Child Support Payments: What happens when you lose your job

Fired or Laid Off? Child Support Payments May be Reduced

Child Support Payments And The Loss Of Employment

In these uncertain economic times, the risk of being laid-off (or fired, unemployed, or otherwise losing your job) is at the forefront of many people’s minds. This stress is compounded by the uncertainty of what to do with  ongoing child support payments as obligations in the event of job loss. While most parents willingly pay support payments, times come up where they lose the ability to. The Calgary, Alberta child support payment lawyers at Kahane Law Office can help you understand payment options.

How To Calculate Payments When You Lose Your Job

One of the objectives of child support payments are to “establish a fair standard of support for children. This is to ensure that they continue to benefit from the financial means of both spouses after separation”. Typically, child-support is based on last year’s income. This is because it is the easiest way to calculate income. However, child-support must account for the financial means of the parents. Thus, nowhere in the child support payments guidelines does it indicate that the payments must be based on last year’s income. When you lose your job, it can mean that there has been a shift in financial means. This means that reducing child support payments while you are out of work maybe an option.

Alberta Courts Ruling on Changing Child Support Payments On Being Laid Off

The effect of losing your job and child support payments was recognized by the Court of Appeal of Alberta in L. (R.E.) v. L. (S.M.), 2007 ABCA 169. In that case the Court stated “The Guidelines do not state that the past year’s income is the basis for calculating support. Section 16 could have but does not, define annual income as income stated on the previous year’s tax return… Reading section 16 with section 2(3) directs that for the Guidelines the most current information must be used. A court following this directive ends up with an estimate of the payor’s current annual income. It then completes an adjustment at year’s end once the actual income is known.”

Therefore, the Courts must look at the reality of the post job loss or laid off financial situation and attempt to estimate current income for child support payments. A dramatic change in income such as a loss of employment does warrant an application to vary child-support payments. Upon such an application, it is very important to provide full disclosure of financial circumstances.

What Counts As Income For Child Support If You Are Fired?

Financial disclosure includes many things. For example, it includes, without being limited to, income tax returns for the last three years, employment contracts and records of any severance package received.

If a severance package was received, income for the purpose of child support may be determined by extrapolating a yearly income based on the amount of severance as a severance will normally be based on an income over a specific period of time. However, if new employment is not found by the end of the severance period it becomes necessary to either reduce child-support payments further or impute income.

What If A Parent Quits To Keep Their Payments Down?

An imputation of income occurs when the court determines that a parent has been intentionally underemployed (or unemployed). The court specifically looks at any intention to reduce child-support payments. In order to avoid this, it is necessary to provide evidence of all attempts to find new employment including all applications, emails to potential employers, updated resumes and any other supporting documentation. You cannot avoid or reduce payments by intentionally remaining out of work.

If Maintenance Enforcement is involved it is also important to provide any new child support orders to them so that penalties are avoided. The system often process extra complexities, however it protects the child and recipient parent.

Getting The Help You Need To Vary Child Support Payments

If your employment situation has changed, child-support payments should also change and we can help you with this application. However, you must be prepared to provide all documentation of your attempts to find reemployment. This is due to unemployment without a reasonable excuse leads to a child-support order regardless.