January 1, 1900

by Denise A. Simon

The New Jersey law which prevents parents who owe child support arrears until they are current on the obligation has been implemented throughout the state judiciary system over the past year. The law, which took effect on August 14, 2000, allows a court to place a lien on a judgment, arbitration award, inheritance or a workers' compensation award if the recipient owes any back child support obligation. The lien then has priority over all other levies and garnishments with the exception of unpaid New Jersey State income taxes. The lien applies to "net proceeds" of a settlement, which the legislature defined as any amount of money in excess of $2,000, payable to the prevailing party. In calculating net proceeds, the law provides that the costs in prosecuting a suit, including attorney's fees and court fees, are to be deducted from an award or inheritance. The law also acknowledges that payments to the State Medicaid program or the Division of Unemployment should be made prior to determining the net proceeds of an award.

Procedure to Initiate a Lien

To initiate the lien, it must be docketed as a child support judgment with the court clerk's office. This creates a searchable record so that attorneys are put on notice of the lien. The law requires that prior to the distribution of net proceeds of a judgment, settlement or inheritance, the attorney for the prevailing party must initiate a search through a private judgment search company to determine the existence of a child support lien. If the prevailing party is not represented by an attorney, the search must be initiated by the opposing attorney, insurance company or agent. The amount of child support judgment must be paid out of the net proceeds prior to final payment being forwarded to the client.

Beginning on May 7, 2001, the Division of Workers' Compensation has child support lien search capability via access to the Division's data system. Child support lien information is downloaded monthly from the New Jersey Administrative Office of the Courts to the Division of Workers' Compensation. Current child support arrearage data is available daily via an online computer linkage between the Division and the AOC. The Division matches the information received on child support debtors with information it retains for individuals who have filed workers' compensation claims. In most workers' compensation courts throughout the state, judges are routinely running the search prior to putting settlements through or prior to commencing a trial. The judge of compensation shall in turn incorporate in the decision an order requiring the employer or the employer's insurance carrier to contact the Probation Division to satisfy the child support judgment out of the net proceeds of the award. In the event no child support judgment is found, the net proceeds of any settlement or judgment may be distributed immediately. Such a system does not exist in state judiciary. The judiciary is not required to review the existence of such liens. Attorneys are therefore held accountable for instituting the private company search.

Thus, in today's day and age, deadbeat parents may not be able to escape their responsibilities and obligations. While the implementation of this new system has created a burden on the legal system, it provides an efficient manner in which to protect the children in the State by mandating that the proceeds of awards be first applied to child support arrearages.

Denise A. Simon is an associate of Hill Wallack where she is a member of the Litigation Division and the Workers' Compensation Practice Group.