Past Due Child Support Payments Applied First to Interest
When a person is past due on a debt, then makes a payment, how is the payment applied? Does the payment reduce the principal, or is the principal left intact and only interest reduced? The answer to this question made a difference of about $30,000 in a recent Florida child support case called Vitt v. Rodriguez.
In Vitt, the ex-husband paid some child support immediately after divorce. According to the opinion, the ex-husband then "disappeared in 1990. He was eventually located in Tampa in 2003, at which point he was behind in his child support plus accrued interest in the amount of approximately $161,000."
Under a local court rule, payments on past due child support were to be applied first to current child support, second to the principal amount of past due child support, and finally to interest on the past due child support. Under this system, the ex-husband reduced his debt approximately $30,000 more than he would have reduced it had the payments been applied to interest on past due child support before applying those payments to the past due principal amount.
In an appeal of the issue, the court found no statute that directed how payments should be applied. The court then adopted the common law rule for application of payments. Relying on a United States Supreme Court case from 1839, the court agreed "that in applying a payment on a debt, the interest due should first be satisfied, and the balance should then to be applied to diminish the principal." Thus, the ex-husband owed an additional $30,000 in interest on past due child support.
It is surprising, as the court said, that Florida had no rule on the application of payments. To what extent other states have such rules is unknown, but in Texas, the Family Code clearly establishes how payments toward past due child support are to be applied - first toward current child support, second toward interest on past due child support, third toward the principal amount of past due child support, and finally toward any attorney's fees or costs ordered paid by the court.
