Arizona Department Of Economic Security (ADES)(DES) Arrearage calculations and per annum interest being grossly miscalculated Phoenix Arizona
After my review of a recalculated report to assess arrears owed, it has come to my attention that DES is altering numbers within the report, summing totals incorrectly, and applying interest at a rate of double, triple, and even quadruple percent within various years.
I've asked ADES to explain their method of calculating interest and have received no response. I've called, stopped by in person, spoke with employees that work there, written correspondence, requested meetings with specialists and managers and even asked the attorney general impromptu while sitting in on a child support hearing, how interest is accrued. This is all in an effort to validate my understanding of the current revised statute and again how DES interest is accrued. Unsuprisingly, after my efforts, I still have no answer.
My question to the fellow rip-off report subscribers here is: Can someone please explain how interest is accrued in the state of arizona.
My understanding is that 10% of the total amount past due is assessed and included in a total interest due. For example, if I owed payments of $300.00 per month and never paid, the interest assessed would total $360.00 dollars for the year (3600.00 due for the year, 10% of that being 360.00).
Accordingly, after 8 years with the same support amount due, I would expect that the total amount of interest due would equal $2880.00 making my total arrears $21600.00 (300 dollars per month multiplied by 12...twelve months in a year...multiplied by 6...six years past due) plus the interest for six years($2880.00). Is this correct or am I missing something?
If this is correct, then DES owes a major amount of money back to atleast one individual in Arizona!
Can anyone clarify my understanding? Can I take on the State?
HELP!
Nicole
phoenix, Arizona
U.S.A.
7 Updates & Rebuttals
Armando
Phoenix,Arizona,
U.S.A.
The DES calculations are correct.
#8Consumer Comment
Wed, July 22, 2009
Keep in mind the amounts are cumulative. They stack on top of each other.
1st month - you have bal outstanding of 300. 10 percent interest on that is 2.50.
end of 1st month- you owe 300 in support and 2.50 in interest.
2nd month - you now have bal outstanding of 600. 10 percent interest on that is 5.00.
end of 2nd month - you owe 600 in support and $7.50 total interest (2.50 from 1st month plus 5.00 from second month)
3rd month - you now have bal outstanding of 900. 10 percent interest on that is 7.50.
end of 3rd month - you owe 900 in support and $15.00 total interest (2.50 from first month+ 5.00 from second month +7.50 from 3rd month)
You are catching a break that they are not charging interest on the unpaid interest amount itself (known as compounded interest).
I will reserve comment on your going 8 years without paying support.
Armando
Phoenix,Arizona,
U.S.A.
The DES calculations are correct.
#8Consumer Comment
Wed, July 22, 2009
Keep in mind the amounts are cumulative. They stack on top of each other.
1st month - you have bal outstanding of 300. 10 percent interest on that is 2.50.
end of 1st month- you owe 300 in support and 2.50 in interest.
2nd month - you now have bal outstanding of 600. 10 percent interest on that is 5.00.
end of 2nd month - you owe 600 in support and $7.50 total interest (2.50 from 1st month plus 5.00 from second month)
3rd month - you now have bal outstanding of 900. 10 percent interest on that is 7.50.
end of 3rd month - you owe 900 in support and $15.00 total interest (2.50 from first month+ 5.00 from second month +7.50 from 3rd month)
You are catching a break that they are not charging interest on the unpaid interest amount itself (known as compounded interest).
I will reserve comment on your going 8 years without paying support.
Armando
Phoenix,Arizona,
U.S.A.
The DES calculations are correct.
#8Consumer Comment
Wed, July 22, 2009
Keep in mind the amounts are cumulative. They stack on top of each other.
1st month - you have bal outstanding of 300. 10 percent interest on that is 2.50.
end of 1st month- you owe 300 in support and 2.50 in interest.
2nd month - you now have bal outstanding of 600. 10 percent interest on that is 5.00.
end of 2nd month - you owe 600 in support and $7.50 total interest (2.50 from 1st month plus 5.00 from second month)
3rd month - you now have bal outstanding of 900. 10 percent interest on that is 7.50.
end of 3rd month - you owe 900 in support and $15.00 total interest (2.50 from first month+ 5.00 from second month +7.50 from 3rd month)
You are catching a break that they are not charging interest on the unpaid interest amount itself (known as compounded interest).
I will reserve comment on your going 8 years without paying support.
Armando
Phoenix,Arizona,
U.S.A.
The DES calculations are correct.
#8Consumer Comment
Wed, July 22, 2009
Keep in mind the amounts are cumulative. They stack on top of each other.
