Cost of Living Adjustments

All child support orders in New Jersey require language that the child support amount will be adjusted every two years by way of a cost of living adjustment. This applies to original, modified or enforced child support orders, though there are different applications of the rule for orders made before August 31, 1998. For these orders, the cost of living (COLA) adjustments are prospective, meaning that they calculate the change for the future of the order. The application of the COLA rules are applied differently to orders made after August 31, 1998.

A 2012 case, which is recent in legal years, Gerstenschlager v. Gerstenschlager out of the Appellate Division of the Superior Court, made COLA adjustments retroactive. This can result in a massive financial obligation of arrears based upon the accrual of the COLA amount prior to the adjustment being ordered, which will be two or more years. As a result of this decision, and this possibility, it is very important to keep complete and accurate records of income to be prepared, if it becomes necessary, to try to reduce any arrears accrued to the extent it may be possible. Maintaining these records cannot be stressed enough.

The COLA adjustment can happen in a couple of different ways. If child support is paid directly to the payee, the payee can bring an action every other year to obtain the COLA increase. If support is paid through the Probation Department, they generally set the COLA adjustment, but if they do not, the payee can commence an action for the adjustment or ask Probation to do it. In all cases for the adjustment, regardless of how the action starts, the payor must receive notice of the adjustment and has only thirty (30) days to object to the adjustment that has been made.

When the objection is made, if the action started with Probation making the adjustment, the Probation Department reviews the objection and if the parties do not agree with the decision from the review the matter transfers to a hearing officer for further action. If it adjustment action started with a hearing officer, it continues with a hearing officer after objection.

Absent one of the two reasons available on which an objection can be based, there is no defense to the COLA adjustment. Those two bases to file an objection are:

• The payor’s income has not increased in an amount at least equal to the cost of living adjustment. If the COLA increase is, for example, 2%, but your income has only increased 1.5%, this would give you a basis to object. Or
• The order or judgment of support calls for a different cost of living adjustment standard. This is something worthy of high consideration in drafting support agreements.

The COLA is determined by a review of the Consumer Price Index in New Jersey for the two years prior to the adjustment being made. If there is an increase in that Index, and there always is, there will be an effort to increase the child support order unless one of these two options for objection to the increase can be used as a defense.

If you need to discuss your COLA adjustment or other child support matter, please call the Law Offices of Peter Van Aulen for a consultation at 201-845-7400.