Alimony Modification due to COVID-19

COVID-19 has caused financial destruction for people. Employees are being laid off and business owners are faced with reduced incomes and the possibility of having to close their businesses. You may be up all night trying to figure out how you’re going to pay your alimony obligation as well as all of your other financial obligations.

What can you do if you have a Court ordered alimony obligation? Court ordered alimony obligations do not get modified automatically. A Court ordered alimony obligation can only be modified by the consent of the parties with the filing of a Consent Order or by filing a Motion with the Court and having the Court enter an order modifying said alimony obligation.

Under Lepis v. Lepis, the Supreme Court of New Jersey held that alimony may be modified upon a showing of a substantial change of circumstances. Therefore, a substantial change in income may be considered a substantial change of circumstances. However, developing case law required the change in income to be substantial or permanent and not merely temporary. COVID-19 presents unprecedented issues for the Court and litigants. It cannot be determined how long the financial consequences of COVID-19 will last. Prior to COVID-19, the Court relied on case law in determining after what period of time, the Court would consider a substantial change in circumstances to be permanent. It cannot be determined at this time as to what amount of time the Court will require a party who pays alimony to wait before filing a Motion with the Court to modify the alimony obligation.

If you are an employee as opposed to a self employed individual, N.J.S.A. 2A:34-23(as modified in 2014), states that when you are unemployed or have not been able to return to or attain employment at prior income levels, the application may not be filed until the unemployment or reduction in income has lasted for at least 90 days. However, after hearing the application, the Court may grant the modification retroactive to the date of the loss of employment or reduction in income.

Since the Family Court is a Court of equity, the Court has the ability to fashion a remedy in the interest of justice that may require the relaxation the 90 day requirement due to the COVID-19 circumstances.

When a W-2 employee files a Motion to modify alimony, the Court shall consider the10 factors as set forth in N.J. S.A. 2A:34-23(k):

1. The reasons for any loss of income;
2. Under circumstances where there has been a loss of employment, the obligor’s documented efforts to obtain replacement employment or to pursue an alternative occupation;
3. Under circumstances where there has been a loss of employment, whether the obligor is making a good faith effort to find remunerative employment at any level and in any field;
4. The income of the obligee, the obligee’s circumstances, and the obligee’s reasonable efforts to obtain employment in view of those circumstances and existing opportunities;
5. The impact of the parties’ health on their ability to obtain employment;
6. Any severance compensation or award made in connection with any loss of employment;
7. Any changes in the respective financial circumstances of the parties that have occurred since the date of the order from which modification is sought;
8. The reasons for any change in either party’s financial circumstances since the date of the order from which modification is sought, including, but not limited to, assessment of the extent to which either party’s financial circumstances at the time of the application are attributable to enhanced earnings or financial benefits received from any source since the date of the order;
9. Whether a temporary remedy should be fashioned to provide adjustment of the support award from which modification is sought, and the terms of any such adjustment, pending continuing employment investigations by the unemployed spouse or partner; and
10. Any other factor the court deems relevant to fairly and equitably decide the application.

N.J.S.A. 2A:34-23(l) applies to applications for modification of alimony filed by business owners or other self employed individuals. In contrast to applications filed on behalf of the W2 employees, there is no 90 day waiting period to file an application on behalf of a business owner or other self-employed individual. Despite no waiting period, a business owner or self-employed individual will still have the burden of establishing a substantial or permanent change in circumstance to justify a modification of the alimony obligation. The applicant will be required to demonstrate a comparison of the benefits from the business to the business owner at the time the alimony obligation began and at the time of the application for modification. The application must include an analysis that sets forth the economic and non-economic benefits the party receives from the business and which compares these economic and non-economic benefits to those that were in existence at the time of the entry of the alimony obligation.

Below are possible outcomes with regard to filing an application to modify alimony:

The Court denies the application.

The Court simply modifies the alimony obligation downward.

The Court temporarily modifies the alimony obligation downward.

The Court temporarily suspends alimony according to specific terms.

The Court directs that alimony shall be paid from the payor’s assets pending further proceedings.

The Court orders a periodic review of the financial situation which may require ongoing examination of the parties’ finances in multiple legal proceedings.

Since the Family Court is a Court of equity, the Court can fashion a remedy that insures fairness and equity to both parties.

It is recommended that parties consider submitting to the nonbinding mediation in order to resolve their issues in an expeditious and cost saving manner. By submitting an application to the Court, the parties are subjecting themselves to costly and ongoing litigation with regard to the application for a modification of alimony. At mediation, the parties can be creative and hopefully arrive at a compromise that is fair to both parties. The settlement of the issue permits both parties to maintain some control of the situation. In the event that the Court is forced to decide the issue, both parties lose complete control of the matter.

Our lawyers stand ready to help you or a loved one with an alimony case.