3d rendering of a giant wrecking ball breaks in small pieces when hits a small family house

The financial crisis that the COVID-19 pandemic has caused has been devastating to many individuals and businesses.  It is likely that there will be a large influx of bankruptcy filings in the coming months due to the financial destruction of this pandemic.  If you have a pending divorce action or a final judgment of divorce and your spouse or ex-spouse has chosen to file for bankruptcy, you should be aware of the definition of “domestic support obligations” (“DSO”) and how DSO’s are treated in bankruptcy.

In this post we will define DSO’s and further explain whether one’s DSO obligation survives the debtor’s bankruptcy (i.e. whether the debt is able to be discharged as a result of bankruptcy).

The dischargeability of an obligation created by a divorce decree, separation agreement, property settlement agreement, court order, or administrative determination depends on whether the obligation is classified as a DSO and whether the debtor filed for bankruptcy under Chapter 7 or Chapter 13 of the federal bankruptcy code (the “Code”).

In this post we will only address dischargeability in the context of Chapter 7 bankruptcy cases.

Statutory Definition of a Domestic Support Obligation

In 2005, Congress revised the federal bankruptcy code and introduced the term “domestic support obligation.”  Pursuant to section 101(14A) of the Code, a DSO is a debt that accrues before, on, or after the date of the order for relief in a case under this           title, including interest that accrues on that debt as provided under applicable   nonbankruptcy law notwithstanding any other provision of this title, that is—                       

(A) owed to or recoverable by—

(i) a spouse, former spouse, or child of the debtor or such child’s parent, legal guardian, or responsible relative; or

(ii) a governmental unit;

(B) in the nature of alimony, maintenance, or support (including assistance provided by a governmental unit) of such spouse, former spouse, or child of the debtor or such child’s parent, without regard to whether such debt is expressly so designated;

(C) established or subject to establishment before, on, or after the date of the order for relief in a case under this title, by reason of applicable provisions of:

(i) a separation agreement, divorce decree, or property settlement agreement;

(ii) an order of a court of record; or

(iii) a determination made in accordance with applicable nonbankruptcy law by a governmental unit; and

(D) not assigned to a nongovernmental entity, unless that obligation is assigned voluntarily by the spouse, former spouse, child of the debtor, or such child’s parent, legal guardian, or responsible relative for the purpose of collecting the debt.

In short, a DSO is any debt incurred before or after a bankruptcy case is filed that is:

  • owed to or recoverable by a spouse, former spouse, child or governmental unit;
  • “in the nature of alimony, maintenance, or support”; and
  • established pursuant to the terms of a divorce decree, separation agreement, property settlement agreement, court order or administrative determination, including interest that has accrued.

“In the Nature of Support” Obligations

One reoccurring question that arises in the context of bankruptcy filings is whether an award made in a party’s matrimonial case meets the statutory requirement of being “in the nature of support”.

This is a factual determination that is made by the bankruptcy court as it is a question of federal law and requires a fact intensive, case specific analysis.  See Ning Yen Yao v. Kao (In re Kao), 612 B.R. 272, 281 (Bankr. S.D.N.Y. 2020); In re Dudding, No. 10-10557, 2011 Bankr. LEXIS 1128, 2011 WL 1167206, at *5 (Bankr. D. Vt. Mar. 29, 2011); Grinspan v. Grinspan (In re Grinspan), 597 B.R. 725, 737 (Bankr. E.D.N.Y. 2019).

In order for the bankruptcy court to make its determination it must determine the intent of the parties and consider as relevant “[a]ll evidence, direct or circumstantial, which tends to illuminate the parties’ subjective intent.” Brody v. Brody (In re Brody), 3 F.3d 35, 38 (2d Cir. 1993). Bloch v. Bloch, No. 09-CV-3963(RRM), 2010 U.S. Dist. LEXIS 99891, at *6-7 (E.D.N.Y. Sep. 23, 2010).

For example, the court will look at the substance and not just the form of payments to determine whether an obligation is considered to be a DSO.

Courts have found that “the nature of the debt is more important than the identity of the payee.”  In re Mason, 545 B.R. 462, 466 (Bankr. S.D.N.Y. 2016).

