Opinion
Case No. 98-11100-SSM, Adversary Proceeding No. 98-1170
September 7, 1999
Tina M. McMillan, Esquire, Robert G. Mayer, P.C., Fairfax, VA, for the plaintiff
Richard J. Stahl, Esquire, The Law Offices of Richard J. Stahl, Fairfax, VA, for the defendant
MEMORANDUM OPINION
A trial was held in open court on July 22, 1999, on the complaint filed by the debtor's former wife to determine the dischargeabiliry of certain obligations arising under a divorce decree. Both parties were present in person and were represented by counsel. At the conclusion of the trial, the court took the matter under advisement to review the evidence and the applicable law.
Facts
Craig E. Buck, a practicing real estate attorney, filed a voluntary chapter 7 petition in this court on February 12, 1998, and received a discharge of his dischargeable debts on May 28, 1998. He and the plaintiff, Christine McLain, were divorced on July 16, 1993, by the Circuit Court of Fairfax County, Virginia, after more than 20 years of marriage. Among other provisions, the divorce decree provided as follows:
1. The marital residence on Cedarwood Lane and investment properties on Mayflower Drive, Evergreen Lane, and Golansky Boulevard would be sold "and the profits or losses equally divided between the parties[.]"
2. The 4,000 shares of Prosperity Bank stock "shall be divided in kind."
3. The debtor would pay Ms. McLain $27,648 as representing one-half of the debtor's interest in the law firm of Buck, Anderson Associates and Title Land Assurance Corporation.
4. Ms. McLain and the debtor would each receive 50% of the shares of Escrow Services Corporation and 25% of the shares of TitleCert Services Corporation. The divorce court valued the 50% interest in Escrow Services Corporation at $23,236.50 and the 25% interest in TitleCert Services Corporation at $23,051.50.
5. The debtor would pay Ms. McLain $46,354.00 "as his contribution for her attorney's fees and costs incurred in connection with [the divorce]."
The divorce decree recited that in the most recent calendar year (1992) the debtor's income from all sources was $327,996.00, and that his average annual income in the five years preceding the divorce was $217,584.00. The decree imputed income to Ms. McLain, who was not then employed and who had not worked outside the home for approximately seven years, of $25,000.00 per year. The decree fixed permanent spousal support at $6,000.00 per month and support for the two minor children at $3,590.00 per month.
In the years subsequent to the divorce, the debtor's income declined, and on November 14, 1994, the circuit court reduced the spousal support obligation to $4,715.00 per month and the child support obligation to $3,064.00 per month effective December 1, 1994. The order entered in connection with that reduction also provided for Ms. McLain to receive the debtor's portion ($17,700) of sales proceeds being held in escrow arising from the sale of one of the investment properties owned by the parties. A little over 6 months later, the parties were back in court on another support-reduction motion, and the court reduced the spousal support obligation to $4,000 per month and the child support obligation to $1,561 per month, both retroactive to March 8, 1995. Two years later, the debtor returned to court on yet another support-reduction motion. This time the spousal support was reduced to $1,000 per month and the child support obligation to $65 per month, both retroactive to March 1, 1997.
Following the divorce, the debtor married his law partner, Teri L. Anderson. Joint federal income tax returns filed by them for 1993, 1995, 1996, and 1997 reflect a steadily-declining gross income for these years of $466,723, $264,870, $206,550, and $124,670, respectively. The debtor attributed the dramatic drop in income to fundamental changes that had occurred involving residential real estate settlements, which had been since 1979 the heart of his law practice. Largely as a result of the passage by the Virginia General Assembly in 1997 of the Consumer Real Estate Settlement Procedures Act ("CRESPA"), Va. Code Ann. § 6.1-2.19, it was testified, real estate brokers and lenders had expanded into the title insurance and escrow business, and real estate brokers were no longer referring settlement business to traditional law firms. The debtor testified that the residential real estate settlement business had become so bad that he had applied (unsuccessfully) for a position with the attorney general's office for a real estate lawyer position that paid only $50,000 to $55,000 per year.
