What Is A Cost Of Living Adjustment (COLA) Clause?

How Can I Make Sure My Payments Increase To Cover Inflation?

What Is a Cost of Living Adjustment (COLA) Clause?

In divorce proceedings in Georgia, it’s uncommon for maintenance (spousal support and child support) agreements to include a Cost of Living Adjustment (COLA) provision. The inclusion of a COLA clause varies by state, with some mandating it while others leave it as an option. Specific requirements for such a provision also depend on the jurisdiction but often involve specifying the effective date of the adjustment and the COLA index to be applied. In most cases, the clause takes into account the potential income fluctuations of the paying party, and the receiving party has the opportunity to contest the adjustment through a court motion before it takes effect.

The primary purpose of a COLA clause is to ensure that support payments (whether spousal or child support) increase as the cost of living rises. This eliminates the need for either party to repeatedly file motions with the court for future increases, known as post-divorce modifications. In Georgia, however, this type of provision is not allowed.  In Georgia, the Courts are not allowed to include automatic adjustments to child support amounts.  The Child Support amounts have to be set by a Judge, and have to be within the Child Support Guidelines when the child support amount adjusts.   However, having a COLA clause doesn’t negate a party’s right to seek a modification if their circumstances change significantly.

If a divorcing couple agrees to include a COLA clause in their maintenance agreement, the court may choose not to approve it. The court has discretion to to change provisions in the Agreement about child custody, visitation, child support, or alimony if the Court does not think that the provision is fair, or does not meet the requirements of Georgia law.

Interested in learning how inflation might be impacting you right now? Click to view the Online CPI Inflation Calculator.

Impact of Job Loss or Failure to Pay Child Support on COLA Adjustments

If the party responsible for support payments experiences a reduction in income, they can file a motion with the court to seek a reduction in support payments, effectively modifying the original maintenance or child support agreement. The court will consider this change in circumstances when making a decision. If this happens to you, it is important to file as soon as the income loss affects you.  Do not file while you are receiving your severance payment, as the income loss has not happened yet.  The Court can reduce your support obligation permanently, or temporarily, to give you a chance to start a new job.

For guidance on this process, it’s advisable to consult with an attorney experienced in divorce modifications, such as Gwinnett County Divorce Modification Attorney Dodie Sachs.