In fact, after looking into the intent of the parties the Court may determine that payments to third parties, such as payments made to the mortgage on a former marital residence, may constitute alimony or support.

A debtor’s duty to pay for the education expenses of a minor child and to provide medical coverage for a minor child are usually deemed to be “in the nature of support” and cannot be discharged in bankruptcy, as well as a debtor’s duty to maintain life insurance with the minor children as beneficiaries.

Chapter 7 Bankruptcy and Discharge – Obligations or Debts That a Party May Incur in the Course of Divorce or Separation  

Obligations that qualify as DSOs are exceptions to the debts that are discharged under Bankruptcy Code § 523(a)(5), and therefore survive bankruptcy and are not dischargeable.

Similarly, pre-petition alimony, maintenance and child support (i.e. spousal and child support) are not dischargeable.

Further, pursuant to the language of Bankruptcy Code § 523(a)(15), an individual may not discharge “any debt to a spouse, former spouse, or child of the debtor and not of the kind described in paragraph (5) that is incurred by the debtor in the course of a divorce or separation or in connection with a separation agreement, divorce decree or other order of a court of record, or a determination made in accordance with State or territorial law by a governmental unit.”

What this means is that in a Chapter 7 bankruptcy case, obligations or debts that a party may incur in the course of a divorce or separation cannot be discharged.  Such obligations or debts may include, among others:

  • equitable distribution payments,
  • lump sum distributions and payments,
  • credit card and charge account obligations,
  • mortgage and HELOC payments,
  • homeowner’s association dues,
  • income tax obligations,
  • automobile loan payments,
  • indemnification and hold harmless obligations, and
  • medical bills.

Therefore, determining whether a debt qualifies as a DSO or some other type of obligation resulting from a divorce or separation is of no consequence as all are non-dischargeable either under Bankruptcy Code § 523(a)(5) (for DSOs) or Bankruptcy Code § 523(a)(15) (for different types of obligations resulting from a divorce), as applicable.

In Tarone v. Tarone (In re Tarone), the court found that it was “irrelevant” whether maintenance and attorneys’ fees awarded by the state court in the course of the divorce proceedings “constitute[d] true support obligations” because even if not encompassed within Bankruptcy Code § 523(a)(5), they are nondischargeable pursuant to Bankruptcy Code § 523(a)(15). 434 B.R. 41, 49 (Bankr. E.D.N.Y. 2010).

However, it is important to keep in mind that in the context of a case filed under Chapter 13 of the Bankruptcy Code, debts incurred during the partition of the marital property are dischargeable.  Therefore, a detailed analysis of how a debt was incurred is necessary in a Chapter 13 bankruptcy case to determine whether the debt will survive the bankruptcy.

Bankruptcy is a unique area of law for which individuals should get detailed legal advice and counsel.  Jaspan Schlesinger attorneys are available to provide comprehensive legal services in both bankruptcy and matrimonial family law to help you make smart decisions about what matters to you when it most matters to you.  We are also committed to guiding our clients through these unprecedented and trying times.

The material provided in this blog is meant only to provide general information and is not a substitute nor is it legal advice to you.  Readers of this article should seek specific legal advice from legal counsel of their choice.  You can reach Sophia Perna-Plank at spernaplank@jaspanllp.com or (516) 393-8270 or Marissa Pullano at mpullano@jaspanllp.com or (516) 393-8297.

Father helping daughter to finish homework

Last week we blogged generally regarding the COVID-19 pandemic and custody matters with the intent of providing our readers general tips and strategies for dealing with this unprecedented time.  This week, the New York Law Journal published two recent cases in which New York courts have issued rulings on parenting disputes during the COVID-19 pandemic. A third case from King’s County Family Court was also published on Lexis Advance dealing with a parenting dispute during this pandemic.  In this blog post we have summarized the recent decisions, including quotes from the decisions themselves for the benefit of our readers.

