Whether your business is hit by an economic downturn, you lost your job or you experienced a pay cut, the deciding factors when a court is considering reducing a parent’s obligation to pay child support boil down to the reason for a loss in income and the party’s ability to pay.

For support orders made prior to October 13, 2010, under New York’s Domestic Relations Law, courts will consider lowering a parent’s child support payments in cases where there has been a “substantial change in circumstances.” However, paying parents, or “payors,” could end up shooting themselves in the foot if such substantial change is the result of their own doing, rather than an unanticipated event.

Two additional bases were added as grounds for modifying a support order; both upward as well as downward.  These bases only apply to Court orders made on or after October 13, 2010:

• Three (3) years have passed since the order was entered, last modified or adjusted; OR
• There has been a change in either party’s gross income by 15 percent or more since the order was entered, last modified or adjusted.

Noteworthy is that the parties reaching their own agreements can agree to opt out of these two bases for modifying child support; in which case, the parties are still left with the long standing, yet more onerous, “substantial change in circumstances” standard, which is referenced in the above paragraph.  It is important to determine if your support order states whether or not you have opted out of these newer provisions, as they provide an easier standard for modification of support.

Focusing on the pre-2010 standard, a party charged with paying support must petition for a downward modification in child support if they believe they are due a reduction. A simple, verbal agreement to reduce an amount of support (that has previously been ordered by the Court) will not suffice. Demonstrating either an unanticipated change in circumstances, or fulfilling one of the two new bases mentioned previously, would allow a court to hold a hearing to determine if a modification is warranted and, if so, the proper amount of support owed. However, relying on the “substantial change in circumstances,” basis to modify support does not mean that all business problems will merit relief from child support payments.

New York courts have repeatedly stressed that a parent’s child support obligations “are not necessarily determined by his or her current financial condition.” Under New York’s Family Court Act, if a parent possesses a “sufficient means,” or is “able to earn such means,” then he or she must pay the amount of child support the court deems fair; whether or not he or she is actually earning the income. Courts often base child support obligations on the payor’s “earning ability,” also referred to as an “imputed income,” rather than on what he or she actually earns.

Documentation will be crucial to obtaining an order of downward modification. The court wants to know both what the payor’s income and assets were when the child support order was initially made, and what his or her income and assets are when the petition for modification is filed. The expenses of the party seeking a reduction will also be of interest to the Court. Signed and dated tax returns will be helpful, as will business records, receipts, affidavits and sometimes even forensic accounting reports.

It is important to remember that the cause for a decrease in income can sometimes carry as much weight as the loss in income itself. A court can decline to find grounds for a downward modification of support if, for example, a business owner voluntarily eliminated a part of his or her business for the singular sake of lowering his or her income.

In the case of Westwater v. Donnelly, a father who left a high-paying job to start his own business requested a downward modification in child support because his new self-employment provided him with substantially less income. However, the New York Supreme Court, Appellate Division, Second Department rejected his request, saying that a modification order would essentially subsidize the father’s financial decisions at a cost to the children’s right to support.

Convincing a court that there has been an unanticipated and unreasonable, substantial change in circumstances can be difficult; courts are not obligated to rely on the financial information provided by payors.  A court may even calculate how much a payor could be earning, based on his or her education or skill levels, and impute income to the payor.

Parents interested in modifying their child support obligations should consult with a family and matrimonial attorney who can help them navigate the process. A family and matrimonial attorney can determine if there is compelling evidence of a substantial change in circumstances; if the payor is entitled to a downward or upward modification based on the newer standard of a change in gross income of 15 percent or more; or, if three years have passed since the order was entered, modified or adjusted.