Either party in a post-judgment divorce action may make an application to modify alimony based on a substantial change in circumstances. The party seeking modification has the burden of demonstrating a change in circumstance which would warrant relief. A reduction in income is the number one reason for a party to seek a modification of alimony. However, that change is only part of the calculus to be considered in determining whether alimony should be modified. The trial court must not only examine earnings of the parties but also how they have utilized their income and assets in the past.
If the parties borrowed money to maintain their standard of living during the marriage, then there may be no change in circumstances to support a modification of alimony if the paying party comes into Court stating that he has to borrow money to meet his alimony obligation.
In a recent case, the ex-Husband, who is an attorney, sought to reduce his alimony obligation because:
- his law firm was dissolving;
- the firm had been operating at a loss requiring he and his partners to borrow money from the firm’s line of credit;
- his income was reduced;
- he was paying a high interest rate on a loan; and
- he had recently opened his own firm
The Court found that these reasons were insufficient to meet the Husband’s burden of proving changed circumstances. The Husband offered no information to the Court regarding his personal income drawn from the firm’s credit line, and he did not present any facts showing a change in his standard of living other than downgrading from a Porsche to a BMW. The Court stated that since the Husband opened his own law firm and brought many of his clients with him, he was employed and had the potential of earning a similar salary as he had in the past. Therefore, the Husband’s request to reduce alimony was denied.
It is important to note that when a self-employed party files for a reduction in alimony, the Courts are wary that such individuals are in a better position to present an unrealistic picture of their actual income to the Court than a W-2 wage earner. In any event, if the Husband in the above case had presented more financial information to support his position, the outcome may have been different.