Bronx Supreme Court

In R.M. v. B.S., the father, a first responder in New York City, moved for an order directing, in part, that the mother adhere to the terms of a 2019 stipulation between the parties granting him parenting time during April 17 – April 25, 2020 and directing the mother to adhere the parenting schedule for the rest of the year.  The mother and the children are residents of Massachusetts.  In order to exercise parenting time with their Father, the children would need to travel to New York, widely considered the epicenter of the COVID-19 pandemic. The mother argued that the father is a first responder with high exposure to COVID-19 and the father had not been quarantined for fourteen days.  The mother further contended that she had been sheltering in place with the children in Massachusetts and one of the children has underlying respiratory issues and uses an inhaler.  The mother was concerned about the father’s ability to ensure the safety of the children and also advised the father that she was indefinitely suspending parental access at that time and would allow the father to exercise his parental access when she deemed it appropriate. In the interim, the mother asserted that she had offered the father face time and telephone access to the children and the father had chosen not to participate in those modalities. The father contended that the mother ignored his communication that he works at the World Trade Center, which has been closed since March 13, 2020 and he would have virtually no interaction with the public and that he does not take public transportation to work. Further, the father argued that he had not seen his children in forty days.

In its’ decision and order, Justice Martin stated:

“The Court clearly recognizes the rights of the plaintiff as non-custodial parent to exercise his previously agreed upon parental access.  Unfortunately, this current public health crisis has upended the lives of us all. However, in light of the unprecedented Covid-19 virus pandemic throughout the nation the Court shall temporarily set forth a new parental access schedule for the plaintiff. It is in the best interest of the parties’ children for their safety at this time to implement the new, although temporary access schedule. Based upon the record provided herein, the plaintiff shall be entitled to daily telephonic/skype access at 6 p.m. The defendant is hereby ordered to facilitate but not to interfere at all with said access.”

The Court having denied the father’s request for in person parental access during the children’s April 2020 recess indicated that it would entertain an application for “additional time” at a later date.  Additionally, the Court reserved decision on the father’s application directing the mother to adhere to the parenting access schedule for the remainder of the year setting a conference in late May to address the outstanding issues.

Suffolk Supreme Court

In Waldorf v. Waldorf, the parties’ child attended boarding school in Maryland.  The mother requested an order temporarily modifying an interim order of parenting time which the father opposed.  The Court ruled that it was unable to issue a decision with respect to the issues on the papers submitted to the Court alone requiring a hearing.  The Court also took judicial notice of the national pandemic and the fact that the schools are currently closed until further notice reasoning that the mother’s argument would likely be rendered moot as the child could recommence attendance at boarding school in Maryland in September 2020.  Therefore, the Court held the mother’s application in abeyance.  The Court also noted in the footnotes to its decision that the mother previously had moved for a Writ directing that the child be returned to her. However, the same Court was sitting as special term emergency judge on the return date of the mother’s Writ and ruled that the child could remain with the father during the national pandemic until further Order of the Court.

Kings Family Court

In Jennifer R. v. Lauren B., a same-sex couple divorced and entered into a settlement agreement which was incorporated into their judgment of divorce. Amongst other things, the judgment of divorce awarded the parties joint legal and physical custody of the parties’ nine year old child. During the pendency of the divorce proceeding, the mother moved for permission to relocate with the child to New Jersey, which was denied after a two-day hearing. Notwithstanding, the mother moved to New Jersey with her new fiancée and the ex-wife remained in Brooklyn, New York. Since the judgment of divorce was entered in 2018, the mother filed numerous applications to modify the judgment of divorce to obtain sole custody of the child, all of which were denied.

As is relevant to this post, on March 14, 2020, due to the Coronavirus Pandemic, the parties agreed, during the pendency of a post-judgment proceeding, to temporarily modify their parenting schedule to alternate their parenting time with the child every two weeks, with the mother to have parenting time from March 28, 2020 to April 5, 2020. However, the mother again filed an Order to Show cause with Immediate Relief on April 6, 2020 for the immediate grant of temporary sole custody and final decision making, arguing that the child should remain with her in New Jersey during the pandemic because New Jersey and the county she resides in pose significantly less risk of infection and transmission than that of New York. The mother further argued that the ex-wife lived in the Coronavirus “hotspot” of Brooklyn which is dangerous for the child.

