STI: Business failed, so can I pay less in maintenance?

March 15, 2009

YOUR PERSONAL ADVISER: FINANCE

Business failed, so can I pay less in maintenance?

 

Q I agreed in a court settlement to pay my ex-wife a lump sum after our divorce. However, my business has since taken a turn for the worse and is now insolvent. I've no income and means to fulfil the court order. Is there any way I can apply to the court to reduce or vary the original order?

 

A A subsisting court order for lump sum maintenance can be varied if there has been a material change in circumstances after the date of the order. It can be said that there has been material change in your earning capacity because your business has become insolvent. This change justifies a review of the lump sum order. However, do note that a variation will be disallowed if the adverse circumstances are self-induced.

 

It is unclear whether the lump sum payable is already overdue. I shall first assume that it is not overdue.

 

The court will ascertain the difference in the income at the time of the consent order and at the time of the variation application. If the difference can be proven and quantified, the lump sum order may be adjusted accordingly.

 

While your responsibility to provide for your ex-wife and children does not cease, you will not be expected to suffer alone. The court will balance each party's needs and arrive at a result in which everyone experiences a reduced standard of living, in an equitable manner.

 

If the lump sum maintenance was also for the benefit of the children, you might wish to know that the court will give greater priority to the children's needs. Parents are expected to sacrifice some personal comforts so that the children are less affected by a fall in the standard of living.

 

Second, if the lump sum should have been paid long ago according to the terms of the order and if you had blatantly refused to make the payment, then, notwithstanding your weakened financial position, you cannot assert that the lump sum maintenance should be varied.

 

Lie Chin Chin

Managing Director

Characterist