He needs to pay the state, and the state pays you. On top of that, he should give you money for a car. But don't let him start paying the child support directly to you in exchange for calling off the state - then you will have to go through all this again when/if he bags on you again.
WHY is OW living with his family? I forget, is she pregnant? If so, maybe they feel like they need to make sure their grandchild is born healthy. Interesting, though, that they don't want him, even though he is supposedly turning his life around. That seems like a big red flag.