Due to the mother’s actions, the ex-wife filed an Emergency Order to Show Cause on April 7, 2020 seeking a Writ of Habeas Corpus for the mother to immediately return the child to the ex-wife and for enforcement of the March 14, 2020 modified parenting schedule. The ex-wife argued that the mother is merely using the COVID-19 risks as “the latest subterfuge to misappropriate her custody.” The ex-wife’s Emergency Order to Show Cause was signed on April 7, 2020 granting the Writ and ordering the mother to return the child to the ex-wife for the duration of her parenting time.

In an Affirmation in Response, the attorney for the child supported the mother’s application for the child to temporarily reside in New Jersey based upon the child’s statement to her as to his preference and because New Jersey is a safer location during the pandemic.

Despite the attorney for the child’s input, the court denied the mother’s motion for the immediate transfer of sole custody to her without a hearing. The court found that the mother failed to prove a change in circumstances sufficient to warrant an immediate change in custody. The mother failed to cite to anything in specific which the ex-wife has done to place the child in risk of exposure to COVID-19. Additionally, the parties communicated and had an appropriate plan for the child to lower risk of exposure by reducing the number of exchanges. Further, the court stated:

Although the Mother makes much of the fact that New York is a “hotspot” of Coronavirus cases, she lives in New Jersey which is second in the Nation in terms of infections and wherein the New Jersey Governor, only two days before the Governor of New York did, also declare a State of Emergency on March 9, 2020.

In sum, the mother was required to return the child to the ex-wife in Brooklyn so the ex-wife could exercise her two-week parental access time, despite the mother’s concerns about Brooklyn being a hotspot for the Coronavirus pandemic.

Concluding Remarks

The cases set forth above highlight both the emotionally devastating circumstances parents face as they lose the right to see their children and the conflicting outcomes that can occur depending on the fact-intensive nature of family law cases.  Some overarching themes seem to persist in the review of all cases as follows:

  1. Due Process must be adhered to in all circumstances – this means, like the Court in Waldorf, a matter may be held in abeyance until a full hearing can be held.
  2. Custody Arrangements – especially those entered into solely due to COVID-19 – must be abided by.
  3. “Make-up,” “Substitute,” or “Additional” Parenting Time may be ordered now or in the future – Courts are scheduling quick-return dates to address “make-up” parental access and how the parental access will take place once the stay-at-home orders are lifted.

Courts in New York State have wide discretion in family law matters which requires each court to make its determination on a case-by-case basis. As these are truly unprecedented times for everyone, judges, lawyers and litigants alike, it is important, to the extent possible, that parents put their differences aside, communicate effectively, and make decisions that will serve the best interests of their children. If the litigant parents are unable to do so, what is clear is that the courts will continue to put the best interests of the children at the forefront of their decisions while recognizing the due process rights of each litigant.

Jaspan Schlesinger is committed to helping our clients make their way through this very trying time. Our offices are virtually open and we are monitoring the courthouse operations and are available via email, phone or video-conferencing to answer your questions and concerns. The material in this blog is meant only to provide general information and is not a substitute nor is it legal advice to you. Readers of this article should seek specific legal advice from legal counsel of their choice. In the event that you need legal assistance regarding custody matters during COVID-19, please contact Marissa Pullano at mpullano@jaspanllp.com or (516) 393-8297 or Samantha Guido at sguido@jaspanllp.com or (516) 393-8250.

 

Little kid fighting against coronavirus. Concept.

The entire world is suffering from the impact of the COVID-19 pandemic.  Those who have a pending family law matter are facing unprecedented issues as the court systems have come to a virtual standstill and the bench and bar are grappling with how to keep cases in the family court system headed toward some type of resolution whether that be settlement or trial.

As we all find ourselves in unprecedented times, the matrimonial attorneys at Jaspan Schlesinger compiled the following tips to guide individuals currently in the midst of a divorce proceeding, whether it be an initial proceeding or a post-divorce proceeding:

Tips for Co-Parenting During COVID-19

By now, we’ve all seen the news story about a Florida Emergency Room physician who was deprived of her custodial rights during this pandemic.  If you haven’t, click here. This case and countless others that may not have made national news, highlight the very real and sometimes heart-breaking circumstances that divorced parents in high-conflict custody disputes may find themselves in.