1st month - you have bal outstanding of 300. 10 percent interest on that is 2.50.
end of 1st month- you owe 300 in support and 2.50 in interest.
2nd month - you now have bal outstanding of 600. 10 percent interest on that is 5.00.
end of 2nd month - you owe 600 in support and $7.50 total interest (2.50 from 1st month plus 5.00 from second month)
3rd month - you now have bal outstanding of 900. 10 percent interest on that is 7.50.
end of 3rd month - you owe 900 in support and $15.00 total interest (2.50 from first month+ 5.00 from second month +7.50 from 3rd month)
You are catching a break that they are not charging interest on the unpaid interest amount itself (known as compounded interest).
I will reserve comment on your going 8 years without paying support.
Bdh123
phoenix,Arizona,
U.S.A.
Arrearage Calculations...is this the proper way to calculate?
#8Author of original report
Wed, July 22, 2009
I've figured out how DES is calculating the arrears on my report. Can someone tell me if this is the proper way to calculate simple interest per annum. I thought the calculation was I=Prt (I= interest, P = Principal, r = Rate, and t = Time).
This is how they are calculating my the arrears:
Principal Interest
Beg Bal:
September Due: $300 0.00 Paid: 0
Balance: $300 0.00
October Due: $300 2.50 Paid: 0
Balance: $600 2.50
November Due: $300 5.00 Paid: 0
Balance: $900 7.50
THIS IS WHERE IT GETS WIERD
December Due: $300 7.50 Paid: 0
Balance: $1200 15.00 (shouldn't this be 10.00?)
THEN IT GETS WEIRDER
January Due: $300 10.00 Paid: 0
Balance: $1500 25.00 (DES adds $15 from Dec.)
February Due: $300 12.50 Paid: 0
Balance: $1800 37.50 (adding 25.00 and 12.50)
March Due: $300 15.00 Paid: 0
Balance: $2100 52.50 (adding 37.50 and 15.00)
This goes on and on...
1. DES is calculating the interest accrued correctly
2. DES is adding the interest amount to the prior month accurately
3. but then they're adding the totals of each month together!
Why on earth are they adding up the totals each month? It would make sense that at the end of the year, I'd owe a balance that grew over time ...but I wouldn't expect each months balance to be added up together and reported by DES as my total interest due.
Thats like your credit card balance being 100.00 and you don't pay, so now you owe 110.00 at the end of the month, and then the next month you don't pay either, so at the end of that month you still owe 110.00 plus more interest which totaled with the previous month (11 bucks) for a grand total of 121.00...that's fine...but your credit card company turning around and adding up 110 and 121 and saying you owe them 231.00 dollars in interest is not fine is it?
or is it?
Help...DES couldn't have screwed up this bad could they? I must be missing something...HELP!
Bdh123
phoenix,Arizona,
U.S.A.
ArizArizona Department Of Economic Security (ADES)(DES) Arrearage calculations and per annum interest being grossly miscalculated Phoenix Arizona
#8Author of original report
Fri, July 10, 2009
Arizona Revised Statute reads: In calculating support arrearages not reduced to a final written money judgment, interest accrues at the rate of ten per cent per annum pursuant to section 44-1201, beginning at the end of the month following the month in which the support payment is due, and interest accrues only on the principal and not on interest.
So, although the explanation above makes sense, because I think this is exactly how DES is calculating the interest, the principal is the only total that can accrue interest. If DES is adding the interest on to the total amount due at the end of the first year and then charging interest against that, isn't that a violation of statute?
Ashley
Springfield,Missouri,
U.S.A.
Try this
#8Consumer Comment
Thu, July 09, 2009
Basically what you are missing is you have to pay interest on your interest. I am not 100% sure this is how arrears works, but I believe it should give you a better idea.
If your payment is 300 and you dont pay, that 10% gets added in. Next month you will owe 630$, not 600$, if you don't pay that then the NEXT month you will owe 993$, not 900$.
SO lemme try this:
That means is you ignored it for 1 year your total amount due after the first year is: 6415.29$ and a total of $555.93 interest
NOT $3960 with a total of 360$ interest.
The longer you go without paying the higher it will get. You end up owing a greater and greater amount as time goes on with no payments. Of course this would result in an insane amount owed after 6 years so it is probably not their method.
If interest is assessed annually (which from your description it sounds like it) here is your breakdown:
Year 1: 3600$ + 360$ interest = 3960
Year 2: 3600$ + $3960 (previous year) + 756$ interest = $8316
etc etc
So compounded annually I come up with 30553.82$ due after six years. Not the 24,480$ you quote. I guarantee the interest is being rolled in to the amount owed annually.