Opinion
Case No. 99-59201, Adv. Pro. No. 99-0401, Chapter 7
August 6, 2001
John P. Brody, Esq., Kegler, Brown, Hill Ritter, Columbus, OH, for Plaintiff/Debtor
Michael T. Gunner, Esq., Hilliard, OH, for Defendant
OPINION AND ORDER ON PLAINTIFF'S AMENDED COMPLAINT TO DETERMINE DISCHARGEABILITY OF DEBTS ( 11 U.S.C. § 523(a)(5))
This matter is before the Court after trial of the plaintiff's amended complaint to determine the dischargeability of certain debts pursuant toll U.S.C. § 523(a)(5) and (15). This opinion and order constitutes the Court's findings of fact and conclusions of law with respect to whether the spousal payments to be made by the plaintiff to the defendant under their separation agreement and decree of dissolution are actually in the nature of alimony, maintenance, or support for purposes of § 523(a)(5); and, if so, whether such payments are not so excessive as to be manifestly unreasonable under traditional concepts of support. A separate opinion and order shall issue with respect to the § 523(a)(15) claim.
This Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1334 and the General Order of Reference entered in this district. This is a core matter which this bankruptcy judge may hear and determine under 28 U.S.C. § 157(b)(2)(I).
The debt in question arises from a separation agreement executed by the parties and incorporated into their decree of dissolution. See Defendant's Exhibit H. The key provision of that agreement follows:
The Husband agrees to pay to the Wife, as and for further discharge of his obligation of support for the Wife, spousal support in the sum of Three Thousand One Hundred($3,100.00) per month for 84 months at which time spousal support shall be reduced to the sum of One Thousand and 00/100 Dollars ($1,000.00) for a period of 36 months commencing the effective date of this Agreement. Spousal support shall terminate upon the death of the Wife but not the remarriage of the Wife. The Husband acknowledges that the sum provided herein is, in addition to other support provided in the Agreement, necessary for the appropriate support of the Wife and the minor child Kelsey.
See IV Spousal Support pp. 11-12.
Thomas Bolon, the defendant's domestic attorney at the time the dissolution was finalized, prepared this separation agreement. The plaintiff was unrepresented by counsel throughout the dissolution proceedings. The Franklin County Common Pleas Court entered the decree of dissolution on or about February 5, 1998.
The plaintiff had an ownership interest in several health clubs during the 1990's, including Bay Wind, Metro V, Northtown and Fitness Express. Some of the businesses were limited partnerships; others were subchapter S corporations. In addition, the plaintiff had management contracts from time to time in other health clubs in which he had no ownership interest. The health clubs were operated under the aegis of Club Management, Inc.
The defendant was involved with the day-to-day operations of the clubs during this period. Her duties included hiring, employee training, advertising, and directing programming. Although the parties separated in 1994, she continued working for the clubs until the Fall of 1995. She remained on the payroll of Club Management, Inc. through September 1997.
The parties' marriage appears to have been irretrievably broken. They had married in August 1981 and had one child, Kelsey, who was twelve at the time of their dissolution. In early 1996, the defendant engaged Stephen Enz to represent her in a possible dissolution proceeding.
After several months of negotiations, proposals, and counter proposals, Mr. Enz drafted a separation agreement which he mailed to the defendant on November 19, 1996. This draft agreement provided for spousal support payments to the defendant of $1,000 per month for an indeterminate length of time. It further provided that the defendant's share of the businesses was $302,400 for which the plaintiff was to pay to her eighty-four monthly installments of $3,600 each.
Although there were further discussions after it was mailed to the defendant, the draft agreement was never signed. The defendant became dissatisfied with Mr. Enz and hired another attorney, Gregg Lewis. No negotiations ensued between the plaintiff and Mr. Lewis.
On September 10, 1997, the defendant, along with Rick Axline, her current husband, met with a third attorney, Thomas Bolon. Mr. Bolon made handwritten notes of the meeting and subsequently testified as a witness at trial. One of the notations he made was "Make it all spousal support so nondischargeable in bankruptcy — argue not dischargeable — don't equate it to her interest in the businesses."
Mr. Bolon later drafted a separation agreement which provided for spousal support of $4,600 per month for 84 months and $1,000 per month beginning with the 85th month. Although not executed by the parties, the payments to the defendant were in the same total amount as the separation agreement drafted by Mr. Enz. Instead of designating the eighty-four installments of $3,600 as payment for the defendant's share of the businesses, however, this amount was simply added to the award designated spousal support. Mr. Bolon never discussed with the plaintiff the fact that this change might have the effect of rendering the entire amount nondischargeable in bankruptcy.