For this reason, the American Academy of Matrimonial Lawyers and the American Association of Family and Conciliation Courts have issued standards to address these very sensitive issues. The Standards can be found here.

For many families, parents are able to work together and come to resolutions regarding how to navigate custody matters. In other situations, where parents cannot easily communicate, it may be the time where parents put aside past differences and work together in the best interests of the children.  If parents cannot amicably navigate parental access during this time, then the default is the custody orders that are currently in place despite how inconvenient they may be.

At this time, attorneys in Nassau and Suffolk counties are able to seek court intervention to intercede and break the stalemate between parents.  However, just because attorneys may be able to seek court intervention does not mean that the court will entertain the request.  Parents must be able to keep the lines of communication open by putting their past differences aside.

If you find yourself in a situation that requires attorney assistance, please know the lawyers of the matrimonial practice group are available by email, telephone and video conferencing to assist in the resolution of these matters.

Tips for Determining How to Handle Financial Obligations During COVID-19

Two additional blog posts by Samantha Guido will address the standards for modification of support matters in specific detail.  There can be no doubt that the tumult in the financial markets and the record-setting unemployment will cause many individuals to question what the financial future might be for them.  If your financial circumstances have been altered, it is important that you seek the advice of a lawyer to see if anything can be done to help alleviate your current or future financial stress.

Tips for Handling Divorce Negotiations During COVID-19

If you are an individual business-owner in an industry that is suffering from the effects of COVID-19, a new business valuation may be required.  If you and your spouse are dividing retirement accounts, it may be important to consider delaying the equitable distribution of accounts until the market volatility levels out. Once a divorce is finalized, you may no longer receive health benefits from your spouse and require medical insurance coverage.  Now is not the time to be without medical insurance coverage.  Similarly, now is not the time to rush into a settlement out of fear of the unknown.  As previously stated, it is important that you seek the advice of a lawyer to guide you during these unprecedented times.

Jaspan Schlesinger is committed to helping our clients make their way through this very trying time.  Our offices are virtually open and we are monitoring the courthouse operations and available via email, phone or video-conferencing to answer your questions and concerns. The material in this blog is meant only to provide general information and is not a substitute nor is it legal advice to you.  Readers of this article should seek specific legal advice from legal counsel of their choice.   You can reach Marissa Pullano at 516-393-8297 or mpullano@jaspanllp.com or Hanna Kirkpatrick at 516-393-8295 or hkirkpatrick@jaspanllp.com.

Statue of liberty wearing a face mask

On March 30, 2020, in an attempt to lighten the financial burden that COVID-19 is reaping throughout the world, the President signed into law a 2 trillion dollar stimulus package.  One of the key components of the stimulus package is sending funds directly to taxpayers.  The amount that will be provided is dependent on your adjusted gross income and family size.  Those who qualify based on their adjusted gross income will receive the full payment of $1,200 per adult and $500 per dependent child under the age of 17 years old.  If you have yet to file your 2019 tax returns, as the deadline has been extended to July 15, 2020, the IRS will use the information from your 2018 tax filings to calculate your stimulus check payment.  For more information on how much you may be eligible to receive, click here.  For those who provided their bank information for their tax filing, the IRS will use that information to directly deposit the stimulus payment.  If you did not provide your bank information on your tax filing, the IRS will be sending you a check with the stimulus payment.

With the first wave of stimulus checks being issued on April 15th, many attorneys and parties will begin to battle over how the stimulus payment should be divided for those who have recently divorced or are in a pending divorce action.

For those who have recently finalized their divorce, they may encounter a situation where their last filed tax return was a joint return and as a result the stimulus money has been deposited into an account which is now owned exclusively by one party.  This is a situation which may require the assistance of counsel to ensure that the proceeds are shared in an equitable manner.

An additional issue that may arise for individuals that have recently finalized their divorce is how they should split the portion of the stimulus payment for an eligible child or children of the marriage.  This is an issue that may have varying arguments as to how the proceeds should be divided.  For example, one may argue that the funds should be split in proportion to the Child Support Standards Act percentages.  Others may argue that the parent who has the children the majority of the time should receive the entirety of the portion of the stimulus payment paid for an eligible child or children.  In the event that you and your ex-spouse are unable to resolve this issue, you may want to seek the assistance of counsel.

