What impact will COVID-19 have on your divorce financial order
The COVID-19 pandemic is having an affect on everybody in the country. The pandemic will have financial implications to most people. Businesses large and small are under threat. The stock market is tumbling, house sales on hold and people are losing their jobs. How will it affect people going through divorce?
If you have yet to apply for a divorce?
If your finances have been negatively affected by the impact of COVID-19. It is important that up to date financial information is exchanged. This is to ensure that both parties have a full understanding of current values of the marrital assets and financial resources. It is also essential to calculate what your respective financial needs are.
You may need to reassess your mortgage capacity to determine whether you can still afford to take on the mortgage for the family home in your sole name. You may have had a sudden loss of income, especially if you are self employed. The value of any capital assets like shares or pensions that you were using as negotiating assets may have reduced in value. It may be that you would be better off to defer the division of your assets. But that said, if all assets have reduced in value, the division is a percentage of those assets, which will not change. It is when different assets reduce at different rates, it becomes an issue.
To ensure that you are as financially secure as possible, it is important all options are considered.
Already have a Financial Order?
The Family court has the power to “vary, suspend, rescind or revive” any Financial Order. An application can be made to the Court on the grounds of there being a “subsequent event, unforeseen and unforeseeable at the time the Order was made, which invalidates the basis on which the Order was made”. Although judges have their personal view of this, but these unprecedented times are a very strong case for unforeseen circumstances.
It is strongly recommended to make applications to the Court promptly, and to get expert advice.
When is my Financial Settlement final?
Your financial settlement must be approved and sealed by the court. It then becomes final and binding on both parties once the decree absolute is issued in the divorce proceedings. Until the decree absolute has been obtained, the settlement can be modified.
If parties only obtain a settlement without a court order, it is simply an agreement. Either party will continue to have the right to financial claims against the other, even after the divorce is concluded
Many orders recently approved by the Court, may contain time limits by which property should be sold or transferred. Shares may need to be sold, or a lump sum to be paid. If those actions are still to be completed, the Court is able to make a new Order “if the circumstances upon which the Order was made has fundamentally altered”.
Carol Sullivan, from Divorce Negotiator advises "In the cases, where your income has dramatically reduced. It may be necessary to apply to vary the amount of the payment that you make due to your changed financial circumstances. Try to avoid the need for court through careful negotiation. Compromise is a better alternative to court appearance, and normally less costly."
Existing Maintenance Orders
If the payer has a permanent change in their income, then it is possible to get a variation order on the amount being regularly paid. So during the pandemic, if one party were to lose their job, it would require a court variation order to alter the payment. It does require a detailed financial report of both parties current financial status to be submitted to court, to enable a fair court order to be sealed.