On October 13, 1997, the defendant sent a letter to the plaintiff regarding the draft separation agreement prepared by Mr. Bolon. See Plaintiff's Exhibit 18. Under the heading of Spousal Support, the defendant wrote:
The original agreement stated that you would pay a total of $302,400.00 for my interest in the businesses. This worked out to be $3,600.00 monthly for a period of 84 months. I agreed to take $1,000.00 off a month in order to lessen your monthly expenses. (At a savings of $72,000.00 to you). Therefore wouldn't that work out to be $2,600 (for clubs) plus $1,000 (spousal) and probably $800 (Kelsey)? That comes out to be approximately $4,400 a month. I will agree to $4,000 total a month which includes Kelsey's child support. This is an additional $400 savings which is equivalent to a $33,600 savings over the 84 month period.
The separation agreement ultimately entered into by the parties provided for spousal payments of $3,100 per month for 84 months and child support of $970.85 per month for a monthly total of $4,070.85. Beginning with the 85th month, the spousal payments would reduce to $1,000 for another 36 months.
Title 11, United States Code, Section 523, provides in relevant part:
(a) A discharge under section 727 . . . of this title does not discharge an individual debtor from any debt —
. . . .
(5) to a . . . former spouse . . . for alimony to, maintenance for, or support of such spouse . . ., in connection with a separation agreement, divorce decree or other order of a court of record, determination made in accordance with State or territorial law by a governmental unit, or property settlement agreement but not to the extent that —
. . . .
(B) such debt includes a liability designated as alimony, maintenance, or support, unless such liability is actually in the nature of alimony, maintenance, or support. . . .
Where, as in this case, the payments are denominated in the separation agreement as spousal support, the question is whether they are, in fact, support and not a property settlement in disguise. Fitzgerald v. Fitzgerald (In re Fitzgerald), 9 F.3d 517, 521 (6th Cir. 1993). Unlike the parties in Fitzgerald, the plaintiff and the defendant are not in agreement that the payments constitute alimony, and the plaintiff has produced considerable evidence challenging their characterization as alimony in the separation agreement. See id. Nonetheless, the defendant argues that Sorah v. Sorah (In re Sorah), 163 F.3d 397 (6th Cir. 1998) creates an irrebuttable presumption that an award designated as support by a state court and which has traditional state law indicia of support, constitutes support within the meaning of 11 U.S.C. § 523(a)(5).
In Sorah, the Bell Circuit Court in Kentucky granted a divorce and ordered the debtor to pay his former wife $750 per month as maintenance until the earliest of her death, remarriage, or 62nd birthday. Id. at 399. The Sixth Circuit held that because these restrictions on the award satisfied the traditional indicia of support, the state court's designation of the award as maintenance not only is entitled to deference, but that the award, under these circumstances, should conclusively be presumed by the bankruptcy court to be support. Id. at 401.
The Sixth Circuit has long recognized, however, a distinction between contested and uncontested divorce proceedings in terms of the deference to be given a state court decree.
In a contested case the likelihood that the state court would have awarded support where it was unnecessary is sufficiently remote that such interference by the bankruptcy court will seldom be necessary. When, as in the present controversy, the decree is not the result of a contested case but merely incorporates the parties' agreement, the concern for comity is of less importance. To allow the parties' characterization of a loan assumption in such cases to control pro forma would permit the debtor to agree to forego his rights under the bankruptcy laws.
Long v. Calhoun (In re Calhoun), 715 F.2d 1103, 1109 n. 10 (6th Cir. 1983.
More recently, the Bankruptcy Appellate Panel pointed out the extremely limited role exercised by Ohio courts in a dissolution proceeding such as this one. Corzin v. Fordu (In re Fordu), 209 B.R. 854, 863 (6th Cir. BAP 1997), aff'd, 201 F.3d 693 (6th Cir. 1999). Although the state court has the authority to approve or disapprove the separation agreement entered into by the parties, it cannot unilaterally change the provisions of the agreement in a dissolution proceeding. Id. [citations omitted].
