In Re Johnson

397 B.R. 289 (M.D. N.C. 2008)

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Nature of the Case

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Facts

Johnson and Snow were married on December 7, 2001. One child, Meagan Johnson, was born to the marriage. On November 23, 2005, Johnson and Snow entered into a Separation Agreement. It was drafted by Johnson’s divorce attorney and released Johnson “from any and all obligations for alimony and support” and provided that Johnson will pay for the support and medical insurance coverage of Meagan Johnson. Johnson and Snow were to equally share the costs of a college education for Meagan Johnson and that they will purchase life insurance policies and designate Meagan Johnson as the beneficiary. They owned real property as tenants by the entirety. Johnson agreed to convey his undivided, one-half interest in the Real Property to Snow. The first deed secured an amount of $56,000.00. Snow agreed to assume sole responsibility for payment of the debt. The second deed was used to purchase, among other items, a 1994 Chevy diesel truck, another pick-up truck, a camper, and an ATV. The money was also used to pay off an outstanding loan on a minivan. The Chevy truck was traded in for a 2000 Ford F-150, which was sold after the divorce was final. The camper was sold, and a portion of the proceeds were applied to the debt secured by the Wachovia Deed of Trust. Snow currently has possession of the ATV. Johnson agreed to pay any and all indebtedness due Wachovia Bank against said real estate, and to pay said Wachovia Bank debt in full no later than when the above-mentioned Piedmont Federal deed of trust is paid in full. The outstanding balance was $22,000.00. At the time that the parties entered into the Separation Agreement, there was roughly $30,000.00 of equity in the Real Property. Johnson made payments on the Wachovia Debt but then filed for Chapter 13 bankruptcy relief. Snow filed a proof of claim totaling $22,283.47, which represents the principal balance of the Wachovia Debt as of the petition date. Snow 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.” Snow argues that confirmation should be denied and that the balance owed on the Wachovia Debt is a nondischargeable domestic support obligation pursuant to Section 523(a)(5) of the Bankruptcy Code.