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How To Handle Job Loss During Your Divorce

How To Handle Job Loss During Your Divorce

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Talk about having the rug pulled out from under you: You’re knee-deep in divorce negotiations, trying to keep some semblance of balance, and you lose your job. Or your spouse loses their job. How will the court look at this, how will it affect negotiations, and what should you do?

Understanding that every situation is different, the court will want to know the cause of this sudden unemployment. Was the job loss due to circumstances beyond your/your spouse’s control or the result of negative behaviors or actions?

Let’s say you lost your job due to widespread layoffs at the company where you work. Not your fault. So when it comes time for judgments to be made as to spousal or child support, you are in a good position to argue that you should not be held to the income level you had while employed, so long as you are making sincere efforts to find a comparable, new job. On the other hand, if you were fired due to misconduct, the court likely will hold you to that level of financial responsibility.

Importantly, both parties need to be realistic about what is and is not possible from a financial perspective. If the now unemployed spouse cannot provide support until re-employed, negotiations might include writing a formula into the support agreement that says once they have a job, they will be responsible to pay x percent of their earned income once re-employed. This percentage may be based on a sliding scale that varies with income level, usually including both a ceiling and a floor on the amount of support to be paid.

On the other hand, if the spouse who loses their job is the lower-paid spouse, the employed spouse may be ordered to pay more support until that person is re-employed. The court’s intention is always to ensure that families, and especially children, are able to maintain the lifestyle they were accustomed to prior to the divorce. Again, the agreement can include a formula or sliding scale to ensure that the supporting spouse is not unduly burdened.

What can you do to navigate this unfortunate situation? The following tips may help.

If you lost your job:

  • Be diligent in your efforts to find employment.
  • Keep records of your job-search activities — interviews, resumes sent, time spent on employment sites, meetings with recruiters, networking, etc., so you can produce documentation to the courts if asked.
  • Don’t view this as a time to go back to school or change the course of your career by pursuing your “dream job,” which pays half what you used to make. Focus on landing a job with a commensurate salary. If you were a highly compensated investment banker, no court is going to look positively on your decision to become a part-time yoga instructor.

If your spouse lost their job:

  • Be realistic in your thinking as it relates to spousal or child support, and open to negotiation.
  • This doesn’t mean you should shortchange yourself. Be informed about what money is or will be there. For example, make sure you have all of the relevant information about the severance package your spouse may be receiving. Know what compensation they are entitled to going forward, any payout they may receive for work previously done, and any other details pertaining to finances.
  • If the employer was owned by a family member or friend and you suspect this may be a front — that “losing their job” is part of a larger scheme of divorce planning — do your diligence to get to the truth.
  • If the job loss is part of a broader layoff, print out any press releases or news stories you can find about the circumstances surrounding the layoffs. These may lead you and the courts to information that’s critical to your negotiations.
  • It’s also important to note that you can and should rely on your counsel to help uncover all relevant information through discovery. This process will help you learn the full circumstances of the job loss, any non-obvious financial consequences including loss of deferred compensation or the possibility of replacement deferred compensation from a new employer, and whether your spouse’s efforts to obtain reemployment are genuine, which may impact what kind of support arrangement is appropriate going forward.

Divorce can be stressful enough. Throwing a job loss into the mix might seem devastating at the moment it happens, but with patience and an open mind, you can make your way to an agreement that works for everyone involved.



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