The Coronavirus has had a huge impact on many people’s livelihood. Some are facing losing their job or their business may be in financial ruin.
In this new blog (published 19 June 2020), trainee chartered legal executive Emily Bell at Silk Family Law shares advice on steps you can take when your income has dropped and you can no longer afford to meet on-going spousal maintenance commitments.
It has now been 14 weeks since the UK went into complete lockdown with shops, pubs, restaurants, and many other businesses closing in order to keep the public safe and stop the spread of Coronavirus. The economy has already taken a hit, but a further long recession is predicted so the full impacts are yet to be seen.
How Coronavirus has affected separated couples and their finances
My colleague, Silk Family Law partner Teresa Davidson, wrote a useful blog on the impacts of Coronavirus on divorce and how we at Silk Family Law have been able to help them look to the future and move on with their lives despite the challenges of the lockdown.
Similarly, we are also working with clients who, following divorce and where a court order has already been made settling their financial claims, are finding themselves in a position where their income has changed. Many are seeking advice on what to do when they can no longer afford to meet the payments to their former spouse as part of a periodical payments order.
What to do if you can’t afford your spousal maintenance
If you have been ordered to pay spousal maintenance to your ex-partner and your income has been affected, you will likely already be aware of the various government schemes available to supplement your income, including loans, tax relief, cash grants and the furlough scheme, which offers up to 80% pay to staff if they cannot work. If you are unsure on your eligibility, we can put you in touch with accountants and IFAs who can help.
However as you’ll know, these are only intended as interim solutions. So what should you do if your business is no longer viable, or your future income is very uncertain? There are a number of steps you can take, which I’ve set out below:
(1) Maintain your payments until a new agreement is made
The first thing to remember is that if there is a court order in place, you must adhere to it. Any missed payment would be a breach of the order. However, all is not lost and in accordance with section 31 of the Matrimonial Causes Act 1973, income orders can be varied.
(2) Speak to your ex-partner and seek to vary payments on an interim basis
You may be in the fortunate position that you can discuss with your former spouse that your income has been affected and may be able to agree to vary the maintenance on an interim basis. This may be that you reduce maintenance in the short term or, cease paying maintenance at all but that you will reimburse them in the future, when your income position has improved.
(3) Formalise any changes to your existing agreement
It is important that any agreement like this is recorded, so that the payee cannot, at a later date, allege you were in breach.
If you and your former spouse agree to vary the maintenance indefinitely, it is important that you seek legal advice and have the agreement embodied in a court order.
(4) Where you can’t reach agreement, a solicitor can negotiate for you
In the event you cannot agree a variation of the maintenance, we at Silk Family Law are able to assist you. In the first instance, we can correspond with your former spouse and/or solicitors instructed on their behalf. We would advise on your current income situation and the fact you are no longer in a position to meet the payments as currently ordered. On your behalf, we would negotiate a variation of the maintenance.
If an agreement is reached, then we would draft an order varying your existing order, and send this to the Judge for formal approval. That would mean that the terms of the original court order would remain in place, save for the provision of spousal maintenance, which would be varied.
(5) Apply to the court
Sadly, it is not always possible to reach a negotiated settlement and I am currently working alongside one of our partners on a case for client who has been unable to reach a negotiated settlement. We have therefore had to make an application to the court on their behalf seeking a variation of the periodical payments order in their former spouse’s favour.
When an application is made, both parties must disclose details of their income, capital including bank accounts and savings, property and details of their income needs. The court will then assess both parties’ financial circumstances and decide whether the order should be varied or in some cases discharged completely.
As you can see from the steps outlined above, there is always a solution to help you move forward, however difficult or complex your situation. At Silk Family Law we always aim to help clients solve problems in the most cost effective way, avoiding applying to court where possible.
As a Trainee Chartered Legal Executive at Silk Family Law, I work closely with all members of the team and their clients to progress cases efficiently and cost-effectively. Silk Family Law operates on a blended fees basis, meaning work is done at the appropriate level to minimise costs.
However, when reaching an agreement informally isn’t possible, the team here has the experience in dealing with complex or challenging cases to help you achieve the best outcome through the court system too.
We are unique as a boutique family law firm in having our own in-house barrister, who can look over your case and advise early on, to avoid unnecessary court time, complications or unexpected outcomes later on.
If you would like to discuss any aspect of my blog, or require advice on the issues raised, you can contact either myself on Emily.email@example.com or call me on 07970 116 144.
Photo credits: Josh Appel, Alice Pasqual and Sharon McCutheon on Unsplash