Most often when we are acting for the income earning spouse, we are concerned with “capping” the client’s liability for child support. Even though the agreed amount often consumes a large”chunk” of the payer’s, there is security in the knowledge that the obligation has “topped out” even if the party’s income increases and that anything more is voluntary. A word of caution, however. In these uncertain times, it is not improbable that a person may, through no fault of his or her own, lose income completely, have that income reduced or have their financial circumstances change for the worse. The last example is particularly relevant in the case of self employed people.
Once parties enter into a Binding Child Support Agreement and it is accepted by the Child Support Agency as meeting the necessary technical requirements for such an Agreement, the Agency can then take on the role of enforcing the terms of the Agreement and collecting periodic payments which are payable pursuant to the Agreement. The Agency can take steps such as garnisheeing wages and tax returns or prevent the payer from leaving the country. If the Agency refuses to accept that the payer cannot pay, arrears will accrue. The only option available to the payer is then to apply to the Federal Circuit Court to set the Agreement aside and “set” the child support payable for the period since the payer fell into default. That of itself is a costly and lengthy exercise.
The other option to a Binding Child Support Agreement, a Limited Child Support Agreement, is sometimes less attractive because it can be brought to an end by either party if his or her income varies by more than 15% or after 3 years. However, as an alternative to being “locked in” to a Binding Agreement for many years but with which the payer is unable to comply, perhaps more consideration ought be given to Limited Agreement in a wider range of circumstances.
If you would like to know more about Child Support Agreements, feel free to get in touch.
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