Interest & Default Fee
Under the Family Maintenance Enforcement Act, BCFMA is legislated to charge daily interest on late payments and arrears owed by payors in B.C.
All interest collected is payable to the recipient, not to BCFMA.
Current interest rate: 6.95%
When would BCFMA take this step?
Most unpaid support is subject to interest. There is a 15-day grace period between when a payment is missed and when interest starts to accumulate. If the payment is not paid within 15 days, interest will be charged back to the date it was due.
No interest will be applied if the payment is received within 15 days of its due date.
How interest is calculated?
- If an order or agreement specifies an interest rate, BCFMA will charge interest at that rate
- If the order does not specify an interest rate, we will charge interest at the prime rate set by the Bank of Canada
- Interest based on the prime rate is updated every 6 months, on January 1st and July 1st each year
- Interest is calculated and applied daily
- BCFMA applies simple interest, meaning it does not compound and there is no interest-on-interest
- The formula to calculate simple interest is Principal (P) x Rate of Interest (R) x Time (T)
When a support order is increased retroactively by the court, interest will not be charged on the increased portion of the support from the date the revised payments start and the date of the court order.
Are there situations when interest may not be charged?
Yes, interest may not be charged if:
- The payor is on Income Assistance in B.C.
- If a payor lives outside of B.C. and another maintenance program is involved, interest will only be calculated and applied if that jurisdiction has interest in its laws, or if the order specifies interest should be charged
What if a payor is having difficulties making payments?
We know that sometimes it may be difficult to make all support payments on time and in full. There are 2 options if a payor is finding it difficult to meet their payment obligations.
- Contact us to discuss a voluntary payment arrangement. Please go to Voluntary Payment Arrangement to learn more
- Consider changing their support order or agreement
Default Fee
A default fee is a penalty charged if a payor misses two or more support payments in a calendar year. The fee is equal to one month’s support payment to a maximum of $400. It goes to the B.C. government, not to the recipient, to help the government pay the costs of operating this Agency.
Before taking this action, we will:
- Send the payor a Notice of Intention to charge the default fee after the first missed payment
- Allow 30 days to dispute the Notice of Intention if the payor believes our records are incorrect
Once applied, the payor will receive a default fee certificate saying the payor now owes the default fee in addition to their ongoing support payments.
Are there situations when the default fee will not be charged?
We may charge the default fee when a payor defaults twice or more in one year, even if the payor’s financial situation has changed. However, we will make an exception if we determine that:
- The payor made the payment on time
- The payor’s cheque was returned NSF (non-sufficient funds) due to a bank error
- On the date the payment was due, the payor was receiving income assistance
- The court order or agreement requiring the payor to make support payments ended, or was changed to a different amount and/or a different due date
Review the Default Fee
A payor can ask us to review the Notice of Intention issued and/or a default fee charged by completing a Default Fee Request for Review Form (PDF 170 KB. We will inform the payor of the results of our review.
Paying the Default Fee
A default fee can be paid by using online banking or cheque.
Any payment received by BCFMA will be used to first pay support owed to the recipient before going towards the default fee.
If a default fee is not paid we may consider collection action.
Recipient withdraws from BCFMA
If the payor still owes default fees when the recipient withdraws from BCFMA, the payor will remain enrolled until those default fees are paid.