In legal and financial usage, arrearage is any amount you owe on a recurring obligation that you didn’t pay on time. Child support, taxes, a mortgage, rent, a credit card balance: once a payment is late, the unpaid amount becomes arrearage, and it almost always grows through interest, penalties, or fees. What happens next depends on the type of debt. Consequences range from a damaged credit report to wage garnishment, property liens, passport denial, and, for taxes, seizure of your bank account without a court order.
Where Arrearage Comes From
Almost any recurring bill can slip into arrearage, but the enforcement tools attached to each type of debt look very different.
Child support. Missed court-ordered payments become child support arrearage. Federal law requires every state to maintain support guidelines and review them at least every four years.1Office of the Law Revision Counsel. 42 USC 667 – State Guidelines for Child Support Awards Many states also charge interest on the unpaid balance, commonly in the 3% to 6% range.
Taxes. Underpay or skip a federal tax bill and the IRS adds penalties plus interest at the federal short-term rate plus three percentage points. That rate is 7% for the first quarter of 2026 and 6% for the second.2Internal Revenue Service. Internal Revenue Bulletin No. 2026-8 States apply their own versions.
Mortgage. Missed mortgage payments put you in arrearage with the lender. Your loan agreement spells out late fees and default interest, and the period from a first missed payment to a foreclosure sale can run roughly six months to over a year depending on state law and the lender’s timeline.
Rent. Overdue rent can trigger eviction. Timelines and notice requirements are set almost entirely by state and local law.
Consumer debt. Credit card balances and personal loans can also fall into arrearage. High interest rates and, eventually, collection lawsuits can turn a manageable balance into a court judgment with legal costs stacked on top.
How the Balance Grows
The most dangerous feature of arrearage is that it rarely stays at the amount you originally missed. Interest, penalties, and fees layer on each other, and the growth can be surprisingly fast.
IRS interest compounds daily and is recalculated each quarter. A $10,000 tax debt at the current 7% annual rate generates roughly $700 in interest in the first year alone, before failure-to-pay penalties. If the IRS later discovers unreported income and reassesses your liability, interest starts compounding on the higher balance.
Mortgage arrearages grow through late fees, default interest written into the loan contract, and legal costs the lender incurs once foreclosure begins. Those costs get added to your total, so even catching up on missed payments may leave you owing thousands more than expected.
Child support arrearage works differently because the underlying amount comes from a court order, not a contract. But many states add statutory interest, and some treat past-due support as a judgment that accrues interest automatically. That interest keeps running even during periods when the obligor genuinely cannot pay.
What Creditors Can Do to Collect
Once arrearage builds up, creditors and government agencies have a range of enforcement tools. Which ones apply depends heavily on the type of debt.
Wage Garnishment
Garnishment directs your employer to withhold part of your paycheck and send it to a creditor. For most consumer debts, the withholding cannot exceed the lesser of 25% of your disposable earnings or the amount by which your weekly earnings exceed 30 times the federal minimum wage ($7.25 per hour as of 2026).3Office of the Law Revision Counsel. 15 USC 1673 – Restriction on Garnishment
Child support arrearages are a different story. The cap jumps to 50% of disposable earnings if you’re supporting another spouse or child, or 60% if you’re not. If you’re more than 12 weeks behind, those caps rise to 55% and 65%.3Office of the Law Revision Counsel. 15 USC 1673 – Restriction on Garnishment Most garnishments require a court order first, but IRS levies on wages and state tax garnishments can proceed administratively.4U.S. Department of Labor. Fact Sheet 30 – Wage Garnishment Protections of the Consumer Credit Protection Act
Liens on Your Property
A lien puts a legal claim on your property (home, car, bank account) to secure the debt. You typically can’t sell or refinance without paying the lien first. The IRS can file a federal tax lien against all of your property once a tax debt goes unpaid after demand.
License Suspension
Many states will suspend a driver’s, professional, or recreational license for unpaid child support. Notice is generally sent before suspension, with a window to pay or arrange a payment plan. Critics point out the catch-22: losing the license you need to work can make catching up harder.
Tax Refunds, Federal Payments, and Passports
The Treasury Offset Program matches people who owe delinquent debts against federal payments like tax refunds and redirects the money to what you owe. It recovered more than $3.8 billion in fiscal year 2024.5Bureau of the Fiscal Service. Treasury Offset Program If you’re expecting a refund and you owe past-due child support or federal debt, don’t count on seeing it.
Child support arrearage above $2,500 can also trigger passport denial. The federal child support agency submits the names of parents over the threshold, and the State Department will deny a new application or revoke an existing passport. A hardship exception exists but requires you to show the need for travel.
IRS Levies
IRS enforcement goes beyond what ordinary creditors can do. After sending a notice and demand for payment, the agency can levy your bank accounts, garnish wages, and seize property without going to court.6Office of the Law Revision Counsel. 26 USC 6331 – Levy and Distraint The tax code’s “levy” reaches bank deposits, wages, accounts receivable, and physical property.7eCFR. 26 CFR 301.6331-1 – Levy and Distraint The IRS must wait at least 10 days after its notice and demand, but once that window closes, its discretion is broad. This is where people most often underestimate the risk of ignoring arrearage.
