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Commercial Rent, Overhead, Employees, Child Support: How To Best Handle The Juggle Legally?

by | Jun 9, 2020 | Firm News |

Upended by the pandemic, many business owners are grappling with what bills to pay and in which order. The strain of New York’s “pause” put a tourniquet on cash flow for many. But what about personal obligations such as child support and spousal maintenance?

Business owners are juggling the chicken-and-egg question: if I don’t have cash flow in my business, how can I meet my obligations? Do the courts care?

Martin Johnson

Child support and spousal maintenance are usually embodied in court orders. Rent, car payments, and most other business expenses are contractual obligations. While contractual obligations can be enforced through legal proceedings, orders directing the payment of maintenance and child support already have the force of the court behind them, which may make their enforcement less difficult than contractual obligations.

At the outset, absent an intent to willfully ignore and disregard court order support obligations in favor of paying, business or personal expenses, no court is sending an ex-spouse or parent who is obligated to pay support to jail. To demonstrate contempt of court or willfulness for failure to pay court ordered support the petitioning spouse needs to show a deliberate disregard of the orders to pay support.

A showing of some good faith attempt to meet support obligations, considering the current circumstances, is sufficient for any court to deny punishment for failure to pay support. What constitutes “good faith”?  This boils down to how your actions in not paying even partial support will be perceived by a judge if an application is made to enforce the support order. The court will not look favorably upon a businessperson who has paid all of his business expenses in full without making an effort to pay for the support of their children.

In contrast, if the business owner makes some contributions to child and/or spousal support obligations in balance with the payment of other necessary business expenses, that demonstrates a good faith effort. Essentially you want the court to know you are making a sincere effort to fulfill your obligations even if the payments are partial.

Prioritizing business expenses for a car, equipment leases, rent, entertainment expenses (as little as they may be in today’s pandemic) as well as other personal expenses except for the child support will leave the business owner in an unenviable position of having to explain this disregard of court ordered support obligations to a judge.

Take Proactive Steps To Show Good Faith Efforts

If you are having difficulty meeting your support obligations, file an application to the Court for a relief from or modification of the court order support. Gathering all of financial documents to support your prioritization of expenses is an important and necessary step to show how the pandemic and resulting closures have affected your income and inability to meet your obligations.

The courts have reopened statewide in each and every county in the state.  In Rockland County petitions are being accepted both in Supreme and Family Courts for downward modifications of support. It would be prudent for business owners to consider filing a petition for relief if he or she finds themselves in a position of being unable to make court ordered payments. Even if some weeks have expired where full payments of support have not been made, it is never too late to file for some relief or modification of these obligations.

Martin Johnson, Esq., Founding Partner at Johnson & Cohen, LLP, of Pearl River

This article first appeared in the Rockland County Business Journal on June 8, 2020