It is very difficult from the evidence presented to make an exact determination of the debtor's current income. The 1998 Federal tax return has not yet been prepared, although the debtor testified that he expected the income figures to be "close" to those for 1997 and that he expected to owe approximately $20,000 in income taxes. In any event, the tax returns do not distinguish between the incomes of the debtor and Ms. Anderson. The debtor and Ms. Anderson testified (he in open court, she by stipulation) that they kept the offices of their law firm financially separate, with he operating the Franconia and Sherwood Hall Road offices (collectively referred to as the Franconia office) and she the Lake Ridge and Stafford offices (collectively referred to as the Woodbridge office). Each office, it was testified, had its own operating account. The situation is complicated, however, by the fact that payroll for all the offices and certain expenses (for example, malpractice insurance premiums) are paid out of the Franconia office, with Ms. Anderson paying into the debtor's office account sufficient funds each month from her fee income to cover her office's share of those expenses. A 1998 year-end financial statement presented by the debtor for the Franconia office reflects income of $2,778 on gross revenues (including Ms. Anderson's contributions) of $493,203. A similar statement for the year-to-date period January 1, 1999, to July 13, 1999, reflects a loss of $18,635 on gross income of $305,902. However, in addition to income from the law practice itself, the tax returns reflect that the debtor receives income from directors fees and from interest earned on his settlement company's escrow account. For 1997, the debtor's share of these items averaged $500 and $1,297 per month, respectively.
The debtor's schedule of income filed in his bankruptcy case reflects a monthly net income of $3,000.00 and monthly living expenses of $3,045.00. A summary of income and expenses prepared by the debtor for the trial in this adversary proceeding reflects an average monthly income of $8,500 and monthly expenses of $8,311 before taking into account $4,200 per month in anticipated, but not yet incurred, college tuition payments for the two children of the marriage.
With respect to the division of property required by the divorce decree, the debtor arranged for 1,900 shares of Prosperity Bank stock to be retitled solely in Ms. McLain's name. He testified at trial that the reference in the divorce decree to "4,000" shares to be divided in kind was in error, since 200 of the shares had always been titled solely in his own name and were, in his view, his separate property. He caused 50% of the shares in Escrow Services Corporation ("Escrow Services") and 25% of the shares of TitleCert Services Corporation ("TitleCert") to be issued to Ms. McLain, as required by the decree. However, he ceased to operate those corporations, and they are both currently dormant. Instead, he formed two new corporations in the latter part of 1993, Merrifield Title Agency and Settlement Services, Inc., to carry on the businesses formerly conducted by TitleCert and Escrow Services. He testified that he did so after he was unable to reach agreement with Ms. McLain about buying out her interest or she buying out his. Both TitleCert and Escrow Services, he testified, had "existed on paper only" and were in substance simply captive extensions of the law practice, with TitleCert acting as the title insurance agent for the firm, and Escrow Services acting as the settlement agent. He also testified that after the enactment of CRESPA, the advantages of having a settlement company distinct from the law practice disappeared, and that Settlement Services, Inc., the successor to Escrow Services Corporation, was now out of business.
The parties sold the jointly-owned residence on Cedarwood Lane in December 1993 and received equal shares of the sales proceeds. However, Ms. McLain, who had continued to live in the property until it was sold, had made all of the mortgage payments (in the total amount of $26,028) from the entry of the divorce decree to the time of sale. Additionally, she had contributed $9,877.29 toward the fix-up costs, compared to $5,000.00 by the debtor. The Mayflower Drive townhouse investment property was sold at a profit. The debtor's half-share ($17,700.00) of the sales proceeds was paid to Ms. McLain as a credit against the equitable distribution award. The Evergreen Lane office condominium units and the Golansky Boulevard office condominium units were transferred pursuant to a court order and resulted in a loss of $40,282.40. Pending the disposition of the investment properties, the debtor had advanced $13,295.32 to cover the negative cash flow of the Evergreen and Golansky properties, while Ms. McLain had advanced only $5,245.00.
In December 1994, the debtor requested from Jefferson National Life Insurance Company the cash value of the life insurance policy on his life and received a check in the amount of $7,960.22, none of which he paid to Ms. McLain. The check from the life insurance company reflected that the funds were treated as a "policy loan," and apparently the policy itself was not surrendered or canceled. The miscellaneous stocks mentioned in the divorce decree were sold for $12,586.00, and all of the proceeds went to Ms. McLain.
Ms. McLain testified that she moved to Sarasota, Florida, in September 1998, because the reduction in support ordered by the state court left her in deep financial trouble and she felt she needed to start over. Although she earned a bachelor's degree in physics in 1971 and had worked in the defense industry for approximately 14 years, she had become a full-time homemaker in 1985 after her husband's law practice took off. After the divorce, she was unsuccessful in obtaining reemployment in the defense industry. Between 1994 and 1998 she was self-employed as a designer. After moving to Florida, she worked initially as a "temp" and is now employed, at a salary of approximately $35,000.00 per year, as a corporate insurance manager. She recently purchased a $300,000.00 home with a $240,000.00 mortgage. A substantial portion of the down payment came from her sister under an equity share arrangement. She testified that she owed approximately $30,000.00 in credit card debt, much of which consisted of attorneys fees for the support-reduction hearings. Her net monthly income is $2,494.00 and her monthly expenses are $2,682.00. She still has 938 shares of the Prosperity Bank stock, which she values at $15,946.00; however, her retirement account, which at one time had a balance of $80,000.00, now has only $31.00, having been depleted "to make up the difference" after her support was cut.
