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The Impact Of The Coronavirus On Divorce Settlements

As the days, weeks, and months roll on, more of the insidious and unforeseen consequences of COVID-19, both for individuals and their families, are becoming apparent.  While it is too early to say with certainty, it is likely that the pandemic will lead to a significant rise in divorce proceedings.  

It also places pressure on those who are subject to financial settlements following divorce, in large part because the arrangements previously put in place may no longer be suitable given changing personal circumstances.  Many have lost jobs or had their income reduced as a result of being furloughed.  Likewise, business owners may be impacted by reduced custom, and hence income.  Some may even be declared bankrupt.  This raises the question, if you are party to a financial settlement with your ex-partner, how will COVID-19 impact on the arrangement?

10 June 2020
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Will COVID-19 affect my current divorce financial settlement negotiations?

If you and your ex-partner were in the midst of the court process of seeking a financial settlement order before the current COVID-19 pandemic, it may be that the financial information provided in ‘form E’ has now changed substantially.  Unfortunately, many people have lost their jobs, had their income reduced, been forced to sell assets, or their businesses have failed.     

There is no one way to handle this particular scenario.  You may decide with your ex-partner it is prudent to place a halt on financial settlement proceedings until relative normality is resumed.  Alternatively, you may wish to carry on working towards a financial settlement.  If you do and have already submitted financial disclosure information prior to COVID-19, the process may need to be repeated to ensure that any negotiated position is based on the latest financial information.  Remember, both parties to financial settlement proceedings are required by law to provide full and accurate disclosure of their respective financial position.
Another approach is to agree part of the settlement.  If the income aspects of the financial settlement cannot be agreed currently as a result of COVID-19, you may be able to agree how you will divide any assets and property, in the knowledge that the income can be assessed at a later date.

My income has reduced due to COVID-19, can I vary my divorce settlement?

If your income has reduced due to COVID-19, your ability to adhere to your side of a financial settlement may be diminished, or your financial needs may increase.  It might also be that your pension has lost considerable value, and hence your financial settlement should be changed to reflect this.  In such circumstances, you may need to vary your financial settlement.  Do bear in mind, however, that the Family Courts have reduced capacity at present and are currently prioritising the most urgent cases, therefore, where possible, if you can negotiate an arrangement without the court, this is highly encouraged.  Where an agreement cannot be reached between parties, alternative dispute resolution (ADR) methods such as mediation and arbitration can be highly effective.

If your financial settlement Court order was recently granted by the court, in some exceptional cases, you may be able to ask the court to reopen the matter on the basis that COVID-19 may be a ‘Barder’ event.   A Barder event, named after the 1987 case of Barder v Barder, occurs where something happens that invalidates the basis or fundamental assumption on which a financial remedy order was made, and hence an application must be made to challenge the order.  To be considered a Barder event, the court will assess whether:

  • New events have occurred since the original financial settlement order which invalidate the basis or fundamental assumptions on which it was made, meaning that, if leave to appeal out of time were given, the appeal would be certain, or very likely, to succeed.
  • The new events occurred within a relatively short time of the order being made (no more than a few months).
  • The application for leave to appeal out of time is made reasonably promptly in the circumstances of the case.
  • The grant of leave to appeal out of time would not prejudice third parties who have acquired, in good faith and for valuable consideration, interests in property which itself is the subject matter of the relevant order

What will happen to my financial settlement in the event of bankruptcy?

If your ex-partner is likely to be made bankrupt as a result of COVID-19, it is essential to act quickly before bankruptcy proceedings are commenced.  Once your ex-partner files for bankruptcy, their assets will be placed into the control of a trustee and hence cannot be split between the parties to the divorce.  By seeking a court order as soon as possible, if deemed to be fair, the court can seek to move the ownership of assets before bankruptcy is commenced.  If the bankruptcy proceedings have already started, it is recommended you seek the guidance of a Family law solicitor who can assess your options.

Final words on The Impact of the Coronavirus on Divorce Settlements

As with most of the legal implications of COVID-19, the optimal approach is to ensure that clear, respectful, and honest communication is maintained with your ex-spouse.  If you are worried about your ability to pay your side of your financial settlement, by working together in the spirit of understanding in this difficult time, it is likely that any new arrangements will only be temporary, and the original terms of the financial order can be resumed as the country starts to return to relative normality.  Kindness and patience are needed now more than ever.

Are you worried about how COVID-19 may impact your divorce settlement? Guillaumes LLP Solicitors is a full-service Weybridge law firm who can help.  We have a  team of experienced family law solicitors who can assist you.  To make an appointment, please contact us through our contact form or call us on 01932 840 111.