Based on the foregoing analysis, this Court concludes that the separation agreement incorporated in the Franklin County Common Pleas Court's decree of dissolution is not entitled to the degree of deference prescribed by Sorah under the circumstances of that case. The overwhelming evidence in this case compels the conclusion that to the extent the monthly payments exceeded $1,000, they were nothing more than an effort to divide equitably what the parties believed at one time to be the value of the plaintiff's health club businesses. As such, the $2,100 portion of these monthly payments was simply a disguised property settlement outside the scope of the dischargeability exception found in 11 U.S.C. § 523(a)(5). See Berg v. Berg (In re Berg), 167 B.R. 9, 13 (Bankr. E.D.N.Y 1994).
The parties actually waived any findings of fact by the state court as to the monthly spousal payments. See section XXII of their Separation Agreement.
The only evidence to the contrary, other than the defendant's testimony, was the treatment by both parties of the $3,100 payments as alimony on their respective federal tax returns in 1998 and 1999. This characterization does not estop the plaintiff from claiming that the payments were, in fact, a property division for purposes of § 523(a)(5). Kelley v. Kelley (In re Kelley), 216 B.R. 806, 809-10 (Bankr. E.D. Tenn. 1998).
The plaintiff's obligation to pay the defendant $1,000 for a period of 120 months will, on the other hand, be nondischargeable under § 523(a)(5) absent proof that this award is manifestly unreasonable under traditional concepts of support and in light of the earning power and financial condition of the plaintiff. See Calhoun, 715 F.2d at 1110;Sorah, 163 F.3d at 402. The Court should view the plaintiff's earning ability and financial status both at the time of the dissolution and, if his circumstances have changed, his current ability to pay. Calhoun, 715 F.2d at 1110; Skaggs v. Skaggs (In re Skaggs), 91 B.R. 1018, 1022 (Bankr. S.D. Ohio 1988).
The obligation to pay the defendant $1,000 a month spousal support for ten years does not, in this Court's view, offend traditional notions of support even though such payments were not terminable upon the defendant's remarriage. This was a 16-year marriage in which the plaintiff enjoyed a wide disparity in income and earning ability over the defendant. Moreover, the scheduled termination of the support obligation coincides with the probable date of graduation from college by the parties minor daughter.
This leaves only the question of whether the award is unreasonable in terms of the plaintiff's ability to pay either then or now. Calhoun, 715 F.2d at 1110; Sorah, 163 F.3d at 402. In deciding this question, this Court does not sit as a super-divorce court to determine the most reasonable level of support, but considers the evidence that the award exceeds what the plaintiff can reasonably be expected to pay. Id.
Contrary to the defendant's argument, the fact that an Ohio domestic court may lack jurisdiction to modify a spousal award incorporated into a dissolution decree does not preclude this Court from determining this issue. Henry v. Edwards (In re Edwards). 216 B.R. 796, 805 (Bankr. S.D. Ohio 1997).
Much of the evidence concerning the plaintiff's ability to pay dealt with the analysis required under § 523(a)(15) in the event that the Court determines the spousal payments not to be alimony, maintenance or support for purposes of § 523(a)(5). There was comparatively little evidence bearing directly on whether spousal support of $1,000 per month was unreasonable at the time of the parties' dissolution or as a continuing obligation at the present time. The evidence adduced that is relevant to this issue, however, does not suggest that a monthly award of $1,000 was, or is, unreasonable.
At the time of the dissolution, the plaintiff was receiving a fixed salary of $68,000 plus distributions from his various businesses for a total of approximately $104,000 per year. Based on his ability for more than a year following the dissolution to make both the spousal payment of $3,100 per month and monthly child support payment of $970.85, the Court cannot say that a $1,000 per month alimony award would have been unreasonable at that time.
There is no question that the plaintiff's financial circumstances had changed considerably by the beginning of 1999. The various health clubs, including the Athletic Club at Metro V, had all closed prior to the end of 1998, and the plaintiff was no longer receiving any funds from Club Management, Inc. In January 1999, the plaintiff's regular income consisted of an annualized salary of $72,000 from Integrated Health Partners ("IHP"), a relatively new entity which had a management contract with the McConnell Heart Health Center. When McConnell decided to buy out the plaintiff's fee contract in May 1999, and later to cancel his consulting contract, the plaintiff's income ceased except for some distributions from IHP and some of his former businesses. Faced with mounting business and personal liabilities, he filed his chapter 7 petition on October 8, 1999.
There is also no question that the plaintiff's financial condition has significantly improved since his bankruptcy filing. On June 16, 2000, he secured employment with Club Corp. out of Dallas, Texas. He went through an eight-month training program and signed a contract with Club Corp. effective March 1, 2001, to manage the Capital Club in Columbus. The contract calls for an annual salary of $85,000 with the potential for incentive bonuses of $15-18,000 a year. Given this level of income, the Court likewise cannot say that a monthly payment of $1,000 for spousal support would be unreasonable at the present time.