Conclusions of Law and Discussion I.
This court has subject matter jurisdiction under 28 U.S.C. § 1334 and 157(a) and the general order of reference from the United States District Court for the Eastern District of Virginia dated August 15, 1984. Under 28 U.S.C. § 157(b)(2)(I), this is a core proceeding in which final orders and judgments may be entered by a bankruptcy judge. Venue is proper in this district under 28 U.S.C. § 1409(a). The debtor has been properly served and has appeared generally.
II.
Two types of divorce-related debts survive a chapter 7 bankruptcy discharge. The first category consists of debts "to a spouse, former spouse, or child of the debtor, for alimony to, maintenance for, or support of such spouse or child, in connection with a separation agreement, divorce decree or other order of a court of record[.]" 11 U.S.C. § 523(a)(5). The second category consists of debts, other than support debts, "incurred by the debtor in the course of a divorce or separation or in connection with a separation agreement, divorce decree or other order of a court of record[.]" 11 U.S.C. § 523(a)(15). The latter, however, is subject to the exception that such debts will be discharged if
(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 and, if the debtor is engaged in a business, for the payment of expenditures necessary for the continuation, preservation, and operation of such business; or
(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.
Id. Thus, debts for spousal or child support are never dischargeable, but other types of divorce-related debts, including property settlements or equitable distribution judgments, will be discharged if the debtor cannot afford to pay them or if the benefit to the debtor from discharging them outweighs the detriment to the other party.
The debtor bears the burden of proof, by a preponderance of the evidence, both as to his inability to pay and as to the benefit of discharge outweighing the detriment to the nondebtor party. Craig v. Craig (In re Craig), 196 B.R. 305, 308-09 (Bankr. E.D. Va. 1996); King v. Speaks (In re Speaks), 193 B.R. 436, 441 (Bankr. E.D. Va. 1995); but see Collins v. Hesson (In reHesson), 190 B.R. 229 (Bankr. D. Md. 1995) (debtor has burden on inability to pay but nondebtor has burden to prove that detriment outweighs benefit of discharge). Because § 523(a)(15) is phrased in the disjunctive, a debtor need prove only one of the two possible grounds for discharging the debt. Craig, 196 B.R. at 309. With regard to ability to pay, the test is not whether the debtor has the ability to pay the debt as of a particular time — such as the date of trial — but whether the debtor can pay the debt over time. Id. at 310. In determining whether the benefit to the debtor from discharging the debt would outweigh the resulting detriment to the nondebtor party, the factors usually considered include the income and expenses of both parties, whether the nondebtor spouse is jointly liable on the debts, the number of dependents, the nature of the debts, the reaffirmation of any debts, the nondebtor spouse's ability to pay, and whether the debt can actually be collected from the nondebtor spouse. Id. at 309.
III.
The debtor does not dispute that his liability to pay Ms. McLain alimony and child support is nondischargeable. At trial, the parties ultimately agreed that the debtor was in arrears, as of that date, in the amount of $1,525. Thus, that sum, and all sums becoming due on or after July 22, 1999, under the June 13, 1997, decree of the Fairfax County Circuit Court, or any future modification of that order, are nondischargeable.
IV.
The real dispute in this case involves the equitable distribution and counsel fee awards. Ms. McLain argues that she is due, net of credits, the principal sum of $92,682.64, together with interest from the time of the award. The debtor, without giving a precise figure, insists the sum is dramatically smaller, but that, in any event, he cannot afford to pay it, and the benefit to him from discharging the liability exceeds the resulting harm to Ms. McLain. Since application of both the ability-to-pay and the benefit-versus-harm tests requires a determination of what amount is actually due, the court turns to the areas of the accounting that are in dispute.
