Women in Transition Event Addresses End-of-Year Mortgage, Alimony Changes

“We’re connected, as women. It’s like a spiderweb. If one part of that web vibrates, if there’s trouble, we all know it, but most of the time we’re just too scared, or selfish, or insecure to help. But if we don’t help each other, who will?” said author of The Peach Keeper”• Sarah Addison Allen.  With that in mind, we’ve organized a complimentary “Women in Transition” seminar on Oct. 30 to support women dealing with divorce, the loss of a spouse, or a major life change.

In the comfort of their peers, women will find advice on protecting their legal rights; managing financial health; dealing with mortgages and refinancing; attending to the needs of their children; and perhaps most importantly, maintaining emotional well-being during this trying time.

Although we host these gatherings a few times throughout the year, the October event will specifically address some major laws that are changing come Jan 1, 2014. These include modifications to the mortgage industry, such as the federal tax calculations on house short-sales, as well as increases to the child support and alimony guidelines in Colorado.

For more information, call Divorce Matters at 720.542.6142 or email info@divorce-matters.  Please RSVP to the October event here.

Colorado Revises Maintenance (Alimony) Guidelines, Effective 2014

Formerly known as “alimony,” maintenance is financial support given by one spouse to another which is paid as a result of divorce or legal separation.  On May 10, 2013, House Bill 13-1058 was signed into law. This Bill will substantially modify the statute which governs maintenance in dissolution or legal separation cases in Colorado (C.R.S. §14-10-114).  This change to the statute is set to take effect January 1, 2014 and applies to actions in which a petition for dissolution of marriage, legal separation, or declaration of invalidity, or an action for the initial establishment of maintenance is filed on or after January 1, 2014.

Historically, the Courts have enjoyed wide discretion in the award of maintenance, both in amount and duration. The only phase of a case in which a domestic law practitioner had a level of comfort in the likely maintenance award was the temporary orders phase where the parties had a combined annual income of $75,000.00 or less. In that case, the presumptive maintenance amount is calculated by taking 40% of the higher earner’s monthly income and subtracting 50% of the lower earner’s monthly income. This calculation results in a presumptive maintenance for the temporary orders phase only. Cases falling outside of this limited circumstance were subject to very wide discretion of the Court. Indeed, a similar set of circumstances may receive a far different maintenance order by one judge than another.

The Colorado legislature enacted H.B. 13-1058 to establish a more detailed statutory framework, including advisory guidelines for the amount and term of maintenance in certain cases.  The hope is a more fair, equitable and consistent maintenance order across Colorado. Time will tell if this stated goal is accomplished.

The new changes insert a guideline for maintenance amounts and duration for parties with a combined annual gross income of up to $240,000.00 whose marriage has lasted between 3 years and 20 years. The guideline is a grid incorporating months of marriage and a guideline term of maintenance. At first review, the changes seem to favor lower-earners. The maintenance guidelines result in maintenance length and amounts much higher than many jurisdictions in the Front Range are accustomed. Upon a closer review, however, there are many exceptions to the guidelines written into the statute. The maintenance guidelines are not a presumptive amount; they are merely guidelines. Courts still retain the ability to review each case for equity. Further, the Court must still consider many of the same factors in entering a maintenance order as contemplated by the previous maintenance statute. Likely, courts will hear argument as to why the maintenance guidelines should not apply to nearly every case litigated in Colorado.

Time will tell if the new modifications result in a more predictable system of maintenance or if the new changes are used as little more than a starting point to interpret the old system of maintenance. More predictability and less litigation? We shall see.

For more information contact: William E. Smith, Esq. 720.542.6142 www.Divorce-Matters.com

Colorado Endorses Collecting Overdue Maintenance (Alimony) from Retirement Accounts

So, you have a Child Support Order and/or Maintenance Order in place.

One problem; you cannot collect the past due amount. While there are many ways to collect support in Colorado, all too often, the person obligated to pay support does everything in their ability to avoid paying the obligation. The Colorado Court of Appeals has recently upheld a process to allow past due child support and maintenance collection from the obligated party’s employer-held retirement account. See IRM of Drexler and Bruce, Jr., 2013 COA 43 (Colo.App.2013).

What type of Retirement Accounts Can I Pursue?

There are many types of financial accounts. This post deals only with employer-held retirement accounts.

The recent Colorado Court of Appeals decision affirms collection from employer-held retirement accounts. These are commonly 401(k) or pension accounts. Please note that the law surrounding retirement accounts is fairly complex. Further, some retirement plans, such as PERA, present special challenges.

How can I Collect?

If a party is behind on support payments, the first question is whether you have a valid, enforceable support order (hopefully, the answer to this question is “yes”).  Next, you must determine whether or not the obligated party has retirement accounts to pursue. If the obligated party has employer-held retirement accounts, you must request that the Court enter a Qualified Domestic Relations Order (QDRO) to collect the arrearages from the retirement plan.

Your request to the Court must comply with the Colorado Rules of Civil Procedure.

