recommendations. 

First, we recommend that the Attorney General 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. 

Second, we recommend that the Judicial Conference of the United States 
work with bankruptcy administrators in the six bankruptcy court 
districts in Alabama and North Carolina not subject to EOUST 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: 

* 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. 

* 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 Comments and Our Evaluation: 

We provided Justice, the Administrative Office, and HHS with a draft of 
this report for their review and comments. The U.S. Trustee Program at 
Justice said that it supported the recommendation and would continue to 
work with the private case trustees, including through their national 
associations, to identify and address impediments to ensuring that full 
SSNs are provided to state CSE agencies. Its written comments are 
included in appendix II. Officials from the Administrative Office, in 
commenting orally on the draft, said that in light of our 
recommendation, they would review--in the bankruptcy districts in 
Alabama and North Carolina--the entire process in place for notifying 
state CSE agencies to see if the process is working correctly and take 
action as needed. They also provided technical comments that we 
incorporated as appropriate. In addition, HHS provided technical 
comments that we incorporated as appropriate. 

We are sending electronic copies of this report to the directors of the 
Administrative Office of United States Courts and the Executive Office 
for U.S. Trustees at the Department of Justice; the Secretary of Health 
and Human Services; appropriate congressional committees, and other 
interested parties. We will also make copies available to others upon 
request. In addition, the report will be available at no charge on 
GAO's Web site at [hyperlink, http://www.gao.gov]. Please contact me at 
(202) 512-7215 if you have any questions about this report. Contact 
points for our Offices of Congressional Relations and Public Affairs 
may be found on the last page of this report. Other major contributors 
to this report are listed in appendix III. 

Signed by: 

Kay E. Brown: 
Acting Director, Education, Workforce, and Income Security Issues: 

[End of section] 

List of Congressional Committees: 

The Honorable Robert C. Byrd: 
President Pro Tempore: 
United States Senate: 

The Honorable Nancy Pelosi: 
Speaker of the House of Representatives: 

The Honorable Max Baucus: 
Chairman: 
The Honorable Charles Grassley: 
Ranking Member: 
Committee on Finance: 
United States Senate: 

The Honorable Patrick J. Leahy: 
Chairman: 
The Honorable Arlen Specter: 
Ranking Member: 
Committee on the Judiciary: 
United States Senate: 

The Honorable John Conyers, Jr. 
Chairman: 
The Honorable Lamar Smith: 
Ranking Member: 
Committee on the Judiciary: 
House of Representatives: 

The Honorable Linda T. Sanchez: 
Chairwoman: 
The Honorable Chris Cannon: 
Ranking Member: 
Subcommittee on Commercial and Administrative Law: 
Committee on the Judiciary: 
House of Representatives: 

The Honorable Jim McDermott: 
Chairman: 
The Honorable Jerry Weller: 
Ranking Member: 
Subcommittee on Income Security and Family Support: 
Committee on Ways and Means: 
House of Representatives: 

The Honorable Adam B. Schiff: 
House of Representatives: 

[End of section] 

Appendix I: Objectives, Scope, and Methodology: 

Objectives: 

The objectives of this report were to determine (1) What percent of 
bankruptcy filers are parents who have orders to pay child support? (2) 
In what ways, if any, might matching national bankruptcy and child 
support enforcement data on a routine basis facilitate the 
identification of bankruptcy filers who have child support obligations? 
(3) What is the feasibility and estimated cost of conducting such a 
data match on a routine basis? 

Scope and Methodology: 

To conduct our work we reviewed relevant laws, rules and regulations, 
and guidance that affect the bankruptcy process and child support 
enforcement (CSE) program, including the Bankruptcy Abuse Prevention 
and Consumer Protection Act of 2005, Title IV-D of the Social Security 
Act, the Personal Responsibility and Work Opportunity Reconciliation 
Act of 1996, and the Privacy Act. We also interviewed bankruptcy and 
CSE program officials. This information was also used to review the 
national court, bankruptcy, and the CSE data systems that might be used 
for a potential recurring, national data match. 