If you have been divorced long enough and have filed an individual return, you will receive your own stimulus check based upon your adjusted gross income on your last tax filing.  If you claimed your child as a dependent on your last tax filing, you should be the one to receive the $500 stimulus payment for each eligible child. However, this may become an issue as parties tend to rotate claiming a dependent child on their tax filings each year.  Is it equitable to allow only one parent to receive the entirety of the stimulus payment under such circumstance? The courts will likely need to address this in the future.

Another question is who receives the stimulus payment if the parent who claims a child as a dependent in even years only filed a return for 2018 and the parent who claims a child as a dependent in odd years filed a return for 2019?  Will each parent be receiving the $500 stimulus payment or will the parent who filed their 2019 return receive the stimulus payment for the child?  Once again, the courts will likely need to address this in the future.

For those who have a pending divorce action, tax refunds are typically treated as a marital asset to be equitably distributed between the parties if they were earned prior to the date of the filing of the divorce action. Therefore, how the stimulus payment will be equitably distributed between the parties will have to be determined on a case by case basis with the assistance of counsel and/or guidance from the Court.

The material in this blog is meant only to provide general information and is not a substitute nor is it legal advice to you.  Readers of this article should seek specific legal advice from legal counsel of their choice.   In the event that you fall into one of the above categories and need legal assistance in securing your portion of the stimulus payment, please contact Marissa Pullano at 516-393-8297 or mpullano@jaspanllp.com or Hanna Kirkpatrick at 516-393-8295 or hkirkpatrick@jaspanllp.com.

Piggy Bank Wearing A Surgical Mask

In recent days there has been an explosion of news articles projecting a wave of divorce filings expected to break across the country when the COVID-19 confinement ends.  Just a cursory scroll of social media provides a plethora of memes about marital discord – some are just downright funny while others are just painfully on point.  There is no doubt that all of us are living in unprecedented times.  Courts in New York State are (as of the date of this blog) still limited only to “essential” matters, and no new divorce actions can be filed.  If you are in the process of contemplating divorce, this blog focuses on four simple things you can do now while we all wait out this quarantine:

  1. Compile all your financial data.

Every divorce (or virtually every divorce) in New York State requires that each party make full and complete disclosure of their finances to their spouse.  The dynamics of some marriages unfold with one party handling the finances. Now is the time to ask the questions and gather information.  It is important that any person contemplating divorce have an idea of all of their assets (real and personal property, retirement accounts, bank accounts) as well as their debts (mortgages, loans, credit card debt) in the name of either party.  Most banks allow you to retrieve your bank statements, mortgage information and credit card statements online for up to five years. Most financial institutions have your retirement account statements online for the last quarter. Compile three months’ worth of each financial account, including credit card accounts and the last quarterly statement for any retirement account.  Then, gather your tax returns. If you can’t find them or don’t want to tip your spouse off, then contact your accountant to obtain your tax returns for the last five years. Try to make copies of all of these items. Also, don’t hide or accidentally misplace any of these documents, they will need to be exchanged and no one needs the additional grief of trying to find important documents in the midst of a very stressful time.  If you come to your initial consultation (either in person or virtual) with these documents in hand, you will save time and money and allow the attorney to give pointed advice and counsel.

  1. Secure your online footprint.

It is important that you begin to clean up your online footprint. First, you should get a new email address. This email should be for the sole purpose of communications regarding divorce and it should not be accessed on any joint computer or work-issued computer. Do not allow any of your passwords to autofill on any device.  A new password should be one that your spouse will not be able to guess.  Furthermore, if you use apple devices, make sure that your data is not being backed up in the cloud for your spouse to access.  I cannot even begin to tell you how often I have had a client come to me with concern about their spouse’s access to their text messages and emails. Simple planning now can avoid a lot of stress later. Second, please clean up all your social media accounts. Check and re-check your privacy settings. Do not post any personal matters, feelings, emotions, and even photos on social media. Your spouse’s divorce attorney will look you up on social media. Don’t give them any ammunition.

