T

Divorced Couples Forced to Stay Together by Bad Economy

February 27, 2009

When a couple reaches a divorce agreement, they hope financial issues are settled and each party can move on.

But the sick economy is taking apart the best-laid plans. Many divorced couples are having to renegotiate settlements because of business difficulties, a layoff or reduced income, said lawyers who specialize in family law.

"There are a lot of very dire things out there right now," said lawyer Ike Vanden Eykel.

As a result, the extent of renegotiations is "unusual in the magnitude that it's happening now," said Vanden Eykel, author of several books on divorce in Texas and a managing partner at Dallas-area law firm Koons, Fuller, Vanden Eykel & Robertson, PC.

Dallas family law attorney Janet Brumley is seeing the same trend.

"It used to be that once you made a deal - a deal's a deal," she said. "Now it's a whole new ballgame."

It's not that people are deadbeats, said Brumley, a partner at Verner & Brumley PC in Dallas. "There are genuine catastrophes when someone loses their job," she said.

So someone who's been making child support and alimony payments may have to approach the ex-spouse about renegotiating.

Whether you're the person making the payments or the person receiving the payments, you should hire a lawyer to represent your interest. Don't be afraid to bring in other professionals, such as an accountant or a certified divorce financial analyst, to assist your case.

If you're the person making payments:

Be upfront. Inform your ex-spouse as soon as you see a problem in making your divorce payments because you were laid off, your income is being slashed or your business is hurting.

"You should immediately renegotiate your payments," said Brumley. "The longer you wait, the bigger the amount you'll owe. Nobody wants to negotiate backward."

Gather documentation to support your claim of inability to pay.

"No one, including your ex-spouse, will take this on your word," Brumley said. "If you are claiming that your hours have been cut and your pay is reduced, show pay stubs that validate that claim."

If you've been laid off and receive a severance package, be prepared to disclose the details, she said. Being upfront about things will help smooth the process because the other party won't feel you're hiding something.

That's the advice that George Parker gives his clients.

"We're just trying to be very transparent," said Parker, a family law attorney and managing partner at Parker & Montgomery in McKinney. "This is our situation, and this is what I can show you to show that this is our situation."

Be prepared to cut your spending. "You're paying somebody X dollars, and they adjust their lifestyle to X dollars. Now, you're saying, 'I need you to take one half of X,' " Parker said. "That's going to be difficult, and they're going to want to see that you're cutting back, too."

Offer alternatives. "Don't just say what you cannot do," Brumley said. "Offer what you can do. It is up to you to generate options."

Money is not the only bargaining tool. For example, if you're out of work and hope to lower child support payments to be within your unemployment benefits, offer to do something that you know the other parent has to pay for now, such as after-school care.

"This makes the custodial parent feel you are trying, and it makes you feel like you are not abandoning your financial responsibility to your children," Brumley said.

Always pay child support.

"If you don't pay child support, you can absolutely go to jail for it," said Mike McCurley, a Dallas family law lawyer.

"The child support payment has to become your first priority. It's not a case where your budget does not allow for child support to be paid. It has to be paid," said McCurley, a partner at McCurley Orsinger McCurleyNelson & Downing LLP.

You can renegotiate with your former spouse on the support and other payments, such as school tuition, but your agreement has to be court-approved.

Don't expect cutbacks to last forever. For alimony or related agreements that were negotiated in the divorce settlement, expect that your ex-spouse will want any renegotiation to stipulate that if those payments are lowered now, that they will also rise once your earning power improves. Court approval is not generally required, but review by lawyers is advised.

If you're the person receiving payments:

Trust, but verify. "Require documentation verifying your ex-spouse's claim of an inability to pay," Brumley said. "This documentation may be in the form of bank statements, payroll stubs, etc."

Hear your ex-spouse out. "Explore your alternatives with your lawyer," Brumley said. "What will likely happen if you do not negotiate with your ex-spouse?"

In this brutal economy, you may get nothing, lawyers said.

"For practical purposes, you always want to sit down and be reasonable," said Vanden Eykel.

But protect your interest. "The payer could get a new job next month. You need to be careful while you're being practical," he said.

Don't limit your thinking. "You and your ex-spouse can do all kinds of things that judges cannot," Brumley said. "You might agree to extend the term of alimony payments, thereby reducing the size of each monthly payment, in return for your spouse's agreement to trade automobiles with you."

Don't sacrifice too much. "Work with your lawyer to craft an agreement that gets you some things you want," said Brumley, "in addition to giving your ex-spouse some relief he or she is requesting."