To identify the proportion of parents with orders to pay child support 
who filed for bankruptcy nationwide, we worked with the U.S. Department 
of Health and Human Services' Office of Child Support Enforcement 
(OCSE) to develop an analysis plan. This plan outlined how they would 
match their national CSE data with a national extract of personal 
bankruptcy filers that we obtained from the Administrative Office of 
United States Courts (the Administrative Office). The national CSE data 
from the Federal Case Registry, as of June 2007, contained information 
about individuals who are participants of the CSE program and 
individuals who are not participants of the CSE program but had orders 
established after 1998 to pay child support. The national CSE data also 
included data from the Federal Offset Program file, which contains only 
current information about noncustodial parents that participate in the 
CSE program who owe past due child support. The bankruptcy data from 
the U.S. Party/Case Index included names and Social Security numbers 
(SSNs) of all individuals that filed for Chapter 7 or Chapter 13 
bankruptcy between October 17, 2005, and October 17, 2006, the first 
year of implementation under the Bankruptcy Reform Act. 

We recognize that the difference in time frames for the bankruptcy and 
CSE data could mean that we over-or under-counted individuals in this 
population. For example, we may have under-counted if a noncustodial 
parent's order ended in May 2007, but this noncustodial parent filed 
for bankruptcy on August 1, 2006. However, we determined that this was 
not a significant methodological limitation for the purposes of testing 
this data match and our analysis. 

From the Administrative Office we received 839,597 records of 
bankruptcy case data. After cleaning the data, 642,709 records were 
left for our work. Records were removed for the following reasons: 
missing SSN, bad SSN (more or less than nine digits), text strings 
instead of SSN, duplicates, and bankruptcy chapters other than 7 and 
13. We had several communications with the system administrators to 
clarify our reasoning before dropping any records. We were told that 
although the system has data checks there is no automatic cleaning 
performed. Rather, notices are sent to the district courts and it is 
left to them to correct the data. 

We assessed the reliability of the respective bankruptcy and CSE data 
by reviewing existing information about these data and the systems that 
produced them, interviewing agency officials knowledgeable about these 
data, and performing electronic testing. Because of OCSE's legal 
concerns, we agreed that they would not provide us with child support 
case data. Instead, they performed the test match of the bankruptcy 
data and national CSE data themselves to meet certain specifications we 
provided, and included some information to allow us to assess the work 
performed. If we are not provided with underlying data, the ability to 
conduct electronic testing as a part of the data reliability assessment 
is limited. For analyses such as these, electronic testing of the data 
is generally a routine part of the reliability assessment. However, 
based on interviews of knowledgeable officials and reviews of relevant 
documentation, and because OCSE routinely performs SSN checks with the 
Social Security Administration, we have sufficient reason to believe 
that the OCSE data are reliable for the purpose of this report. In 
preparation for matching, we eliminated duplicate SSNs from the data 
within each bankruptcy chapter, which brought our total to 630,075 
individuals who filed for bankruptcy. This total double-counts the 
1,538 individuals who filed for both Chapter 7 and Chapter 13 
bankruptcy. 

To help determine the potential benefits of data matching on a routine 
basis, we conducted a match ourselves of national bankruptcy filings 
with CSE data in Texas to ascertain whether bankruptcy filers 
volunteered their child support obligations when they file for 
bankruptcy. Among the six states we contacted, Texas was readily able 
to provide us with an extract of their child support caseload. Our 
universe totaled 1,931 individuals, which included noncustodial parents 
with child support orders who were participating in the Texas CSE 
program at some point between October 17, 2005, and October 17, 2006, 
and who filed for bankruptcy between October 17, 2005, and October 17, 
2006. From this universe, we then selected a simple random probability 
sample of 100 noncustodial parents.[Footnote 25] With this probability 
sample, each member of the study population had a nonzero probability 
of being included, and that probability could be computed for any 
member. Each sample element was subsequently weighted in the analysis 
to account statistically for all the members of the population, 
including those who were not selected. 

Because we followed a probability procedure based on random selections, 
our sample is only one of a large number of samples that we might have 
drawn. Since each sample could have provided different estimates, we 
express our confidence in the precision of our particular sample's 
results as a 95 percent confidence interval. This is the interval that 
would contain the actual population value for 95 percent of the samples 
we could have drawn. As a result, we are 95 percent confident that the 
interval ranging from less than 1 percent to over 7 percent would 
contain the true percentages of our sample population who completed all 
of their bankruptcy paperwork and had not reported their child support 
obligations. 

