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Financial Issues This forum is for discussing any of the financial issues involved in your divorce.

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  #1  
Old 03-07-2018, 12:08 PM
v3ktors v3ktors is offline
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Default Interest rate on payment of arrears

I think this is a relatively simple question...but perhaps not. Is there a standard approach used for payment of arrears (either for support or s 7 expenses) on a payment plan approach as opposed to a lump sum? Is interest typically included, or is it case-by-case? If interest is applied, is there a basis for how much interest can be applied?


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Old 03-07-2018, 12:25 PM
Stillbreathing Stillbreathing is offline
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If you are with FRO there is a standard interest rate and formula for calculating arrears. You have to complete the form yourself as well as the calculations using their formula then submit it to them. If you don’t they will not go after the interest. Even then you have to hound them and they may still ignore any interest owing. Also, unlike your bank , they din’t Start calculating interest until the payer is one month late. Ridiculous but true.
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Old 03-07-2018, 12:45 PM
v3ktors v3ktors is offline
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Does that apply in the case where you're owed some amount of money in arrears...say $10,000, and you agree that the arrears can be paid back in monthly amounts of $100 until the arrears are fully paid. Would FRO apply an interest rate in this case?


Alternatively, could you have an agreement or order whereby you're paid back $100 monthly until the entire arrears are paid in full, with an annual interest rate of say 5%, which would in effect, increase the length of time for the arrears to be paid in full? If this were possible, I think that the interest rate would not be included in any documents from FRO, but rather would just increase the length of time that the $100 monthly payments would be made.
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Old 03-07-2018, 12:53 PM
rockscan rockscan is offline
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If you have it in your agreement that there is a payment schedule then I dont think you can claim interest if they are making those payments. Most interest line items in agreements specify interest is owing on default payments. FRO has the same process regarding interest which applies to payments not made.

For instance, my partners agreement clearly states that interest is owed at a specific amount on arrears that have not been paid. Which means if he fell into arrears because he wasnt making payments, interest would be owing.

If you and your ex have agreed that they are in arrears and owe ten grand payable at 100 a month then there is no clause on interest. Its not like a loan.

Im not a lawyer though, thats just my understanding of the interest on cs payments.
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Old 03-07-2018, 01:00 PM
v3ktors v3ktors is offline
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Thanks for the replies. At this moment, there is no agreement or order yet in place, but I suspect that a settlement offer will be presented. I expect that the monthly arrears payments will go through FRO, so I don't expect issues with missed or delayed payments. Instead, where I am coming from is that the arrears arise from payments that should have been made over the past three years (so the payments are already late). In lieu of a lump sum payment right now to make up for the arrears, I am agreeable to a payment plan, but if that payment plan takes years to complete the arrears amount, then it doesn't seem fair that some sort of interest is not applied. An interest payment would also put some onus on the payor to pay more quickly if able to.
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Old 03-07-2018, 01:54 PM
rockscan rockscan is offline
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How did it become what should have been paid? Was the person not paying or you failed to agree on an amount?

I ask because my partner has been unable to pay the proper amount of cs because his ex refused to update FRO and is dragging their feet on the court process. He was ready, willing an able to pay his proper cs but was prevented from doing so. It would be unfair to add interest to the amount as it was her fault not his.

Which means in your case, if it was simply a delay because of the court process then interest would be unfair. If it was all because of neglect on their part then interest would be a reasonable request.
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Old 03-07-2018, 02:46 PM
v3ktors v3ktors is offline
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I agree that in your case, it would not be fair. In my case, it has been a case of my ex refusing to pay the proper cs or contribute anything towards s. 7 expenses, even after advising my ex of these discrepancies when they arose.
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Old 03-07-2018, 03:36 PM
v3ktors v3ktors is offline
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P.S. Up until now, nothing has gone through FRO...so there was no reason why the appropriate payments were not forthcoming.
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Old 03-07-2018, 03:53 PM
Stillbreathing Stillbreathing is offline
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Unfortunately the word “settlement” is an oxymoron when it comes to arrears in Cs or other monies owed. Lawyers and judges will try to persuade the person who is owed money to accept less than they are legally entitled to ( never mind what you are entitled to plus interest). For example, if your ex owes you 100,000 in arrears they may try to get you to accept 10,000. Their reasoning would be it’s in the past, there is no order for enforcement and it’s more likely you would actually get your hands on any money. Surprisingly enough the same lawyers do not use this line of reasoning when you owe them money! Settlement is a term whose true meaning is the financial ripping off of the person who is owed money in a divorce by use of coercion, and disrespecting their legal entitlement .

The only way you will likely get interest is if collection is through FRO and then only on a moving forward basis if at all.
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Old 03-07-2018, 07:14 PM
kate331 kate331 is offline
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I have to agree with Stillbreathing. I think racking up arrears is to the payers advantage as there is a real possibility they will be negotiated down. Then recipients always have to weigh the cost of legal fees vs the actual support you may receive.

I'd like to know the cost to taxpayers who now have to support some of these children through social services. That would be an interesting study. Fixing one system would help the other, imo. From what I have read 80% of FRO payers are in arrears.
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