Paying Alimony and Child Support During Financial Difficulties.
We know the Pandemic’s end is in sight however, people’s biggest concern these days is how to manage their financial obligations, especially if business is slow or they have just been terminated from their employment. if you are one of the many people suffering financially, and you are worried about how you are going to make your child support and/or alimony payments, here are some options:
- Liquidate Assets. If you anticipate that this will be a temporary situation, you could use savings or liquidate assets to meet your financial obligations. It is prudent to use cash first and then any other assets that will either not have any tax consequences or will have the most favorable tax consequences for you. You should consult with your CPA or tax attorney for guidance.
- Do Nothing. If #1 above is not an option, as an attorney admitted to the bar in the state of New Jersey, I cannot advise you to violate a court order. I can only advise you of the consequences of violating a court order. If you do not meet your support obligations, the payee can file a motion to enforce your obligations. Even though the courts are operating on a limited basis, do not assume that the court will not address the motion. There could be consequences such as immediate enforcement, counsel fees awarded to the other party, sanctions, or even the threat of incarceration. If you are served with a motion, see #3 below.
- File a formal application with the court for relief. This is where things get a little muddy. In order to have your support obligations modified, you must demonstrate that you have experienced a permanent and involuntary loss or reduction of income. Losing one’s job is generally considered to be a temporary situation, and therefore, one not warranting modification of support. The court expects that you will get a job again and that you have to continue to pay your support in the meantime. However, once you have been unemployed for a period of 90 days, you are permitted to make an application for relief, even if it’s just temporary. This could include modifying your support obligations or suspending enforcement. Please note that if you do file an application, whether it is on your own motion or in response to an enforcement motion, you will be required to submit an updated case information statement. You probably remember doing that during the divorce or a prior proceeding. You are required to submit a case information statement if you want relief. So not doing one is not an option. This means that you will have to disclose all of your financial circumstances, such as all of your assets and liabilities, your income, your tax returns, and any other materials the court may deem relevant to your financial circumstances. If there is some reason you do not want to make those disclosures, you should carefully evaluate whether you wish to file an application for relief. This is something that you can discuss strategically with an attorney.
- Make an application to the court to suspend enforcement. Family Court is a court of equity. Even if the court cannot, or is not inclined to, permanently modify your support obligations, sometimes the court will suspend enforcement if it’s fair and equitable under the circumstances. That doesn’t mean you don’t have to pay. It just means that if you don’t, or you only pay a portion of your obligation, you will not be subject to the usual consequences as someone who is deemed to be willingly and voluntarily not meeting their support obligations.
- Negotiate a Resolution. Another option, which should be done sooner rather than later, is to make an effort to negotiate the issue with your the other party. If you do not have any kind of amicable relationship, this may be difficult. It’s not impossible though. I have seen many people do it. Sometimes the other party knows that if they do not engage in a discussion, motion practice will ensue and thousands of dollars in legal fees. There could also be a provision in your settlement agreement that requires you to attend mediation if a dispute arises. This might be a good time to trigger that provision. I’ve seen many cases where the parties never thought they would be able to resolve anything, yet they did. So trying to discuss the matter before engaging in motion practice is always a good idea.
Deciding how to proceed if you are having financial difficulties requires a careful analysis of all of your circumstances and a sound strategy. Call us for a consultation