To conduct our review of the bankruptcy case files for the Texas 
sample, we developed a data collection instrument to gather information 
systematically from the selected bankruptcy files and used the 
Administrative Office's electronic public access service to review all 
bankruptcy filings and to record whether the child support obligation 
was reported in the bankruptcy paperwork. Bankruptcy filers (and their 
attorneys) can report these obligations in a number of places in the 
paperwork. We did not determine whether the individuals who neglected 
to report their obligations eventually did so when asked by a case 
trustee. The results of this case file review cannot be generalized 
nationwide; however, they can be generalized to the population of 1,931 
noncustodial parents with IV-D orders on record in the automated system 
of the Texas State CSE program who also filed for bankruptcy nationwide 
and are intended for illustrative purposes. Moreover, it is possible 
that we identified some individuals as non-reporters due to a timing 
issue rather than their not disclosing a current obligation. While we 
attempted to match the time frames of the bankruptcy and child support 
data as closely as possible, it is possible that an individual's child 
support status on the exact date they filed for bankruptcy might not 
have been captured in our data match. We determined that this timing 
issue was not a significant methodological limitation because we found 
so few filers that did not report their child support obligations. 

To help us understand the potential benefits as well as the feasibility 
and cost of data matching on a routine basis, we interviewed officials 
in both the bankruptcy system and the CSE program, including officials 
representing federal, regional, and state entities. In interviews with 
these officials, we also discussed challenges that data matching would 
involve for all parties, including technical, legal, financial, and 
security challenges that data matching would entail for all parties. We 
spoke with officials in the Administrative Office, the Executive Office 
for U.S. Trustees, and OCSE. We also interviewed officials at state 
agencies in Alabama, California, Illinois, New York, Texas, and West 
Virginia. We chose these six states for their diverse geography, 
caseload sizes, and administrative structures. Our work at the six 
state agencies focused on the notices they receive from case trustees 
under the new DSO provisions of the Bankruptcy Reform Act rather than 
the notices they receive from bankruptcy courts under the more general 
requirement that all creditors specified in bankruptcy filings are to 
be notified by the courts. Additionally, we interviewed 5 regional U.S. 
Trustees and 1 bankruptcy administrator in Alabama and the 16 case 
trustees who report to them in bankruptcy districts in these six 
states. 

We conducted this performance audit from December 2006 to January 2008 
with generally accepted government auditing standards. Those standards 
require that we plan and perform the audit to obtain sufficient, 
appropriate evidence to provide a reasonable basis for our findings and 
conclusions based on our audit objectives. We believe that the evidence 
obtained provides a reasonable basis for our findings and conclusions 
based on our audit objectives. 

[End of section] 

Appendix II: Comments from the Department of Justice: 

U.S. Department of Justice: 
Executive Office for United States Trustees: 
Office of the Director:	
Washington, D.C. 20530: 

December 18, 2007: 

Ms. Kay E. Brown: 
Director: 
Education, Workforce, and Income Security: 
Government Accountability Office: 
Washington, DC 20510-1501: 

RE: GAO 08-100: 

Dear Director Brown: 

Thank you for the opportunity to review the Government Accountability 
Office's draft report entitled Bankruptcy and Child Support 
Enforcement: Improved Information Sharing Possible Without Routine Data 
Matching. The draft report concludes that while a routine data matching 
of bankruptcy data with state child support records may provide 
additional benefit, it may not be warranted because of costs and policy 
considerations. GAO does recommend, however, that the United States 
Trustee Program (Program) more actively encourage trustees under its 
supervision to provide state child support enforcement agencies with 
the full Social Security numbers of debtors with domestic support 
obligations. We support this recommendation. 

In implementing the Bankruptcy Abuse Prevention and Consumer Protection 
Act of 2005 (BAPCPA), we provided specific guidance to the private 
trustees to include in their notices to the state child support 
enforcement agencies the full Social Security number of debtors with 
domestic support obligations. To assist the private trustees, the 
Program, in consultation with the Office of Child Support Enforcement 
of the Department of Health and Human Services, developed sample 
notification letters which were given to the private trustees for their 
use. The notifications letters were also provided to the vendors of 
trustee management software for inclusion in their software so that the 
private trustees could more efficiently generate the required notices. 

