What happens if my spouse cannot afford to pay the equalization payment?
Inability to pay the equalization amount in a lump sum does not eliminate the obligation, but courts have tools to accommodate financial hardship. Under the Family Law Act, a court can order that the equalization payment be paid in installments rather than all at once. The payment schedule can be set to align with events like the sale of the matrimonial home or other asset disposals.
A court may also order security — for example, a lien or mortgage on property — to protect the recipient spouse while payments are made over time. The court can also consider postponing possession or sale of the matrimonial home to allow the paying spouse time to arrange financing.
In practice, many couples resolve this by structuring the settlement around a home sale: the proceeds are divided after the sale, satisfying the equalization obligation from the net sale funds. If the paying spouse has genuinely no assets, the recipient spouse may need to explore other legal options, including enforcement mechanisms if a court order is later breached.
Key takeaways
- The equalization obligation does not disappear because a spouse cannot pay immediately
- Courts can order installments or a deferred payment schedule
- Security such as a lien on property can protect the receiving spouse
- Structuring settlement around a home sale is a common practical solution