Child support as a form of income?

Question

I just met with a woman at the rental. Her source of income was SSI + child support. As it turns out, they did not meet my minimum income requirement (3X monthly rent), so they didn't apply.

I've dealt with SSI before but how do you get proof of child support payments? Is it considered discrimination not to accept it as a form of income? My only concern about it is that the father might stop paying at some point or fall behind.

Steve Babiak · Answer

Proof of child support has a few different forms. First, is there a court order stipulating child support or a divorce agreement where that is stipulated? If not, some informal arrangement can always be broken leaving the recipient broke. And even if court ordered, the payer may decide to not remain employed so as to avoid payment. Secondly, when does it expire (child's age at expiration could come up while still your tenant if you accept them)? Third, how is payment made? Sometimes the court gets paid and distributes that money to the recipient; sometimes it is paid directly from one parent to the other. Regardless you want to see proof of deposits of that payment. If it is all cash - can't be proven, so forget them if they have to count support as income to qualify.

Hence why I always say "documented income" - it can be verified that way.

Bill Gulley · Answer

At one time I believe the secondary market accepted child support payments if current and paid in the past 12 months, such is shown by the deposits on bank statements or if court ordered through the court, they provide an accounting. 24 months of a good payment history is a pretty good indicator that there is a responsible father (or mother to be politically correct) at the other end.

I'd consider other factors as well, if CS was $500 a month and the applicant was close without it or was the CS $1,200 and the applicant had 50% ratios,rent to income,  a missing CS payment for any reason with an applicant that could not come close to qualifying would be a different issue......those compensating factors I have mentioned before.

As mentioned above, you need a copy of the court order and read it carefully, you would assume on child turning 18 would disqualify them, CS often continues if the child remains in school. Another issue is that one child can be awarded more or less than another child, a child with issues can be awarded more than another, so just assuming an 18th birthday cuts the CS in half (2 kids) may not be the case.

When I had to deal with CS issues I would always ask about the obligated party, employment, time on job, earnings, etc, but never needed to verify it.

There are other issues besides CS, like maintenance awarded, same type of issue by more dreaded by those paying. I didn't have many in this boat but a few. I admit, I did make a phone call, the excuse for the call was some related issue, something on a credit report perhaps just to clear it up sort of call. Fishing.  It gives you an opportunity to talk to that payor and you can sence the attitude they have with regard to the issue. You may talk to all kinds, but if you listen you can get a sence of the responsibility they have in the matter.

Kyle J. · Answer

#1 - Ask the applicant to provide you with a copy of the court order showing the amount of child support ordered.

And

#2 - Ask the applicant to provide you with a statement from the State Disbursement Unit (or whatever the agency is called in your state that is responsible for collecting/distributing child support payments) and/or a copy of their bank statement documenting that the payments are actually being made.

If the child support is not court ordered and is just being made as part of some informal agreement (i.e. made outside of court) between the parents, I wouldn't even count it as it's not legally binding and the party who is paying can stop at anytime with no repercussions.

Of course, even with court ordered child support, the party who is paying could still stop paying at anytime too. But at least there are consequences/remedies if they do stop. And an applicant who has a wage earning job could just as easily get fired and lose their income too.

Account Closed · Answer

I would agree with Bill G., if they can show a history of it consistently being paid on time, I would have absolutely no problem accepting it as proof of income.

Philip LaRoche · Answer

Bienes,

Child support is not considered income. I can not claim my payments on my taxes nor does my ex-wife have to claim it as income on hers. At any time either party can pettition the court to raise or lower their payments based on a significant change in income. I my self would not count on it in todays market.  Not to mention those payments have an expiration date. In FL it is 18 or 21 should the child attend college. Other tidbit is the court order is to provide support in the amount of X number of dollars, it does not say make a payment of so many dollars. In my case should my son attend college my ex will no longer receive payments from me as I will be paying for his living expenses at college. There are other issues to also look at when looking at child support payments. If the minor child spends extended time at the non custodial parent that parent may not have to provide payment during that time frame, thus reducing the amount of income for your tenant during the time the child is away.

Just my 2 cents I hope it helps.

Take care 
Phil

Robert Steele · Answer

I have turned down applicants that rely on child support payments for income. To be comfortable with this I would need to analyze the income of the individual paying the child support and I think in most cases there is no chance of them agreeing to that.

Bill Gulley · Answer

A two year past history of receiving child support on time is a good rule to follow, the rest is stated above very well!

Bienes Raices · Answer

Thanks Phil...my friend (who used to be a landlord) also told me that SSI will reduce the SSI payment/allotment by the the amount of child support an individual is receiving.

Steve Babiak · Answer

I agree that the income of the party paying child support is part of the issue.  Usually, that party as well as the recipient have their finances examined (at least in my area) by somebody for the county, so that the support payment is fair based on incomes from both sides.  So then the only challenge becomes the paying party staying in the job making that amount or more, and not taking a menial job so as to attempt to get even with the other parent (usually an ex-spouse).  The county will require that the "earning capacity" of the payer not be deliberately lowered; if deliberately lowered, they will use the "capacity" rather than actual earnings, and that could mean inability to pay.

So Bill G.'s suggestion of seeing a history for 2 years becomes a good guide to seeing that the paying party is behaving responsibly.

Bienes Raices · Answer

ok thanks everyone, it's good to know how to handle it if it ever comes up again

Child support as a form of income?

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