In hard
times, a divorce can pack an even harder financial punch
Monday, September 28, 2009
Linda Stein
SPECIAL TO THE TIMES
Robert Smilow's family business has
been on a downturn over the last five years. The textile company, which
designs and makes patterns for clothing manufacturers and once employed
15 people, has lost business to China due to the policies of the federal
government, Smilow says.
"The way our government has structured
our import and export taxes, it has decimated the business," Smilow
said. "You can buy directly from China instead of from me."
With its export business in trouble,
the company suffered a crippling blow from the recession, and Smilow
expects to be unemployed by January.
The 43-year-old Hamilton Square man had
separated from his wife six years ago. Their original agreement was that
Smilow pay her $4,500 per month for alimony and child support for his
children, who are 8 and 10, plus pick up the expenses for their
children's camp and sports. He also paid for the family's health and car
insurance.
"When things got bad, I took a
$2,000-a-month pay cut, and we started to go to court over everything,"
Smilow said. "It took her a long time to realize she had to sell the
house. It was worth $1 million. Now it's worth $400,000 and it's in
foreclosure."
After several rounds in court, his
payments to his ex-spouse are down to $2,200. And Smilow, who has
remarried, is due to be a father again in December.
While state records show the rate of
divorce filings has fallen by 1 percent in New Jersey from July 2008 to
July 2009, lawyers say they are seeing more clients like Smilow who need
to renegotiate the terms of their child support and alimony payments.
Charles F. Vuotto Jr., of Tonneman,
Vuotto & Enis in Matawan, who chairs the family law section for the
State Bar Association, said initially a recession "gives people pause"
as they ponder a divorce because they worry about keeping their jobs or
are laid off. Also, the falling value of a couple's home, which is
typically their largest investment, is also a deterrent to getting a
divorce.
A recession also "fuels disputes and
arguments and leads to divorce," Vuotto said. But some couples may delay
their divorce due to finances.
"Things are tight," he said. "Somebody
may have lost a job. Bonuses aren't being paid. Portfolios have
declined. Litigation is expensive. They're less inclined to pay a lawyer
however many thousands of dollars for a retainer."
But meanwhile, those who are already
divorced and making hefty payments to ex-spouses are taking an economic
hit and need relief.
"From an anecdotal point of view, there
is an increase in modification, an increase in motion practice, and the
bench and the bar are looking to address these applications," Vuotto
said.
"I think judges are becoming more
sensitized to this issue over the last five or six months," said Vuotto,
who has spoken to several Family Division judges at recent seminars.
"Children have to be fed, obviously. It's harder to reduce child support
than alimony. When (a breadwinner) has experienced a real change in
circumstances and he or she has less money to pay support, it's
necessary to give some relief. The question is, who suffers?"
Judges tend to look at what an intact
family might do in the same economic squeeze, such as reduce
expenditures, liquidate items or get a second job, he said. They expect
the divorced families to make similar adjustments.
Barry Szaferman, of Szaferman Lakind in
Lawrence, has seen a slowdown in divorces since the last quarter of
2008, "after the Lehman Brothers hit," he said in reference to the
financial collapse of the giant global securities firm.
But his practice is still busy as
people seek to change the terms of their divorce settlements.
"That's definitely on the increase,"
Szaferman said. "People losing their jobs, particularly in the financial
sector, who made a lot of money, much of it through bonuses. We'll be
learning a lot (about the trend) in the next three to six months."
Szaferman agrees that judges are "less
skeptical" toward clients who claim their circumstances have changed for
the worse. "They still require individuals to show it's not temporary
and diligently pursue other job efforts for a reasonable period of
time," Szaferman said. "Just being unemployed is not enough to trigger
relief."
Pennington attorney David Perry Davis,
who represents Smilow, is also seeing an increase in clients seeking to
change the terms of their divorces.
Another of his clients, a Princeton
restaurateur who has seen his business drop precipitously, went back
before a judge to reduce the generous alimony he agreed to give his
ex-wife. He's had to lay off employees and stop serving lunch as well,
Davis said.
But Davis has also noticed another
trend as the recession wears on: couples coming in together for an
amicable divorce that will cost them much less than a contentious court
fight.
"The biggest change I've seen in the
last year is a lot more people doing things on an uncontested basis,
people realizing that what little funds they have left should be
distributed among themselves instead of giving the money to lawyers.
(The couples) make better friends than they made spouses. They just want
to get it done.
"I don't care how much money you have.
Nobody wants to give $20,000 to a lawyer," Davis said.
"People come in. You explain the
rules," he said. "With it being uncontested, you can do it for $1,000.
It doesn't cost as much to get divorced."
The main expense for a couple is not
the divorce itself; it's supporting two households, he said.
A Princeton lawyer, Marlyn E. Quinn,
who also handles divorce cases, said one big problem is that houses have
lost value and are slow to sell. A house is usually a couple's largest
asset.
"Divorce is more difficult when there
is not much equity left in houses and houses aren't selling quickly,"
she said. "People are having to live together (despite their desire to
live apart)."
But in the Princeton area, houses are
still selling, especially as the owners have gotten more realistic about
lowering their sales prices, Quinn said.
"There are a lot of people out of
work," she said. "They started their divorces before they lost their
jobs and they can't pay their mortgage. And they can't pay me."
Facing a New
Jersey divorce?Learn about your
rights and develop a strategy to protect yourself and your children.
732.696.2500
New Jersey Divorce Lawyers - TONNEMAN, VUOTTO & ENIS, LLC - 732-696-2500
