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If You Are Self Employed & Seeking to Lower Your Support, Come Prepared!

January 17, 2025

Gilbert v. Fenstermacher,  a Lancaster County case decided by the Superior Court on January 13, 2024 illustrates how challenging child support modification can be where one or both of the parties is/are self-employed in a turbulent economic market.

Fenstermacher is a real estate investor with a child support obligation. Real estate is a challenging business these days as the rise in interest rates has cooled the fires of home buying. But the defendant in this case seems to be positioned in a better place because it appears his income comes from both rents and sales of property.

Mother filed for support in late 2021 and secured an order for $778 a month. The court issued that ruling on the last day of 2021 utilizing 2020 income data. A couple months later the parties agreed to increase the order to $1,000 a month. But five months after that mother filed again to modify the order asserting that she now saw the 2021 tax returns and more was due. Based on those 2021 returns the order went to $2,200 a month.

In May 2023, Father filed to reduce based on an alleged steep decline in income from the $14,000 a month found on the 2021 returns. Mistake. In July 2023, the court recommended raising his support to $2,400 a month based on the 2022 returns. But, because father professed that his income  in 2023 was falling, the increase was not made part of a temporary order. Father’s petition based on his 2023 problems was heard in January 2024.  At that hearing father testified he expected 2023 gross income to be $250,000.

Now the problems start to multiply. The opinion states father struggles with discussion of his prior tax returns even though they are in the record. He indicates that a subdivision for which he was exclusive agent in the past became non-exclusive in 2023. As for his 2023 return, he “thought” he would file on time but was not certain whether the return would be joint with his incumbent wife. He had no completed profit and loss to show the court for how 2023 came out (in his defense it was mid-January when the hearing was held but he provided no income information after July1 ). And, (courts love to hear this) there was a new baby of his on the way which might impact his ability to pay. There is a complicated answer to that assertion but it doesn’t pan out. He thought he could provide health insurance for his first two kids through his now pregnant second wife but did not have cost data.

No surprise here. Modification denied because he failed to prove a change in circumstance. We can spare the reader the gory details which seem to indicate that 2023 was, in fact, a challenging year. Not only did he lose the exclusive rights to sell a development, but he lost a tenant who had left a rental property in bad condition and in need of serious repair.

Father may have actually had a case for reduction but wholly aside from adding a new child to the rolls while claiming an economic downturn, he walked into court without definitive data to support his claim. As the appellate opinion points out, this was a case that might have been sustained if the petitioner brought in a 2023 self prepared profit and loss statement fully supported by bank statements and account ledgers showing the trail off in commission and rental income coupled with costs to repair a damaged property. Instead, the petitioner decided he just needed to tell his story even though his past history had shown that when the court dug into the tax return his income was up when he asserted it was down.

Every day lawyers meet with existing and prospective clients who have a story to tell about their income. Some of these people make profound amounts of money but have no clue how to read a tax return or an income statement. If you are one of those clients, you should know that as honest as you may be courts meet a lot of self-employed people play some pretty tricky games with their data and then profess to not know or have forgotten that their child’s college and car expenses are not deductible even though the kid wants to be a lawyer someday. Your month in Florida last January did not become a deductible expense because you wrote three wills and an employment agreement for clients between walks on the beach. People who are self employed are held to a higher standard because they can and do often get away with shenanigans (a legal term) when filing their tax returns. You can’t deduct a $2,300 a month Bugatti payment because it gets you to court or the jobsite faster. And you won’t be the first person to tell a creditor to pay you in February “cause I’m in support court in mid January.”

Mr. Fenstermacher may have had some of the serious financial reverses he claimed. But he seems to have come to court with lots to say supported by a dearth of corresponding documentary facts. He lost his case in January 2024 and while on appeal the court could not modify his order until now when the appeal was decided. Yes, Virginia, timing is everything. And this is a case where he probably didn’t have all the 2023 data he needed to present a complete picture and should have asked to defer a hearing on his modification until he did. Self-employment income cases are not a place to try self-representation.