A. The cash surrender value of the life insurance policy
Although the divorce decree makes no mention whatsoever of the life insurance, the debtor concedes that he and Ms. McLain stipulated at the equitable distribution hearing that the cash value of the existing life insurance policy on his life would be equally divided. The only dispute is what that amount is. Apparently an exhibit used at the equitable distribution hearing showed a "cash value" for the policy of $13,222. Where that figure came from is not certain. Ms. McLain testified at trial that at one point she had seen a "piece of paper" from the insurance company showing a cash value of $11,189. The debtor testified, however, that the amount actually paid to him by the insurance company on December 6, 1994, in response to his request for the cash value of the policy was only $7,960.22. That testimony was corroborated by a copy of the check and accompanying remittance advice. It may be that the policy distinguished between its cash surrender value (what the policy holder would receive if the policy were canceled) and its loan value (the maximum amount the policy holder could receive while still keeping the policy in force). Or it may simply be that the trial exhibit was based on erroneous information. In any event, in the absence of any evidence (other than hearsay) of a greater value, the court finds the debtor's testimony as to what he actually received persuasive on the issue of cash value. Thus, the court determines that, with respect to the life insurance policy, he owes Ms. McLain one-half of $7,960.22, or $3,980.11.
B. The 4,000 shares of Prosperity Bank stock
As noted above, the divorce decree required the parties to divide 4,000 shares of Prosperity Bank stock in kind. While the record is not totally clear, it appears that 3,800 of those shares were titled jointly in the name of the debtor and his wife and that 200 were titled solely in the debtor's name. The debtor testified that at the time of the divorce, he was a member of the Bank's board of directors, and that the State Corporation Commission required that bank directors own at least 200 shares solely in their name. The 3,800 jointly-titled shares had been pledged to Nationsbanc as collateral for a loan. The debtor and Ms. McLain contributed roughly equal amounts to pay off the loan, and 1,900 of the pledged shares were then reissued in Ms. McLain's name and 1,900 in the debtor's name. The debtor retained the 200 shares that had been titled solely in his name. He testified at the trial of this adversary proceeding that the reference in the divorce decree to 4,000 shares was a mistake and that the correct figure should have been only 3,800, since — he argues — the 200 shares were his separate property. However, the decree divorce is plain on its face and cannot be collaterally attacked. The express language of the decree requires that the 4,000 shares be divided "in kind." The clear meaning of that direction is that at the end of the day the debtor would have 2,000 shares and Ms. McLain 2,000 shares. Enforcing the decree according to its plain meaning does no violence to the debtor's continued ability to sit on the board of directors — which is now a moot point, since he is no longer a director — since he would have continued to hold more than 200 shares in his own name even after the transfer of 2,000 shares to Ms. McLain. Thus, the court concludes that the debtor is required to deliver 100 additional shares to Ms. McLain. It is apparently undisputed that, at the time of the divorce decree, the shares were valued at $13.50 each. Thus, the court concludes that the debtor owes Ms. McLain an additional $1,350.00, exclusive of interest.
Since it appears that the debtor still has the shares of stock and that they may have appreciated in value, the court will order specific performance by directing the debtor to transfer 100 shares to Ms. McLain.
The debtor, however, raises the further argument that, to settle the chapter 7 trustee's turnover motion with respect to the 200 shares of stock, he paid the trustee $14.00 a share. Having spent $1,400 to buy the 100 shares in question back from the estate, he asserts it would be inequitable to require him to deliver them to Ms. McLain or to pay her their value. The problem, however, is wholly one of the debtor's own making — had he delivered the shares to Ms. McLain as he should have back in April 1994, there would have been no occasion for him to buy them back from the chapter 7 trustee. Whether he is entitled to a refund of what he paid the chapter 7 trustee for them is not an issue currently before the court, and the court expresses no opinion.
C. The carrying costs on the Cedarwood Lane residence
As discussed above, the divorce decree required that the marital residence be sold "and the profits or losses equally divided between the parties." Although the actual cash proceeds of sale were equally divided, Ms. McLain complains that the debtor contributed nothing toward the $26,028.56 in mortgage payments that had to be made between the entry of the decree and the date the property went to settlement approximately six months later, with the result that she was required to make all of those payments from the alimony she received from the debtor. The debtor replies that Ms. McLain continued to live in the property during that period, and that the mortgage payments should be treated as payments of rent. The court believes this argument has merit. See Gaynor v. Hird, 15 Va. App. 379, 424 S.E.2d 240 (Va.App. 1992) (where husband lived in property following divorce and made all the mortgage payments, former wife was accountable to him in subsequent partition suit for one-half of the mortgage payments, and he was accountable to her for one-half the fair rental value of the property). No evidence was introduced as to the fair rental value of the property. In the absence of such evidence, the court will assume that the rental value is equivalent to the mortgage payment, since few landlords will rent at an amount significantly less than their carrying costs on the property. Thus, the court concludes that the debtor does not owe Ms. McLain any additional sums based on her having made all the mortgage payments on the Cedarwood Lane property between the entry of the decree and the time the property was sold.
