Trustee Program. 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. 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. 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. 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. (The  results could be higher or lower in other states.) In developing guidance for trustee noticing under the U.S. 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. 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  these costs, bankruptcy officials cited some statutory and policy  considerations to releasing their own data or to performing a data match. 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. 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. Trustee Program. They said, for  example, they would need to build an exchange method that would allow  for the secure exchange of data. 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. 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. 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.
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.