Based upon the GAO recommendation in this report, the Program will 
continue to work with the private trustees, including through their 
national associations, to identify and address impediments to ensuring 
that full Social Security numbers are provided to state child support 
enforcement agencies. We appreciate the GAO's thorough review of this 
issue and its constructive recommendation. 

Sincerely, 

Signed by: 

Clifford J. White III: 
Director: 

[End of section] 

Appendix III: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Kay E. Brown (202) 512-7215 or BrownKE@gao.gov: 

Acknowledgments: 

In addition to the contact named above, Denise M. Fantone, Acting 
Director; Gale Harris, Assistant Director; James Whitcomb, Analyst-in- 
Charge; Susan Higgins; and Sara Pelton made significant contributions 
to this report. In addition, Ron La Due Lake, Cynthia Grant, and John 
"Chris" Martin provided assistance in data collection and analytical 
support; Linda Watson, Ellen Wolfe, and Jessikah Foulk provided 
assistance in data collection; Susan Bernstein provided writing 
assistance; Jim Rebbe and Geoff Hamilton provided legal assistance; and 
Lise Levie provided technical assistance. 

[End of section] 

Footnotes: 

[1] Pub. L. No. 109-8, § 230, 119 Stat. 23, 72 (2005). The Bankruptcy 
Reform Act was signed into law on April 20, 2005, and most of its 
provisions became effective on October 17, 2005. 

[2] Each of the 50 states, the District of Columbia, Puerto Rico, the 
U.S. Virgin Islands, and Guam administers a CSE program. Hereafter, we 
will refer to these 54 CSE agencies as "state agencies." 

[3] We determined that the differences in dates were not a significant 
limitation for our purposes. See appendix I for more information about 
this issue. 

[4] Because businesses do not pay child support, the scope of this 
report is limited to individuals filing under Chapter 7 or 13, which 
are the bankruptcy chapters under which individuals usually file. 

[5] Among the six states we contacted for this review, Texas was able 
to provide us with a relevant extract of their child support caseload. 

[6] Pursuant to the Bankruptcy Judges, United States Trustees, and 
Family Farmer Bankruptcy Act of 1986 (Pub. L. No. 99-554, 100 Stat. 
3088 (1986)), the Judicial Conference established the bankruptcy 
administrator program in these two states as a part of the federal 
judiciary. 

[7] The Federal Parent Locator Service is a national system to assist 
states in locating noncustodial parents and custodial parties to 
establish paternity and child support orders; enforce and modify 
orders; and identify orders or cases involving the same parties in 
different states. 

[8] The 45,346 adults are all noncustodial parents with child support 
orders in the Federal Case Registry while the 33,958 represents only 
those noncustodial parents with "IV-D" orders associated with parents 
receiving services from the CSE program, which is administered under 
Title IV-D of the Social Security Act. 

[9] This figure is based on the 17,146 filers identified in a separate 
match HHS conducted for us with the Federal Offset Program file, which 
only includes noncustodial parents with IV-D orders who owe past due 
child support. This file only includes parents with arrearages that 
meet minimum threshold amounts. 

[10] We also found that of all custodial parents with child support 
orders in place that establish their legal right to child support, 0.7 
percent filed for bankruptcy compared with about 0.5 percent for 
noncustodial parents. Moreover, of all custodial parent bankruptcy 
filers with orders, 80 percent are part of the CSE program compared 
with 78 percent for noncustodial parents. Finally, of all custodial 
parent bankruptcy filers with orders, 56 percent filed for Chapter 7 
while 44 percent filed for Chapter 13. 

[11] The 95 percent confidence interval for this estimate ranges from 
less than 1 percent to over 7 percent, which means we are 95 percent 
confident that this interval contains the true values in the study 
population. It is possible that we identified some individuals as non- 
reporters due to a timing issue rather than their not disclosing a 
current obligation. While we attempted to match the time frames of the 
bankruptcy and child support data as closely as possible, it is 
possible that an individual's child support status on the exact date 
that they filed for bankruptcy might not have been captured in our data 
match. 