Credit Reports
Missed payments get reported to the major credit bureaus, and those delinquencies can stay on your credit report for up to seven years from the date you first fell behind. A bankruptcy filing remains for ten years.8Office of the Law Revision Counsel. 15 USC 1681c – Requirements Relating to Information Contained in Consumer Reports A lower score makes borrowing more expensive, renting an apartment harder, and can even complicate hiring where employers pull credit as part of a background check.
How Long Collection Can Continue
Different debts have different collection windows.
The IRS generally has 10 years from the date it assesses your tax to collect the balance, penalties, and interest included. That deadline is called the Collection Statute Expiration Date. Each new assessment gets its own 10-year clock, and the clock pauses while certain requests are pending, including installment agreement applications, offers in compromise, bankruptcy filings, and collection due process hearings.9Internal Revenue Service. Time IRS Can Collect Tax
Consumer debt statutes of limitations vary by state, typically three to 10 years. Once the statute expires, a creditor cannot sue you for the balance, though the debt itself doesn’t disappear and can still appear on your credit report for seven years.
Child support is the most persistent category. Most states either have no statute of limitations on collecting past-due support or set very long windows, and in many jurisdictions the arrearage can be enforced indefinitely, including after the child reaches adulthood.
Can Bankruptcy Wipe Out Arrearage?
Sometimes, and it depends heavily on the type of debt.
Child support and alimony arrearages survive bankruptcy. They are classified as “domestic support obligations,” given first priority in the payment hierarchy,10Office of the Law Revision Counsel. 11 USC 507 – Priorities and explicitly excluded from discharge.11Office of the Law Revision Counsel. 11 USC 523 – Exceptions to Discharge No chapter of bankruptcy will reduce what you owe.
Most recent tax debts are also non-dischargeable. To have any chance of discharging tax arrearage, the return generally must have been due at least three years before filing, filed at least two years before, and the tax assessed at least 240 days before. Tax debts tied to fraud or unfiled returns cannot be discharged at all.11Office of the Law Revision Counsel. 11 USC 523 – Exceptions to Discharge
Mortgage arrearages are where bankruptcy can genuinely help. Chapter 13 lets you catch up on missed mortgage payments through a court-approved repayment plan of three to five years while continuing regular monthly payments. Filing triggers the automatic stay, which halts nearly all creditor actions, including foreclosure, the moment you file.12Office of the Law Revision Counsel. 11 USC 362 – Automatic Stay Chapter 7 also triggers the stay but has no mechanism to cure a mortgage arrearage over time, so it only delays foreclosure.
Credit card and personal loan arrearages are generally dischargeable in Chapter 7 and Chapter 13. Those debts don’t carry the protected status of support or taxes. Bankruptcy stays on your credit report for up to 10 years, and Chapter 7 requires passing an income-based means test.
How to Resolve Arrearage
Ignoring arrearage is the single most expensive choice available. Interest and penalties keep compounding, enforcement escalates, and your options narrow with time.
Child Support
If your income has dropped substantially, ask the court or your local child support agency to modify the payment amount going forward. The critical rule: modifications are not retroactive. Everything that accumulated before you filed the request still stands. File as soon as your financial situation changes, not once you’re thousands behind. Many child support agencies also offer debt compromise or arrears management programs that can reduce the portion of arrearage owed to the government, as opposed to the custodial parent.13Administration for Children and Families. Changing a Child Support Order
Taxes
The IRS offers several structured options, and applying pauses most enforcement while your request is pending.14Internal Revenue Service. Payment Plans – Installment Agreements
- A short-term payment plan lets you pay in full within 180 days with no setup fee when you apply online, provided you owe less than $100,000 in combined tax, penalties, and interest.14Internal Revenue Service. Payment Plans – Installment Agreements
- A long-term installment agreement is available if you owe $50,000 or less and have filed all required returns. Setup fees run from $22 to $178 depending on payment method and application channel, with waivers for low-income taxpayers.14Internal Revenue Service. Payment Plans – Installment Agreements
- An offer in compromise settles your liability for less than the full amount if you genuinely cannot pay. The IRS evaluates your ability to pay, income, expenses, and asset equity. You must have filed all required returns and not be in an open bankruptcy proceeding. The application requires a $205 fee and an initial payment, both waived for low-income applicants.15Internal Revenue Service. Offer in Compromise
Interest keeps accruing on the unpaid balance even during a payment plan, so paying more aggressively than the minimum reduces the total cost.
Mortgage
Contact your lender before foreclosure begins. Most prefer to avoid the cost of foreclosure and may offer a forbearance agreement, a loan modification, or a repayment plan that spreads the overdue amount across future payments. If those options fail and foreclosure is imminent, Chapter 13 bankruptcy remains a last resort for curing the arrearage while keeping the home.
Credit Cards and Personal Loans
You can often negotiate directly with the creditor for a reduced payoff or a structured repayment plan. Creditors get more willing to negotiate as debt ages, particularly as it approaches the statute of limitations for lawsuits. Once a creditor sues and wins a judgment, the enforcement tools expand to wage garnishment and bank levies, so resolving the debt before that stage is almost always cheaper.