Being Dad Family Finance

COVID-19: what to do if you’re hit financially

Finance
Written by Steven White

Follow this helpful guide if you can’t afford to pay child or spousal maintenance due to the coronavirus.

It is undeniable that the COVID-19 pandemic has left many people in financial hardship.

Some are living on a reduced income after been furloughed – others have lost their jobs completely. And with schools closed, many parents are having to juggle working from home with home-schooling, while some have decided to stop working completely to focus on their child’s education.

These circumstances have led to people seeing their overall incomes drop considerably.

Many in this position will be worrying about how to keep up with regular payments, including those who are currently paying child or spousal maintenance, while others will be concerned that they will see a drop in the maintenance that they receive.

Family and divorce specialist solicitor Lucinda Holliday highlights a few things that should be taken into consideration if you’re unable to meet your usual financial commitments.

Contact Child Support Agency or Child Maintenance Service

If your maintenance is being paid through the Child Support Agency (CSA) or the Child Maintenance Service (CMS), it is vital that you contact them as soon as possible if you will not be able to pay your arranged maintenance.

The CSA or CMS will be able to assess your current situation, and your payment schedule can be negotiated accordingly.

If payments are reduced or missed without having previously notified the CMS and having the payments due recalculated, you may be left with arrears that need to be paid. The CSA or CMS will aim to collect all the arrears within two years.

In normal circumstances, you may be asked to pay up to 40 per cent of your income to repay the arrears, but this depends on your circumstances and other financial commitments.

The CSA or CMS will take into consideration: the needs of you and any new family; the needs of the other parent and the children receiving maintenance; whether the other parent has informed the CSA or CMS that they are likely to suffer financial hardship if your payments aren’t met.

If you do not inform the CSA or CMA that you may fall behind on your payments, or are unable to pay the full amount agreed, they may take enforcement action against you to try and make you pay back what you owe, without any consideration into your current situation.

Solicitor Lucinda Holliday

If you have been furloughed, and your income has been reduced by 20 per cent, you will still be expected to pay child maintenance in full.

Only when your income has been reduced by 25 per cent or more will the CSA or CMS reassess the amount of maintenance you should be paying.

Family-based child maintenance arrangements

Family-based maintenance arrangements are often chosen over CSA or CMS as they are the easiest way to arrange child maintenance, meaning many people will fall into this category.

Both parents will have agreed on the amount of child maintenance to be paid, and how regularly these payments will be made.

As family-based arrangements are not usually legally binding, it is much easier for you to negotiate payments between yourselves if you find yourself in financial hardship.

Be transparent with the other parent and explain your current situation. You should consider every possibility to ensure you continue to provide maintenance payments if you can, even if they are a reduced amount.

It is important to remember that both parents have a legal obligation to financially support their children, so ensure that as soon as you are financially able to, you will start payments again, and make up the amount missed.

If both parents cannot come to an agreement, you should consider making an application to the CMS, who can help calculate a reasonable payment.

Other things to consider

During such an unprecedented time, it is more important than ever for both parents to communicate openly to ensure you are doing what is best for your children.

The maintenance-receiving parent may rely on regular child or spousal maintenance payments, and may find it more difficult to make ends meet during this time.

However, if the paying parent has been made redundant or cannot work during the pandemic, they will also be facing similar hardship. It is vital that both parents approach maintenance payment discussions with sensitivity and understanding, as it is likely that both parties are struggling financially.

If an agreement cannot be made between the two parents through altering a family-based arrangement, it may be helpful to use non-court services such as mediation. A mediator will be able to help you communicate effectively to come to an agreement, whilst taking into consideration each parent’s situation.  

If communication has broken down and as a maintenance-paying parent or maintenance-receiving parent you are unsure what to do, you should seek legal advice from a specialist family lawyer. They will be able to discuss your specific circumstance in detail and recommend what can be done.   

Lucinda Holliday is partner and head of family and divorce law at Blaser Mills Law.

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