  1. Research attorneys and ask for referrals.

Your relationship with your lawyer is of utmost importance. Your attorney is your voice and your advocate. Make sure that you understand how your attorney communicates, what their values and belief systems are.  Ask hard questions. Seek the advice of a trusted friend or colleague and do your own research.

  1. Consider counseling.

Divorce is usually one of the most difficult experiences that a person will go through in their life.  Certainly no one enters a marriage with the idea that it will end.  At every end, there is typically a complicated web of emotions that each person will process differently.  Consider attending marital counseling with your spouse before initiating divorce, especially if you have children.  Marital counseling may allow you to choose the path that is right for you and your spouse and arm you with the tools to discuss divorce and the process with your children that will promote healthy emotional growth rather than emotional harm.  There are many qualified mental health professionals that your divorce lawyer can refer you to.

The material in this blog is meant only to provide general information and is not a substitute nor is it legal advice to you.  Readers of this article should seek specific legal advice from legal counsel of their choice.   In the event that you need legal assistance, please contact Marissa Pullano at 516-393-8297 or mpullano@jaspanllp.com.

COVID-19 Money

Generally, there are three (3) grounds to modify a prior order of child support: (1) a showing of a substantial change in circumstances, (2) the passage of three (3) years since the order was entered, last modified or adjusted, or (3) a change in either party’s gross income by fifteen percent (15%) or more since the order was entered. This post will address each of these three (3) grounds and give you a brief explanation of your rights under the law.

Ground #1 – Substantial Change in Circumstances

One ground to seeking a modification is based upon a showing of a substantial change in circumstance.  Here, a court will generally consider certain factors to determine whether there has been a change of circumstances warranting an upward or downward modification of child support.  For example, when seeking an upward modification of child support the court may consider the increased needs of the children, the increased cost of living if it results in greater expenses for the children, a substantial improvement of a party’s financial condition, and the current and prior lifestyles of the children.  When seeking a downward modification of child support the court may consider a loss of income by either parent, or an increase in income of the party receiving child support (payee’s income) which may result in a lower child support figure for the party paying child support (payor).

Loss of Employment Must Be Involuntary and Diligent Efforts to Secure Employment Are Required

Many times a party will argue for a downward modification of child support based upon a reduction in their income based upon their loss of employment. However, loss of employment will only be considered a ground for modification if it was involuntary and the party has made diligent attempts to secure employment commensurate with his or her education, ability, and experience.

Grounds #2 and #3 – Passage of Three Years & Change in Gross Income by 15%

A party can also seek to modify a child support order upward or downward based upon the passage of three (3) years or a change in either party’s gross income by fifteen percent (15%), so long as you did not expressly opt out of these statutory provisions in your agreement. In other words, if you are entering into a divorce agreement with your spouse and you would like to preserve your rights to seek a modification of child support based upon the passage of three (3) years or a change in either party’s gross income by fifteen percent (15%) be sure that your agreement includes language which preserves your rights to a modification on these grounds.

If you believe you may be entitled to a modification of child support, you should seek advice from an experienced attorney. The material in this blog is meant only to provide general information and is not a substitute nor is it legal advice to you.  Readers of this article should seek specific legal advice from legal counsel of their choice.   Samantha Guido may be reached at 516-393-8250 or sguido@jaspanllp.com.

 

COVID-19 coronavirus in USA, 100 dollar money bill with face mask. Coronavirus affects global stock market.
COVID-19 coronavirus in USA, 100 dollar money bill with face mask. Coronavirus affects global stock market. World economy hit by corona virus outbreak and pandemic fears. Crisis and finance concept.

We recently posted about a modification in child support obligations. In addition to child support, a person may also seek to modify their maintenance obligations or the amount of maintenance they are receiving from their ex-spouse.

What is Maintenance?

Perhaps the most important question, and a very frequent question is, what is maintenance? In order to fully understand this term, we must look historically at a word most people are familiar with, and that is “alimony.” Divorce actions which were commenced prior to July 19, 1980 dealt with alimony. Alimony was a sum paid by one spouse (or ex-spouse) to the other, or to a third party for real and personal property, services furnished to either spouse, or for rent, mortgage payments, insurance, and taxes, amongst others.  In 1980, the New York State Legislature amended the law providing for alimony, and in fact changed the name of alimony to “maintenance” or “spousal support.” Maintenance is defined as “payments provided for in a valid agreement between the parties or awarded by the court . . . to be paid at fixed intervals for a definite or indefinite period of time . . .”[i] The statute also provides for a way to calculate a person’s maintenance obligation based upon the respective incomes of the parties.