A QDRO is a domestic relations order that creates or recognizes a person’s right to receive all or a portion of the benefits payable to the plan participant (here the obligated party) under a retirement plan. A proposed QDRO must be drafted in a way that meets the particular retirement plan’s requirements and specifications.

A QDRO may be used to enforce maintenance and child support obligations for which you have a valid and enforceable Court order.   If the Court grants your request for a QDRO, you must submit exactly what the retirement plan requires directly to the retirement plan for collection.

Conclusion

In an ideal world, you can expect to receive child support and maintenance payments as the Court ordered. However, some people will do anything to avoid their obligations. There are many options to collect past due support, depending on the circumstances. Which option makes the most sense in your particular case requires an analysis of all possible options. The above information gives a very basic outline of one such option to collect past due support.

For more information contact Divorce Matters.

720.542.6142.

www.divorce-matters.com

 

How to Adjust Maintenance (Alimony) Obligations

If there is one constant in life, it is that life always changes. Layoffs, retirement, career changes, remarriage, changes with an aging parent, or illness””all of these can have an impact on how you live your life””and how you manage your financial obligations.  For divorced couples and parents, these changes are further complicated because of maintenance or spousal support obligations.

We work frequently with people who need to reduce their maintenance payments.  We also work with people who need to seek an increase in the maintenance they receive.  The need to change these payments stems from job loss, career change, remarriage, caring for an aging parent or the fact that the children from the marriage have gotten older.  Maintenance modifications are as much a fact of life as constant change.

Maintenance Defined

In Colorado, maintenance refers to spousal support which used to be called alimony.  Spousal support or maintenance is usually involved in a case that involves a long-term marriage or a case where one spouse has been able to make significantly more than the other, as in the case of a stay-at-home parent.

Whether or not one is entitled to maintenance initially is governed under §14-10-114 of the Colorado Revised Statutes.  An initial award of maintenance is not always required in a divorce, and a determination of entitlement (amount and duration) is case specific.  When maintenance is awarded or agreed upon as part of a divorce, all terms regarding the amount and duration are specified.

Substantial and Continuing Change

According to §14-10-122 of the Colorado Revised Statutes (C.R.S.), maintenance is modifiable only if there has been a substantial and continuing change.  However, you should be aware that if you and your spouse or former spouse entered into an agreement regarding the payment of maintenance, whether or maintenance is modifiable will be determined solely on the provisions of that agreement, regardless of whether or not there has been a substantial and continuing change.

So, for example, if your agreement specifically states that “maintenance is contractual and non-modifiable” the Court will not have jurisdiction to modify maintenance even if something has changed in your life.  Even if you are not bound by an agreement, the courts may not consider the change in your life to be a “continuing” change and may decline to modify maintenance. From the court’s perspective, some life obstacles are bumps in the road that are only temporary, such as lack of employment, as your finances will (hopefully) revert back to levels similar to when you negotiated you maintenance agreement.

For the court to approve a maintenance modification, you must be able to prove that the change to your financial situation is not only significant but ongoing. While temporary unemployment is not considered ongoing, income loss from a disability often is.

Taking the First Steps

The first step is to determine whether your maintenance can be modified.  In some divorces, the maintenance obligation cannot be modified.  If the maintenance obligation can be changed, you need to determine whether there has been a substantial change that would support a change.

So what should you do if your finances have changed substantially and you can no longer meet your maintenance responsibilities?

  • Collect the right information. When you apply for modification, you will need to complete a current Sworn Financial Statement, just as you did during the divorce process. Some information that will be helpful to you while completing this statement include:
    • Tax returns from the past three years
    • W-2 or 1099s from last year
    • Current paystub
  • Refer back to your original divorce agreements. As mentioned earlier, in some divorces, the couple agrees during the divorce process that all maintenance obligations are unchangeable. One of your very first steps should be to understand what you originally agreed to. You should speak to an attorney for legal advice.
  • If you have already missed payments, pay back as much as possible as soon as possible””even if it is not the full amount. Try to demonstrate to the courts that you are making an effort to catch up on your payments, even while seeking a better maintenance agreement. If you make no payments, you may be considered uncooperative, which may reflect poorly on you during the modification process.
  • Seek legal advice. Some maintenance agreements may not be modified, but in many cases if you can prove that your financial situation has drastically changed, it may be feasible. An attorney will be able to clarify your options. Also, because maintenance is not decided based on a formula, legal representation can help you maneuver the sticky, subjective areas in the law.  The most important thing you can do is to act immediately and not wait.  Modifications can only be applied back to the date that you file with the court requesting a modification of maintenance.  Courts may also look at the length of time that you waited to address the issue as part of determining whether or not the change is substantial.  The longer you wait, the less effective your argument becomes that your life change was substantial.

Conclusion

Changes are going to happen in life, and when those changes affect whether or not you can continue to make your maintenance support payments, it is vital to understand what your rights and responsibilities are and to clarify all options. You will only have an opportunity at being successfully in modifying maintenance if you can prove that your situation has changed drastically and that the change is ongoing””such as being laid off because of an injury or illness or retirement ””so you need to know exactly where you stand.