For the foregoing reasons, the Court concludes that $2,100 of the monthly payments the plaintiff was to make to the defendant for a period of 84 months under their separate agreement, although designated as spousal support, is not actually in the nature of alimony, maintenance, or support for purposes of 11 U.S.C. § 523(a)(5). The Court further concludes that the monthly payment of $1,000 for 120 months is in the nature of alimony, maintenance, or support and is, therefore, nondischargeable under § 523(a)(5).
IT IS SO ORDERED.
OPINION AND ORDER ON PLAINTIFF'S AMENDED COMPLAINT TO DETERMINE DISCHARGEABILITY OF DEBTS ( 11 U.S.C. § 523(a)(15))
This matter is before the Court on the plaintiff's amended complaint to determine the dischargeability of certain obligations he incurred in connection with the parties' separation agreement. This separation agreement subsequently was incorporated into their decree of dissolution.
The Court has issued a separate opinion and order regarding the discharge of the plaintiff's marital debts under 11 U.S.C. § 523(a)(5). The Court determined in that decision only $1,000 of the monthly spousal payments constituted nondischargeable support. The Court will determine here whether the remainder of those payments, as well as certain other obligations under the separation agreement are nondischargeable under § 523(a)(15). The following, together with pertinent facts from the § 523(a)(5) opinion and order, constitute this Court's findings of fact and conclusions of law on this issue.
This Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1334 and the General Order of Reference entered in this district. This is a core matter which this bankruptcy judge may hear and determine under 28 U.S.C. § 157(b)(2)(I).
Title 11, United States Code, Section 523(a) provides in relevant part:
A discharge under section 727 . . . of this title does not discharge an individual from any debt —
(15) not of the kind described in paragraph (5) that is incurred by the debtor . . . in connection with a separation agreement . . . unless —
(A) the debtor does not have the ability to pay such debt from income or property of the debtor not reasonably necessary to be expended for the maintenance or support of the debtor or a dependent of the debtor . . .; or
The omitted language concerns debtors who are engaged in business. At the time of the plaintiff's bankruptcy filing, and the trial of this adversary, his former businesses were no longer in operation.
(B) discharging such debt would result in a benefit to the debtor that outweighs the detrimental consequences to a spouse, former spouse, or child of the debtor.
The burden of proof is on the defendant to show that the debts are not of the type excepted from discharge under § 523(a)(5). Molino v. Molino (In re Molino), 225 B.R. 904, 907 (6th Cir. BAP 1998). If the defendant satisfies her burden, the plaintiff must then prove by a preponderance of the evidence either of the exceptions to nondischargeability found in subsections (A) and (B) respectively, Id.
There are three provisions set forth in the parties' separation agreement to be considered. First and foremost is the plaintiff's obligation to pay the defendant $3,100 per month for a period of 84 months. In the § 523(a)(5) opinion and order the Court determined $1,000 of this monthly payment to be nondischargeable support, leaving the dischargeability of the remaining $2,100 per month to be determined under § 523(a)(15).
The second provision ordered the plaintiff to maintain a life insurance policy with a death benefit of $400,000 until December 31, 1998. This amount would then decrease by $40,000 each year for the next 10 years. The defendant was to be the named beneficiary of the policy.
Lastly, the parties agreed not to incur any indebtedness for which the other might be responsible. At some point following their dissolution, the plaintiff made several charges on a credit card which he believed at the time was in his name. When he stopped making payments on the credit card shortly before his bankruptcy, the company sought payment from the defendant. She, in turn, initiated a contempt action against the plaintiff in state court. At this time, the plaintiff discovered that the primary obligor on the credit card was the defendant and that he was merely an additional cardholder. The plaintiff contacted the credit card company to have the account switched over to his name, and he has been making $200 payments each month ever since. At the time of trial, the account balance was approximately $9,000.
The parties appear to believe the relevant provisions of the separation agreement to be either II F or H of the separation agreement. These provisions, however, concern the removal of the defendant's name from business indebtedness which existed at that time and holding her harmless for any debts that might result from those liabilities in the future. In contrast, all of the credit card charges were made after the parties' dissolution. See March 5, 2001 Transcript of Proceedings p 197.
