Loan Applications Can Come Back To Haunt

Many cases have been won or lost in both the child and spousal support arenas due to clever lawyers and their clients finding and introducing into evidence for the Court’s consideration recent loan applications where the adverse party claimed inflated income to secure approval of a loan application to a lender.

Now, that same person is in family court telling the judge, usually under penalty of perjury, that he or she has limited income for purposes of paying child or spousal support. 

Income stated on loan application is substantial evidence at trial supporting a court finding that it is the party's income.  A 2005 appellate court decision ruled that a trial court may properly rely on income stated on a loan application that was wildly different from that stated on tax returns.

Although case law permits a trial court to rely on income stated on a loan application, the trial court is not obligated to do so.  The trial court still has wide discretion to believe or not believe the statement of income on a loan application.  In fact, in a 2009 appellate case, In re Marriage of Berger, Mr. Berger had applied for a 1.8 million dollar construction loan.  The loan application listed his income at $65,000 per month.  The trial court did not adopt this figure as Mr. Berger’s income in the family law case.  This case went up on appeal.  The appellate court ruled that, like any other evidence, it is within the discretion of the trial court that hears and considers the evidence contained in the loan application to be persuaded or not be persuaded by the loan application evidence put before the court for review.

Nevertheless, loan applications and associated financial statements are one of the most fertile areas for discovery in support litigation. With the prevalence of refinancing, it is always a good idea to see if the other party has refinanced and, if so, to subpoena the loan records.


Richard Ross
Certified Family Law Specialist

Richard Ross is a certified family law specialist in California who is a member of the Collaborative Family Law Professionals in both Ventura and Los Angeles Counties.

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