IRAQ VETERAN NAILED BY CSED CREDIT REPORT

An Air Force serviceman and his girlfriend had a child. He provided support while active duty voluntarily. His support was enforced through a CSED order in 2004. In 2008, while he was still active military and serving in Iraq, mom applied to CSED for a child support increase. 5 months later when he was stateside on leave, he consented to the increase. CSED made the award retroactive and provided the retroactive portion be paid over a 24 month period as provided in Section 40-5-309 M.C.A.

CSED sent him notice that they would report his arrearage as a bad debt and delinquent, then did so. The labels “bad debt” and “delinquent” on his credit report barred him employment with government entities including the Department of Homeland Security and the Seattle Police Department. He sued in State District Court. The Montana Supreme Court found that a child support arrearage is not a delinquency and is not a bad debt. But the serviceman had failed to exhaust administrative remedies to challenge CSED’s characterization of the retroactive portion of the award, so the Court upheld the dismissal of his lawsuit on procedural grounds.

While upholding the dismissal, the Court was very critical of CSED for not helping the serviceman understand his possible remedies – even though they were not required under the law to do so.

“¶ 35 While being bound by statutory and procedural bars to reach the conclusions we do, we recognize the resulting injustice. A servicemember who has both an exemplary record in the military and an exemplary record in his payment of child support has been branded a “delinquent” obligor in the eyes of potential employers. Consequently, he has lost significant career opportunities—opportunities that would have benefited his child as well as himself. It appears that CSED had opportunities to help Kenck understand and protect his rights but did not do so. For example, CSED could have implemented § 40–5–262(3), MCA, allowing it to consider Kenck’s payment record, the availability of other remedies and other matters relevant to determining whether to release the administrative arrearage information to the credit reporting agencies. There is no evidence that it considered this discretionary opportunity.

 ¶ 36 Moreover, Kenck visited the Billings CSED office within days of being discharged from the USAF, contesting the characterization of his child support account as delinquent and the reporting of his arrearage to the consumer reporting companies in the first place. It does not appear that CSED assisted Kenck in understanding what steps he could take to challenge the inaccurate report, nor did it advise him that such actions must be taken within 90 days of his discharge.”

The Court took the extraordinary action of directing the district court to order CSED to give notice of the opinion to the credit reporting agencies and monitor CSED’s compliance.