The Court in a separate opinion and order has determined that $2,100 of the $3,100 spousal payment was not of the kind described in § 523(a)(5). Therefore, the defendant, despite advocating a position contrary to that holding, has met her burden under § 523(a)(15). See Molino, 225 B.R. 907.
Although the parties focused their attention at trial as to what constituted nondischargeable support on the $3,100 per month obligation, the requirement that the plaintiff maintain life insurance could also be viewed as falling within the scope of § 523(a)(5). See Holder v. Holder (In re Holder), 92 B.R. 294, 297 (M.D. Tenn 1988); Caster v. Caster (In re Caster), 1994 WL 797866 (Bankr. N.D. Ohio 1994). Nevertheless, the Court will assume for the purposes of this opinion and order that the plaintiff's duty to maintain life insurance was not intended as support for either the defendant or their minor daughter, Kelsey. Thus, the burden shifts to the plaintiff to prove that this obligation is dischargeable under § 523(a)(15)(A) or (B).
The fact that both parties are prohibited from incurring debt for which the other might be liable indicates that this provision of the separation agreement was not intended to provide support. Accordingly, the plaintiff must show that he is either unable to pay the credit card debt or that discharging this debt would result in a benefit to him that substantially outweighs the detriment to the defendant.
In determining whether the plaintiff has the ability to meet the three obligations, the Court will apply the disposable income test of 11 U.S.C. § 1325(b)(2). Barnes v. Barnes (In re Barnes), 218 B.R. 409, 411 (Bankr. S.D. Ohio 1998). This test includes the following factors:
1. The debtor's "disposable income" as measured at time of trial;
2. The presence of more lucrative employment opportunities which might enable the debtor to fully satisfy his divorce-related obligations;
3. The extent to which the debtor's burden of debt will be lessened in the near term;
4. The extent to which the debtor previously made a good faith effort to satisfy the debts;
5. The amount of the debts which a creditor is seeking to have held nondischargeable and the repayment terms and conditions of those debts;
6. The value and nature of any property the debtor retained after his bankruptcy filing;
7. The amount of reasonable and necessary expenses which the debtor must incur for the support of the debtor, the debtor's dependents, and the continuation, preservation, and operation of the debtor's business, if any;
8. The income of debtor's new spouse as such income should be included in the calculation of the debtor's disposable income; and
9. Any evidence of probable changes in the debtor's expenses.
Id. [citations omitted]
The plaintiff entered into a contract with Club Corp. on March 1, 2001, to manage the Capital Club. The contract calls for an annual salary of $85,000. At the time of trial, the plaintiff had not yet received his first paycheck under this contract. Based on his immediate prior employment with Club Corp., however, various tax withholdings would reduce his take-home to around 72% of his gross salary. This would result in a monthly net income of approximately $5,100. The plaintiff is also eligible for a year-end incentive bonus based on his performance and the gross operating profit of the business. He estimated this bonus could be $0 to $15-18,000.
From this net income, the plaintiff must pay $1,000 per month alimony to the defendant and $970 per month child support. He also pays health insurance premiums of $180 per month. The parties' separation agreement requires the plaintiff to maintain health insurance coverage for their minor daughter, Kelsey. The monthly total for these nondischargeable support obligations is $2,150.
The monthly mortgage payment, including real estate taxes and insurance, in which the plaintiff resides with his current wife is $1,970. He has no ownership interest in the residence and is not liable under the mortgage. Prior to the purchase of the home, the plaintiff and his current wife lived in a condominium owned by a trust set up for the benefit of the wife and her children. She paid only $115 per month in condominium fees. When the condominium proved to be too small for their needs, the trust sold it and applied $150,000 of the proceeds to the purchase of the new home. Before he remarried, the plaintiff paid $1,500 rent for a three-bedroom apartment, a figure not significantly below the mortgage payment.
The plaintiff and his current wife have only one automobile, a 1997 Buick Riviera. The wife owns the car; however, the plaintiff appears to be the primary user at this time and pays the monthly installment of $500. The plaintiff estimated the monthly expense of a second car to be $300. The Court believes this figure to be the more appropriate car expense for the plaintiff. Insurance on such a vehicle should run no more than $100 per month. Other transportation costs, such as gasoline and maintenance, are estimated to be $140 a month. Therefore, the plaintiff's total monthly automobile expenses are $540.