While this post does not directly deal with calculating an initial maintenance obligation, this background information is vital in understanding how to seek a modification of maintenance.

What is a Modification of Maintenance?

While it may seem obvious, it is worth noting that a person seeking a modification of maintenance occurs when either the payor (the person paying the maintenance) or the payee (the person receiving the maintenance) requests that a court either increase or decrease the amount of money being paid as and for maintenance.

Are You Entitled to a Modification of Maintenance?

Unfortunately, obtaining a modification of maintenance obligations is not an easy task. A court may modify a maintenance award, in the absence of a valid agreement which is incorporated, but not merged, into a court order or judgment, upon the showing of either the payee’s inability to be self-supporting or upon a showing of a substantial change in circumstances, including financial hardship, or upon actual full or partial retirement of the payor if the retirement results in a substantial change in the financial circumstances. What constitutes a substantial change in circumstances is determined on a case-by-case basis.

When a payor is seeking a downward modification of maintenance, a court will compare the payor’s financial circumstances at the time of the motion for a downward modification and the payor’s financial circumstances at the time of the divorce to determine whether there has been a substantial change in circumstances. For example, in a 2013 case, a court denied a defendant’s motion for a downward modification of his maintenance obligations despite the fact that the defendant became disabled and retired.  The court’s reasoning in its denial was that the defendant received a substantial lump sum pension payment that rendered him financially capable of meeting his maintenance obligation to the plaintiff until she reaches 65.[ii]

Similarly, courts are also unwilling to find a substantial change in circumstance when a person losses employment or has a decrease in income when such loss or decrease is found to be voluntary.

What If You Have a Settlement Agreement That Was Incorporated Into a Judgment of Divorce?

The standard for a modification of a maintenance obligation is even higher than the standard set forth above. If individuals entered into an agreement after July 19, 1980 which remains valid and was incorporated into a subsequent order or judgment of a court, a court may not modify the terms of said agreement pertaining to maintenance without a showing of extreme hardship on either party. In other words, the party seeking a modification of the maintenance provisions of a divorce decree which incorporates the terms of a settlement agreement, must demonstrate that the continued enforcement of the settlement agreement as is would create extreme hardship. Establishing extreme hardship is not easy. In fact, courts have even held that while loss of employment may be a substantial change, it is not enough to establish an extreme hardship.

Showing extreme hardship is a difficult task; however, it can be done. In a 2005 case out of the Fourth Department, Marrano v. Marrano[iii], the court found that the defendant met his burden of establishing that his continued payment of $40,000 per year to plaintiff in maintenance would result in extreme hardship warranting a reduction in his maintenance obligation. In this case, the defendant earned $174,000 from his real estate business in 1994 but by 1999, his earnings decreased to approximately $18,000. Additionally, the gross income from his business was $1,810,000 in 1995, but decreased to $295,000 in 1999. Moreover, the plaintiff did not refute the evidence presented by defendant that his company, which was valued at $150,000, would produce a yearly income for defendant of $56,557 for the next three (3) years and that his yearly living expenses would be approximately $50,400. At the time of the hearing, the defendant’s only other assets consisted of $300 in a bank account and $15,000 in equity in his home. Based on the above, the court found that payment of $40,000 per year in maintenance would cause an extreme hardship on defendant.

If you believe you may be entitled to modification of maintenance or have questions about support obligations, you should seek advice from an experienced attorney. The material in this blog is meant only to provide general information and is not a substitute nor is it legal advice to you.  Readers of this article should seek specific legal advice from legal counsel of their choice.   Samantha Guido may be reached at 516-393-8250 or sguido@jaspanllp.com.

[i] DRL § 236(B)(1)(a).

[ii] Taylor v. Taylor, 107 A.D.3d 785 (2d Dep’t 2013).

[iii] 23 A.D.3d 1104 (4th Dep’t 2005).