Family Law

Support Work-out Plans

More and more divorced people are finding that because of unemployment or the poor performances of the businesses they own, they are unable to meet their child support and maintenance obligations owed to their former spouses.  Support payments are not modified until there is a Court order modifying them.  Unpaid support obligations are judgments as soon as they come due.  Unpaid child support accrues interest at 12%, and unpaid maintenance accrues interest at 8%. If a spouse fails to pay support, he or she could be found in contempt of court and jailed.

Some support payments can be modified. However, there are significant hurdles. Obligee spouses are generally suspicious of the obligor spouse's claim that he or she is unable to afford support payments. Thus, attempts to work out support obligations must be supported by full disclosure. The obligee spouse will want to know that the support obligations are not being "put last," and that other creditors are being asked to accept deferred or lower payments. They want to be sure that the standard of living of the Obligor spouse is not above that of the Obligee spouse.  Obligee spouses also want to be sure that they do not agree to reduced support obligations only to find that the obligor spouse has recovered full financial health in two years.

Courts are somewhat sensitive to economic realities, but must be neutral as between parties. Thus, they often take the position that one person's financial crisis should not necessarily be the obligee spouse's problem. They also often take the position that, "this too, shall pass," and economic storms will be weathered. 

Support plans must be well thought out, and must not ignore the obligee spouse's legitimate concerns. They are also more likely to be effective with the obligee spouse than the Court, so energy should be put into getting agreements from the obligee spouse.

Options for working out maintenance obligations

1. Direct negotiation with obligee:

   1. Abatement of support
      Interest free
      Agreement regarding contempt citation
      Resumption at certain date or upon certain conditions

   2. Creation of joint financial plan

   3. Lump-sum payment at date certain

   4. Liquidation plan in exchange for reduced obligation

   5. Active and transparent negotiation with other creditors

   6. Filing for bankruptcy protection

Non-contractual maintenance

1. Motion to modify maintenance

   1. File immediately

2. Direct negotiation with obligee

   1. Abatement of support
      Interest free
      Agreement regarding contempt citation
      Resumption at certain date or upon certain conditions

   2. Creation of joint financial plan

   3. Lump-sum payment at certain date

   4. Liquidation plan in exchange for reduced obligation

   5. Active and transparent negotiation with other creditors

   6. Filing for bankruptcy protection

Options for working out child support obligations

1. Motion to modify maintenance

   1. File immediately

2. Direct negotiation with obligee

   1. Abatement of support or partial abatement
      Interest free
      Agreement regarding contempt citation
      Resumption at certain date or upon certain conditions

   2. Creation of joint financial plan

Bankruptcy

Bankruptcy does not discharge support payments. A former spouse is just another obligee/creditor. However, the support obligations should take priority because failure to meet them could lead to jail time, and unpaid monthly obligations are immediate judgments.

Negotiating with a former spouse in a businesslike way, and treating him or her as another creditor/obligor, is the first step in creating a successful work out plan.  You must step away from the emotions inevitably linked to support payments. In doing so, you can objectively explore options for dealing with financial crises.