PAYMENT
PROCESSING
CS 540P Distribution of
Discounted Settlements
06/99 Revised 03/07/22 Training
Complete 03/21/22 Last Reviewed 07/10/25
42 U.S.C 657 and 654b, R527-330
Federal laws
42 U.S.C. 654b and 657 (see CS 535P
Distribution of Collections and CS 537P Distribution of all Payments other than
Discounted Settlements and Federal Tax Intercept Payments) and administrative
rule, R527-330 dictate how the Office of Recovery Services/Child Support
Services (ORS/CSS) must distribute and disburse payments.
(2) For child support services cases, if the obligor designates the debt where
the payment should be posted, ORS shall honor the obligor's expressed intent
and credit the payment to the designated debt.
(3) Absent a specific designation, ORS shall
apply payments in the following order:
(a) pro-rated among the obligor's current support
obligations; and then
(b) divided equally among child support cases
with arrears.
(4) A payment credited to a child support case
with arrears shall be applied to the oldest debt, and arrears owed to the
family shall be paid before arrears owed to the state pursuant to the priority
designations specified in 42 U.S.C. 657.
(5) The provisions in this section do not apply
to payments received from the following as they have their own disbursement
protocols:
(a) Federal Tax Refund Intercept Program; and
(b) discounted settlements.” (Emphasis
added.)
To meet
these requirements, ORSIS has been programmed to automatically distribute
payments appropriately. The distribution
rules for discounted settlement are slightly different than other support
payments. Accounting posts a discounted
settlement payment with an override to the case number(s) which should be
included in the approved settlement posting instruction.
Discounted
settlement payments are posted and applied only to those debt(s) coded for
settlements. When the case is coded for
a discounted settlement ORSIS automatically distributes the payment as follows:
1.
Level 1 - Current Support: When a settlement payment is received/receipted in the State
Disbursement Unit (SDU), it is applied
first to unpaid current support owing on the case(s).
2.
Level 2 - Arrears Debts Coded
with a Settlement Amount: After current support has been paid,
ORSIS identifies all arrears debts within the case coded for a discounted
settlement. Settlement payments
distribute to the oldest debt in the following debt group priority up to the
SETTLEMENT AMOUNT:
a.
NADC
(Non-IV-A) arrears debts;
b.
DCNS
(day-care non-State paid) arrears debts;
c.
MNMC
(non-IV-A medical) arrears debts;
d.
COND
(Non-IV-A conditionally assigned) arrears debts;
e.
FSCN
(Non-IV-A foster care);
f.
YCOR (Youth
Corrections);
g.
FDHS (DHS
Custody);
h.
CSUP (Child
Support – Child in Care);
i.
PARM (Parent
Responsibility Medical – State Hospital);
j.
PARS
(Parental Responsibility – State);
k.
TEMP
(temporarily assigned) arrears debts;
l.
AFDC (IV-A)
arrears debts;
m.
MDMC (IV-A
medical support) arrears debts;
n.
DCST (day
care-State paid) arrears debts;
o.
FSCA (IV-E Foster Care);
p.
YCOA (IV-E
Youth Corrections); UDAA (Non-IV-A unassigned during assistance) arrears debts
q.
FEES;
r.
FSMN
(Non-IV-E Foster Care Medical);
s.
YCMN (Youth
Corrections Medical); and,
t.
FSMA (IV-E Foster Care Medical).
Any money
remaining after paying current support and the arrears debts coded for
settlement show up on the Funds Remaining Report.