Post-Divorce Modification in the Covid-19 Economy

In our last post, we talked about possible ways to achieve a modification of  a divorce settlement proposal if your financial situation has changed drastically due to the pandemic. If you have not yet signed a Marital Settlement Agreement (MSA), you have options in addressing property distribution issues such as marital home or business buyouts. If you have already signed your MSA, however, your options are more limited.

Of course, if you are on good terms with one another and agree about the need for a change, you are always free to make a mutual modification to your MSA.  Generally speaking, however, any agreements you have regarding property distribution are binding unless your MSA provides for adjustments under specified circumstances, or unless you have some legal basis for setting aside your agreement. Barring this, you may still be able to modify spousal support (alimony) or child support, but not property distribution. Mediation is an excellent forum for addressing modifications of support. If you cannot reach a resolution, a court can intervene but this will be much more labor intensive and expensive than working it out between yourselves.

Setting Aside a Judgment of Divorce

Even if you recently finalized your divorce and are looking at a property distribution agreement that no longer seems fair to you given the bizarre events of 2020, there are very few situations in which you might be able to set aside the judgment of divorce. Exceptions include fraud, misrepresentation, or misconduct on the part of your spouse; the discovery of relevant new information that your spouse did not disclose and that you could not reasonably have discovered; or the existence of some major mistake. If you believe that one of these circumstances applies to your case, consult an attorney to review your options.

Modification of Spousal Support

Whether or not a modification of support is appropriate will depend on the type of alimony, the terms of your MSA and other factors. New Jersey allows four types of post-judgment spousal support: limited durational, open durational, rehabilitative, and reimbursement. Reimbursement alimony, which a court might award to one spouse as repayment for contributions to the education or career advancement of the other, is not modifiable. Any other type of alimony is modifiable unless your MSA states that it is not. Modification generally requires a substantial and ongoing change in circumstances.

You can request a modification based on loss of income whether you are the paying party or the recipient. A recipient who was not employed but was attempting to become fully employed within a brief period of time may also have a good reason for not reaching this goal under the extreme conditions of the pandemic. Regardless of who is requesting the modification, the court will balance each party’s need against the other party’s ability to pay.

Assessing the Duration of a Change in Circumstances

The biggest challenge most people have is predicting how long their change in circumstances might last. The New Jersey alimony statute (N.J.S.A. 2A:34-23) provides that 90 days is the minimum period of unemployment a party must experience before filing an application for modification of alimony on that basis. This 90-day requirement does not strictly apply to business owners, but it does provide a guideline.

For some people affected by the pandemic, their decrease in income has dragged on for nearly a year. If you own a restaurant, a salon, a gym, or another business that depends on a public clientele, or if you were an employee of such a business, your losses may have been deep and severe, and you may be having trouble seeing any light at the end of the tunnel. A court would certainly consider the widespread damage to the economy in assessing the length of time it might take to obtain a new job or get a business back up to speed.

If the loss of income is long-lasting but recovery might eventually occur, a court can temporarily suspend or adjust payments. The court can also make any changes retroactive to the date that the reduced income began. You can address these factors in mediation as well. A good solution may be to agree to a temporary modification for an agreed-upon period of time. You can then schedule another mediation session to reassess the situation.

Making a Case for Modification

If you were making your case in court, you would need to present a Family Law Case Information Statement (CIS). For modification of alimony, the most pertinent sections will be Part C (income) and Part D (monthly expenses). Some people use this form in mediation to reach their original agreements on spousal and child support. If you have already done this, then it will be relatively easy for you to do it again. The comparison will show how substantial your change in circumstances has been. Whether you use the CIS or not, you will need to document your claims. This will require the same kinds of documents that you produced in your original case. You can review this checklist to get an idea of what you will need. Self-employed parties should also provide a business analysis.

Your loss of income must have been involuntary and you must have made efforts to recoup it. For employees, this generally means that you have kept a log of job-hunting efforts. Business owners will have a more complicated task. You should be able to show things like applications for loans and expenditures aimed at keeping the business afloat.

Modification of  Child Support

Child support remains modifiable until children are emancipated. For the most part, a request for an increase or a decrease in child support payments will require the same type of documentation as a request for an increase or decrease in alimony. There will be slight differences, however. Child support awards take into account not only parental income, but also the division of parenting time. For many parents both factors have been substantially impacted by the pandemic. Child support is also easier to calculate than spousal support because there are fairly strict formulas for child support. You can use the worksheets appended to the New Jersey Child Support Guidelines to get an estimate of how your situation may have changed from your original orders or agreement.

If you have questions about post-divorce modifications based on pandemic-related events, one of our caring and experienced mediators can help. Contact us today for a free virtual consultation.