Supportkids transfers 20,000 of child-support collection cases after loan default
Austin-based company says it will serve remaining clients.
By Tim Eaton
Thursday, May 28, 2009
As a result of a recent loan default, Austin-based Supportkids Inc. was forced to transfer a portion of its child-support collection cases to a New Hampshire-based law firm.
Supportkids CEO Byron Sehlke said Supportkids unloaded 20,000 cases to Richard J. Boudreau & Associates on May 14,
leaving Supportkids with 18,000 cases, many of which are nonpaying.
"This was not our decision," Sehlke said.
Boudreau & Associates didn't respond to a request for comment.
Supportkids, a for-profit company that collects money from parents who are behind on their child-
support payments, said in a letter to clients that the organization was unable to refinance a loan with an unnamed lender.
As a result, the lender handed over the cases, which Supportkids had used as collateral on the loan, to Boudreau & Associates.
Sehlke called the situation "a function of the credit crisis." He added that the company, which has laid off an undisclosed number of employees, remains in transition but will continue to serve its remaining clients and accept new ones.
Affected clients of Supportkids were told in the letter that Supportkids no longer has current information on their cases and that Boudreau & Associates has their case files and should be contacted with questions or for new information on their cases.
Supportkids had tried unsuccessfully to reach a cooperative agreement with the lender and Boudreau & Associates to arrange for a transition period, so the company was not able to notify clients in advance of their cases being transferred, the letter said.
Supportkids charges an initial $475 case development fee and takes a 34 percent commission on overdue child-support payments. When it accepts a case, it requires that the parent who is behind on the payments send the money to the company, which takes its cut and forwards the balance to the parent who is caring for the child or children. Sehlke said the company takes only the toughest cases.
Thank You Mr. Eaton for the low down on our situation. They cant use our child support as collateral against a loan default. Its against the law. Basically, they are using their 34% from our child support to pay their debt. And FYI Michelle, if they say that they will hold your money and refuse to pay you until their direct deposit form is signed, that's extortion.