Other necessary expenses include utilities which the plaintiff estimated to run $500 per month on average. Without further evidence, the Court believes $300 to be a more realistic figure. The plaintiff maintains a monthly food budget of $600 which includes both groceries and restaurant costs. He has clothing costs of $150 per month, laundry and dry cleaning expenses of $75, and medical and dental expenses of $80 per month. In addition, he pays a monthly life insurance premium of $100 with the beneficiary being his current wife. Combined these monthly expenses total $1,305.
The Court believes that the plaintiff conducted a diligent search and has obtained the most lucrative employment opportunity he could find. Even if he were to receive the maximum bonus of $18,000, he would likely net only $1,080 per month average over the year. His expenses are not likely to decrease over the next several years.
The Court also finds that the debtor previously made a good faith effort to satisfy the debts arising from the separation agreement. He made all of the $3,100 payments to the defendant in 1998 and a considerable portion in 1999. The stoppage of these payments coincided with the demise of the plaintiff's businesses based on circumstances which were beyond his control.
Although the plaintiff's bankruptcy discharged a tremendous amount of personal liability for his business' debts, he continues to face tax liabilities ranging from $15,000 to $23,000 to the Internal Revenue Service and the State of Ohio. He took little or no property under the separation agreement except for his businesses which are now defunct. He currently owns no real estate or automobiles, and has no savings for his eventual retirement.
The plaintiff's current wife is not employed. She is a high school graduate with no specialized training and earned less than $7.00 per hour at her last job. She no longer receives spousal support from her former husband and believes that any current payments or arrearages are uncollectible. Should she return to work the Court believes she is unlikely to take home more than $1,000 per month. Work-related expenses, such as clothing and transportation, would further reduce this figure by half. In addition, $300 of the net income would go to the support of her son who is currently a student at Baldwin-Wallace College.
Having considered the relevant factors under § 523(a)(15)(A), the Court determines that the plaintiff has proven by the preponderance of the evidence that he is unable to pay the additional monthly spousal payment of $2,100 to the defendant. At best, the plaintiff's net household income would be $7,180. Total expenses would be $6,765, leaving a net disposable income of $415.
Under these same factors, the Court determines that the plaintiff has not shown his inability to pay the life insurance premium of $120 per month and the $200 monthly payment on the credit card debt. Subtracting these payments from the $415 would further reduce net monthly disposable income to $95, a negligible amount particularly given the speculative nature of the plaintiff's $18,000 bonus.
Subsection 523(a)(15)(B) requires a balancing test to arrive at the actual benefit to the plaintiff of discharging the obligations versus the hardship that the defendant and the parties' daughter would suffer as a result of discharge. Molino, 225 B.R. at 908-09.
Subsections (A) and (B) are in the disjunctive. Therefore, in light of the determination that the plaintiff is unable to pay the additional $2,100 spousal payment, the Court is not required to apply this balancing test to that particular obligation. However, were the Court to conduct such an inquiry, much consideration would be given to the defendant's earnings potential. If the defendant returned to her teaching career instead of continuing in the present business venture, her monthly net income would likely equal or exceed the $2,100.
If, when making this analysis, the debtor's standard of living will be greater than or approximately equal to the creditor's if the debt is not discharged, then the debt should be nondischargeable under the § 523(a)(2)(B) test. However, if the debtor's standard of living will fall materially below the creditor's standard of living if the debt is not discharged, then the debt should be discharged under 11 U.S.C. § 523(a)(15)(B).
Id. at 909 [citation omitted].
The Court has already determined that the plaintiff has the ability to pay the life insurance premium of $120 per month. Not discharging this obligation, thus, will not result in a substantial hardship to the plaintiff. On the other hand, the defendant and the parties' daughter will suffer significant hardship should this obligation be discharged and the plaintiff die prior to the termination of his support obligations. Accordingly, the plaintiff has not met his burden of proof under subsection (B) with respect to this obligation.
The Court likewise found that the plaintiff could afford to make the monthly $200 payment toward the credit card debt. A review of the defendant's financial condition clearly indicates that she is not in the position to assume this debt. Furthermore, the equities greatly favor the defendant in this instance given the fact that the plaintiff ran up $9,000, albeit unknowingly, on her credit card after the parties' dissolution. This debt, therefore, will not be discharged under § 523(a)(15)(B).
Based on the foregoing, the Court determines that the additional spousal payment of $2,100 per month is dischargeable pursuant to § 523(a)(15)(A). The plaintiff's obligation to maintain a life insurance policy with the defendant as beneficiary as well as his obligation to hold her harmless on the credit card debt are determined to be nondischargeable.