What happens when coronavirus means you can't afford child support
The growing concern and uncertainty amongst Australians caused by the coronavirus (COVID-19) pandemic is exacerbated for many separated parents. This is particularly so for those facing significant difficulty in meeting not only their business or living expenses, but also their child support obligations.
It is important to know where you stand and what your options are to ensure that you can make sound decisions during this difficult period that will not end in enforcement action being taken against you down the track. This will depend on how your child support obligations are enforced, such as whether you have an informal arrangement with the other parent, or whether an administrative assessment and/or a Binding or Limited Child Support Agreement is in place.
For those with an informal arrangement with the other parent, it may be best to communicate any difficulties and the capacity you now have to contribute to children's expenses. By both parents being open and frank about their respective circumstances and the children's needs, it will assist in coming to a joint agreement.
This may mean that parents need to work together to prioritise what's important and who will pay certain expenses until circumstances improve. If the issue cannot be resolved, then recourse for the non-paying parent may be to make an application for administrative assessment with the Department of Human Services (Child Support Agency).
Some parents have an administrative assessment in place through the Child Support Agency (CSA) obligating one parent to make certain payments to the other parent resulting from an application for administrative assessment. CSA administrative assessments will vary based on each parent's income, among other factors like percentage of care.
If the income for a parent reduces, then that parent can seek to alter their child support income by lodging a new estimate of their income with CSA for the year or part of the year.
Many parents choose to record their child support agreement in a Limited or Binding Child Support Agreement. With Limited Child Support Agreements (LCSA), either parent can choose to end the LCSA a number of ways, including by agreement, if the LCSA is three or more years old or if a new notional assessment varies the previous notional assessment by more than 15% in circumstances not contemplated by the previous agreement. It follows then that a parent may be able to elect to end a LCSA if the paying parent's income reduces to a certain extent.
With a Binding Child Support Agreement (BCSA), the law around ending such agreements are more complex. Like a LCSA, parents can agree to terminate a BCSA and enter into a new one, for which legal advice is needed for both parties.
If there is no agreement, and a parent is unable to maintain their child support obligations, then that parent may need to consider applying to the Court to set aside the BCSA. One of the grounds where a court can set aside a BCSA is because of exceptional circumstances (relating to a party to a BCSA or an applicable child) that have arisen since the agreement was made which involves certain hardship.
If you are unable to meet your child support obligations, particularly regarding a BCSA, it is important that you seek independent legal advice regarding your situation as soon as possible.
There are a range of options available to negotiate an outcome that is pragmatic and workable, whether it be in the short, medium or long term. Whilst a party may have grounds to set aside a BCSA for example, this may be a costly exercise. Due to the recent changes in the court arising from the pandemic, it may also be an even lengthier process.
Given the stress that would likely be caused in the home due to a reduction in child support for whatever reason, it is important that parents keep the lines of communication open for the benefit of the children wherever practicable.
It is possible to reach interim agreements between parents to get through this difficult period, and legal advice should be sought as to how any variation should be recorded.
If parents cannot reach an agreement amongst themselves however, then family dispute resolution is an option to have an independent and trained mediator facilitate the discussion and help resolve the issues.
Many mediators are offering online services during this period, such as mediation via Zoom conferencing or by telephone. This is a practical solution for many now, as escalating the dispute to litigation can be a costly exercise, not just financially for parents but emotionally as well.
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