California Divorce Blog–Deferred Income or Diverted Income for Debt Repayment

Sometimes parties divert income or defer income to repay debts owed and therefore claim that the diverted income should not be counted as “Income” for support purposes.  California Courts have held that diverted income is typically to be counted as “Income” for support purposes.

A parent’s voluntary debt repayment, effectively diverting funds from income, may be added back into his or her “annual gross income” calculation. Generally, the law does not permit a “voluntary diversion of income to pay debt, resulting in deprivation of funds for child support.” (See Marriage of Kirk (1990) 217, CA3d 597, 606-608, 266 CR 76, 81-82.   (H voluntarily agreed to reduction in salary to reflect automatic payback of funds borrowed from employer corporation: trial court erred in not considering diverted funds as H’sincome; see also Marriage of Pearlstein (2006) 137 CA4th 1361, 1376, 40 CR3d 910, 922).

The Court may treat income diverted for the “Necessities of Life” differently. However, if a party is diverting income for garden variety debts then the court will likely qualify the diverted funds as “Income” and therefore include such money as income for purposes of calculating support.

Please contact Attorney Keith F. Simpson today to discuss your legal matter at (310) 297-9090.  Keith F. Simpson is an experienced Manhattan Beach Divorce Lawyer. For further information you may also review the website at http://www.simpsonlaw.net or call for your free initial consultation today.

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