Forced Resignation Serves as Basis For Child Support And Alimony Reduction

Resignation Letter

(Photo credit: Graham Ballantyne)

When the boss says “resign or I’ll fire you,” and you resign, is that a good faith reduction in income?  Can you use your change in income to reduce your child support and alimony?  A recent Supreme Court of Oklahoma opinion orders such a modification.

The parents in Garcia v. Garcia divorced in 2008.  The decree ordered father to pay child support to mother, and to pay support alimony to the ex-wife for 6 years.  At the time of the divorce, father was a school principal.

Father moved to reduce his child support and alimony obligations after he lost his job.  The father testified his superintendent told him to resign or be fired.  Figuring it would be easier to find another job in education if he quit rather than being fired, father chose to quit.  His resignation letter did not say he was resigning under threat of being fired.  Since leaving his job, father testified he’d made 53 job applications and sent 35 resumes, resulting in one interview.

Father asked the court to base his modified support obligations on earnings at minimum wage.  Mother argued that father either resigned his job voluntarily or committed acts that led to his dismissal.  Since father caused the actions that changed his circumstances, he should not be relieved of his support obligations.   The trial court and the Oklahoma Court of Civil Appeals agreed with mother. Both courts reasoned that Father’s job loss was due to his own misconduct, therefore his resignation was voluntarily self-induced. The lower courts relied on earlier case-law holding that voluntary underemployment or unemployment does not justify a reduction in support.

The Supreme Court of Oklahoma tweaked the test a bit after reviewing cases from Oklahoma and other states. Rather than voluntary or involuntary reduction, the test now is whether, based on all the circumstances, a reduction in income is done in bad faith to avoid a support obligation.  “A court must look to the particular circumstances involved and it is critical to determine whether the reduction in income was in good faith or bad faith.” In the Garcia case, the court ultimately determined that father’s decision to resign and not face termination was coerced, and was not done in bad faith to avoid his support obligations.

By David Tracy

 

Collect Child Support and Alimony from Disability Payments

If your child’s other parent receives Social Security Disability Income (SSDI), your child should receive an auxiliary benefit from Social Security. The auxiliary benefit may not cover monthly child support due you. The disabled parent may owe past due child support. Your former spouse may owe you alimony. You can collect these obligations by income assignment paid directly from the obligor’s disability benefit.

         As a general rule, SSDI payments are exempt from garnishment, attachment or other legal process. This is called an anti-assignment provision. It protects persons on disability from most creditors. But by federal law, the anti-assignment provision does not apply to collection of child support or support alimony. The government does not want parents or former spouses who can pay to allow their exes or children to become public charges.

Each state has a process for withholding up to 65% of a person’s disability income for the payment of child support or support alimony. In Oklahoma, the income withholding notice/order must be signed by a judge or hearing officer. The income assignment must then be filed and served on the office manager at any Social Security District or Branch Office. The addresses and telephone numbers of Social Security District and Branch Offices may be found in the local telephone directory. The income assignment proceeds will be paid to you through your state’s support registry.

It is important to know what type of benefit the disabled parent or former spouse receives. There are two types of Social Security benefits. The first type consists of old-age and disability insurance benefits (SSDI). The second type of Social Security benefit is Supplemental Security Income (SSI). SSI benefits are designed to help aged, blind, and disabled people who have little or no income. It provides cash to meet basic needs for food, clothing, and shelter.

SSDI benefits are funded by Social Security taxes. SSI benefits are funded by general tax revenues. Social Security Disability is considered a substitute for income. SSI is considered a supplement to income based on need. Because of the different purposes of the two types of Social Security, and the different ways the two benefits are funded, SSDI benefits are subject to income withholding, but SSI benefits are not.

By David A. Tracy

42 U.S.C. §407 – Anti-assignment provision for SSDI benefits

42 U.S.C. §659 – Exception for child support and support alimony

42 U.S.C. §666 – Order to withhold income for support shall be provided under state law

Income Withholding Order/Notice Form

Social Security Ruling 79-4 – authorizing collection of child support and alimony from disability income

SSA’s Program Operations Manual System, Section GN02410.200 – Notes SSI payments not subject to garnishment or income withholding

5 CFR Part 581 – Processing Garnishment Orders For Child Support And/Or Alimony