Cancelled Debt Held Not Income For Child Support Calculation

Tennessee child support case summary on income determination.

William Lane Lanier v. Corie J. Lanier

The mother and father of three children in this Tennessee case were divorced in 2007.  At the time of the divorce, both parents were given equal parenting time.  A modification was later made with respect to the oldest child, and the father was given greater parenting time.  Other petitions were filed, and the trial court ultimately gave the father sole decision-making authority for all three children and reduced the mother’s parenting time.  Both parties appealed various issues to the Tennessee Court of Appeals.  Numerous issues were addressed on appeal, including whether the trial court had correctly determined the mother’s income.  The new parenting schedule required the mother to pay child support, and for purposes of child support, the trial court had set the mother’s income at about $44,000.  The father appealed this ruling.  He argued that the trial court had erred by considering only her W-2 income, without considering other evidence.  In particular, the mother had a debt of almost $13,000 cancelled in 2013, and the father argued that this non-taxable benefit should have been considered.

The trial court had rejected this argument because the issue was raised too late by the father, and also because the evidence had been before the court and had been properly considered.

The mother argued that the debt in question had been allocated to her previous husband in an earlier divorce.  When the husband failed to pay it, she was still liable, and she negotiated a reduced payoff amount.  This resulted in a 1099 being issued by the lender.  She also pointed out that the original debt had been incurred prior to the birth of the children.

The Court of Appeals agreed with the lower court that this one-time event should not be considered in determining the mother’s ongoing income.  In particular, it looked at the definition of income in the child support guidelines and noted that a cancelled debt was not income for purposes of child support.  For these reasons, the Court of Appeals affirmed the income determination.

Because other parts of the judgment had been vacated, the appeals court remanded the case to the trial court for further proceedings.

No. M2014-02293-COA-R3-CV  (Tenn. Ct. App. Dec. 9, 2016).

See original opinion for exact language.  Legal citations omitted.

To learn more, see Child Support Modification in Tennessee | How to Modify Child Support.

See also Tennessee Parenting Plans and Child Support Worksheets: Building a Constructive Future for Your Family featuring actual examples of parenting plans and child support worksheets from real cases available on Amazon.com.