Alimony is a common form of divorce, especially in the United States. Alimony is a type of divorce reparation, where one party (the ex-husband) pays another party (the ex-wife) money during and after a marriage to help with living expenses.
In most cases, the husband agrees to pay his ex-wife income from the time they married until their death and she accepts it, although she may not spend much of it.
Some payments may be made in exchange for work or labor; for example, the husband agreeing to take care of the children while their parents work on building their own lives.
These arrangements are common and accepted in both communities, so very few people ever talk about them. People who make these arrangements know what kind of people they are—they understand what needs being met, and how it should be paid for.
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Legal repercussions
If your spouse becomes bankrupt, their debts can fall onto family or friends to pay. This is called garnishing income or taking away someone’s salary or money to pay off debt.
If your spouse has been paying alimony, then their debts may still be legally his or hers, even if their ex-wife is no longer paying.
In most cases, this doesn’t matter as much. Most people don’t like going through the trouble of suing their spouse in court and getting a judgment against them, only to have it unisexly ignored by the other party.
Plus, in most cases, a husband and wife really do get married for the sole reason of settling marital disputes in court.
Making up for the pay difference
If one spouse stops paying alimony, he or she may need to make up the difference by paying a balance due. This can happen if the spouse unable to pay or unwilling to continue paying, or if the court has ordered one party to pay in addition to wife’s inheritance and husband’s child support.
In most cases, only when both parties agree to a modification of the alimony agreement is it changed into a debt.
Modification agreements must be approved by the court and signed by both parties. The modified agreement may include different amounts of money that each spouse is supposed to pay, depending on who owns what property.
This can create some confusion for each party, who is responsible for what. It can also make it more difficult for one party to get their lives back up and running again.
Contact your former spouse and negotiate a payment plan
If your former spouse doesn’t want to pay you alimony, you can contact a court to order them to do so. Many courts will work with a judgment up to $100,000 in assets and an average of $200,000 in debt to create a payment plan that meets your needs.
Most importantly, the goal of the payment plan is for both parties to receive enough money to live comfortably while they reconcile their financial obligations.
If your ex-spouse doesn’t have enough money of their own, you may be able to get someone else to contribute something towards paying you off. For example, if you contributed $500 per month, your ex-spouse would only owe $500 per month in order for them to meet their obligation.
It’s important that you don’t make any assumptions about who can and cannot pay alimony. All it takes is one wrong assumption for it to lead to a divorce settlement that doesn’t include you.
Collect on deferred alimony
If your divorce or marital dissolution does not include child support, then the next thing to consider is collecting on deferred alimony.
Alimony is a legal term that refers to money received in return for work done by a former spouse during their marriage.
While most states require that ex-spouses work off their alimony payments, some don’t require any assistance at all. If your state doesn’t require any help at all, then you can collect on deferred alimony.
Usually, when an ex-spouse receives deferred alimony, it comes in the form of a check paid to the former spouse years before the couple married. The payment is made after the couple marries, but before they receive any tax benefits from it.
Because this payment is made years before the person receives anything back, it becomes possible to collect on it.
Ask the court to modify the original agreement
If one party changes their behavior and the other party doesn’t, the other party may be able to get out of paying alimony.
In order for the other party to request a modification of the alimony agreement, they must show that they have suffered as a result of the payments. This could be in the form of expenses they were not reimbursed for while married or property that was acquired during the marriage.
A recent way to request a modification of the alimony agreement is through a joint bankruptcy petition. If one person in the marriage is unable to pay their debts, then the other person can ask the court for help.
If both people in the marriage are able to meet their obligations, then there is no need for a modification. The court will determine if there has been enough time for each party to meet their obligations based on how long it has taken before.
Consider taxable income
If you stop paying your ex-spouse’s alimony, you may face legal consequences. You may be considered to have gotten away with financial fraud against your ex-spouse.
Under Federal law, you may be charged with tax evasion if you do not pay court-ordered child support or alimony. You may also be charged with bankruptcy fraud due to the fraudulent charges your ex-spouse made on your credit card.
Under state law, you can be sentenced to jail or even prison for paying less than the full amount due to fraud. In some states, there is no minimum amount that has to be paid in alimony and/or child support. There are also some states where jail time is not an option.
Seek tax advice
If your divorce has gone past a few years, you may be able to seek tax advice in the federal government’s new tax guidance. The Tax Cuts and Alimony Reinvestment Act of 2006 (TCA) made substantial changes to the tax laws related to divorce.
As of 2018, states can no longer use alimony awards from before 1975 as precedent for establishing alimony in a divorce today. This changes the landscape of how judges decide alimony, which can have dire consequences for both parties.
For example, if one party pays too much or none at all, the other may not have any reason to maintain an ongoing role in their lives and responsibilities. This can cause deep regret on both parts, as one person feels like they were forced into a situation where they had no choice but to give up everything else for the other.
Impact on future taxes
If you stop paying alimony, you may lose your right to inherit property or receive Medicaid or Medicare when your spouse dies.
Under Federal law, if you stop paying alimony, your spouse does not automatically lose his or her right to inherit property from you. Federal law requires a spouse who no longer owes child support to receive Supplemental Security Income (SSI) payments.
However, if you no longer owe support, your spouse still receives the benefit of SSA’s Bankruptcy Act Repayment Program (BAP). This program allows spouses who have been unable to manage their own finances for years to have some control over their future by repaying some of the money they owed.
This benefit applies even if the person no longer has any funds because of bankruptcy. A spouse can enter BAP with as little as five years since marriage.