Johnson v. Johnson

397 B.R. 289 (2008)

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Nature of the Case

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Facts

H and W were married on December 7, 2001. One child, Meagan Johnson, was born to the marriage. On November 23, 2005, H and W entered into a Separation Agreement. Paragraph one releases H 'from any and all obligations for alimony and support' of W. Paragraphs three and four of the Separation Agreement provide that H will pay for the support and medical insurance coverage of Meagan Johnson. Paragraph five provides that H and W will equally share the costs of a college education for Meagan Johnson. Paragraph nineteen of the Separation Agreement provides that H and W will purchase life insurance policies and designate Meagan Johnson as the beneficiary. In the agreement, H also agreed to convey his undivided, one half interest in Real Property to W. Two deeds of trust encumber the Real Property. The first deed of trust is in favor of Piedmont Federal Savings and Loan Association (Piedmont), and it secures a debt in the original principal amount of $56,000.00. W agreed to assume sole responsibility for payment of the debt secured by the Piedmont deed of trust. The second deed of trust is in favor of Wachovia Bank and Trust Company (Wachovia) secures a line of credit with an outstanding balance, as of the signing of the Separation Agreement, of $22,000.00. The Debt was incurred to purchase personal property items for H, W, and Meagan Johnson, and their household. H agreed to assume sole responsibility for payment of the Wachovia Debt. Meagan Johnson was accustomed to living in the residence, and both H and W wanted her to remain living there. At the time that the parties entered into the Separation Agreement, there was roughly $30,000.00 of equity in the Real Property. Their divorce judgment incorporated the Separation Agreement. H married W2 in November of 2006. W remarried in the spring of 2007. H and W2 filed jointly for Chapter 13 bankruptcy relief. W filed a proof of claim totaling $22,283.47, which represents the principal balance of the Wachovia Debt as of the petition date. H and W2's plan provides for a payment of $505.00 each month for 60 months. The Plan proposes no payments on the Wachovia Debt. On their Schedule E, H and W2 checked the box stating that there were domestic support obligations owing. W is listed as an unsecured, nonpriority creditor on Schedule F. Schedule F lists the Wachovia Debt as 'domestic support obligations arising from separation agreement and divorce judgment.' Wachovia Bank is also listed as an unsecured, nonpriority creditor for the 'second deed of trust on property conveyed to the former spouse.' On Schedule H, W is listed as a co-debtor on the Wachovia Debt. W filed an Objection. W contends that the balance owed on the Wachovia Debt is a nondischargeable domestic support obligation pursuant to Section 523(a)(5) of the Bankruptcy Code. H contends that he did not intend for the assumption of the Wachovia Debt to be for alimony or child support. He admitted that he wanted to provide for Meagan Johnson and that he was willing to do anything to secure a divorce.