[12] Administrative Office officials told us that in the event that a 
filer has for some reason initially not listed a creditor and the case 
trustee has knowledge of this, the case trustee should require the 
filer to amend the bankruptcy paperwork. 

[13] Our work at the state agencies focused on the notices they receive 
from case trustees under the new DSO provisions of the Bankruptcy 
Reform Act rather than the notices they receive pursuant to the more 
general requirement that a bankruptcy court send a notice of a meeting 
of creditors to all creditors specified in bankruptcy filings. 

[14] Regarding administrative convenience, one trustee noted that she 
relied on one pre-formatted letter for sending the notifications to 
custodial parents and state agencies. This letter was formatted for 
custodial parents, who are not to receive the bankruptcy filer's full 
SSN. This was considered easier than having two separate letter 
formats--one for custodial parents and another for state agencies-- 
although it resulted in the full SSN not being provided to state 
agencies. 

[15] For a fuller discussion of these issues, see the following GAO 
products: Social Security Numbers: Federal and State Laws Restrict Use 
of SSNs, yet Gaps Remain, GAO-05-1016T (Washington, D.C.: Sept. 15, 
2005); and Social Security Numbers: Federal Actions Could Further 
Decrease Availability in Public Records, though Other Vulnerabilities 
Remain, GAO-07-752 (Washington, D.C.: June 15, 2007). 

[16] A routine data match could also help state agencies locate 
noncustodial parents identified by custodial parents but for whom a 
child support order has not yet been established. While this would 
provide useful information for child support enforcement, these parents 
would not have formal child support obligations to report when they 
file for bankruptcy. 

[17] The Administrative Office's database is the U.S. Party/Case Index. 
EOUST's database, the Automated Case Management System, is based on 
extracts of case management information from the Administrative Office. 

[18] Fiscal Year 2004 Annual Report to Congress, U.S. Department of 
Health and Human Services. In addition to the Federal Case Registry, 
the Federal Parent Locator Service includes the National Directory of 
New Hires: a central repository of employment, unemployment insurance, 
and wage data from State Directories of New Hires, State Employment 
Security agencies, and federal agencies. Person data in the registry 
are matched daily against employment data in the National Directory of 
New Hires. 

[19] See The Challenge of Data Sharing: Results of a GAO-Sponsored 
Symposium on Benefit and Loan Programs, GAO-01-67 (Washington, D.C.: 
Oct. 20, 2000). 

[20] These risks involve developing and deploying automated systems 
with critical flaws (e.g., it does not satisfy the needs of the end 
user and does not operate as intended), resulting in significant 
schedule slippages or increased cost or both. For a discussion of risk, 
see GAO, DOD Business Transformation: Preliminary Observations on the 
Defense Travel System, GAO-05-998T (Washington, D.C.: Sept. 29, 2005); 
and DOD Business Systems Modernization: Billions Continue to Be 
Invested with Inadequate Management Oversight and Accountability, GAO-
04-615 (Washington, D.C.: May 27, 2004). 

[21] Thirteen states have county-operated programs, and five other 
states reported having a combination of state-and county-operated 
programs. 

[22] Costs for development and maintenance would also be incurred by 
bankruptcy entities, although estimates of these potential costs were 
not developed for us. 

[23] As noted previously, EOUST's database does not include bankruptcy 
filers in Alabama and North Carolina. In addition, its database is 
based on extracts of case management information from the 
Administrative Office. 

[24] Under the Privacy Act of 1974 (5 U.S.C. 552a), a federal agency is 
prohibited from disclosing any record that is contained in a system of 
records to another agency without the prior written consent of the 
individual to whom the record pertains. There are 12 exceptions to this 
"no disclosure without consent" rule. The two pertinent to our 
discussion are the routine use and law enforcement agency exceptions. 
The routine use exception allows an agency to disclose information if 
its disclosure is compatible with the purpose for which the information 
was collected, and if the routine use was published in the Federal 
Register. The law enforcement exception allows an agency to disclose 
information upon a written request by the head of an agency for a civil 
or criminal law enforcement activity authorized by law. 

[25] For our analysis, we included only 94 of the 100 bankruptcy filers 
with obligations who completed all of the required bankruptcy 
paperwork. 

[End of section] 

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