The debtor also argues that it can be inferred from the size of the spousal support award — $6,000 per month — that the divorce court must have contemplated that Ms. McLain would be solely responsible for the mortgage payment of $5,218.00 per month pending the sale of the property. But since the decree required that the property be sold, and since the level of spousal support set in the decree did not include a modification once the marital residence was sold, the court finds this argument unpersuasive.
Ms. McLain notes that the debtor, because he was not living in the property at the time it was sold, was able to take a $109,529.00 loss on the sale on his 1993 Federal income tax return. However, the court concludes that "profits or losses" from the sale of property does not include the income tax consequences.
D. Escrow Services Corporation and TitleCert Services Corporation
By far the most significant dispute, in monetary terms, involves the shares awarded to Ms. McLain in Escrow Services and TitleCert Services. Based on the values placed on those businesses by the divorce decree, Ms. McLain argues that she would have received, had the companies continued in business, a monetary benefit having a value of $46,288.00. Instead, the debtor simply ceased to operate the two corporations — although keeping them technically alive by filing annual reports with the State Corporation Commission and paying the annual corporate franchise fee — and set up new corporations to carry on their business. By doing so, he effectively diverted the entire value of Escrow Services and TitleCert to himself.
The debtor rejoins that the decree did not make a monetary award to Ms. McLain of the value of the two corporations, but only an award of stock. Any value the corporations had, argues the debtor, existed solely because of his personal efforts, and he had no obligation to continue working for the corporations. He also contends that at the November 14, 1994, support reduction hearing, the chancellor condemned the debtor's actions and "punished" the debtor by requiring him to pay the private school tuition for the children. Thus, the debtor argues, Ms. McLain has already been given "credit" for his walking away from Escrow Services and TitleCert and setting up two new corporations.
As the chancellor cogently observed:
This is a different situation, far different from one in which Mr. Buck just resigns from the corporation and goes to work somewhere else. The fact is that he didn't just resign from the corporation. He resigned from the corporation and took the whole thing with him. He took it over to his own shop and has now — has, in effect, seized whatever corporate opportunity there was that was there.
Pltf. Ex. 3 at 7.
The court finds this argument unpersuasive, even putting aside the fact only some six months later the debtor was relieved, retroactive to March 1995, of the obligation to pay the private school tuition. As the debtor testified, Escrow Services and TitleCert were basically extensions of his law practice. The debtor's interest in the law practice was titled solely in his own name, while, for whatever reasons, the stock in the corporations was jointly owned. With respect to the law practice proper, the divorce court obviously could not make a division in kind and instead made a monetary award. With respect to the two corporations, however, the court could and did order a division in kind of the jointly-owned shares. Had the debtor not separated out, for legal or other reasons, the title agency and settlement aspects of his law practice, the revenues generated by those activities would presumably have been reflected in the form of a corresponding increase in the revenues of the law firm. The record does not reflect how the divorce court valued either the law practice or the two corporations, but it seems reasonable that the value was based on a capitalization either of gross revenues or operating income, those being the most common methods of valuing a business as a going concern. Thus, had the corporations not existed as separate entities, the value of the law practice would have been increased by the value of the two corporations, and the monetary award to Ms. McLain based on the value of the law practice would have been correspondingly greater.
With respect to Escrow Services Corporation, only 50% of the stock was jointly-owned. Apparently all or some portion of the balance was titled in the name of trusts set up for the benefit of the children.
It is probably true, given the dramatic fall-off in the debtor's real estate settlement practice that occurred subsequent to the divorce decree, that the values placed on Escrow Services and TitleCert by the divorce decree were, at least in hindsight, overstated. Had the debtor continued to operate the two companies, Ms. McLain was obviously not guaranteed that there would be any profits, and she would have shared equally with the debtor in whatever economic misfortunes attended lawyer-owned title and settlement businesses as the market changed. Any determination of the actual loss to Ms. McLain from the debtor's abandonment of Escrow Services and TitleCert and the shifting of their business to the new corporations is therefore at best an approximation. But using the ratio of the average number of title orders for the Fairfax office for the years following the divorce (roughly 30 per month) to the average for the year of the divorce (roughly 90) as reasonable estimate of the drop in corporate value arising solely from market changes, the court concludes that the loss to Ms. McLain from the debtor's actions is one-third of the $46,288.00 value placed on Ms. McLain's interest in the two corporations by the divorce decree, or $15,429.33.
An exhibit introduced by the debtor reflects that in October 1993, the Fairfax office of Buck, Anderson Associates had approximately 115 pending settlements. That figure dropped to a low of approximately 15 settlements in April 1997. Since then, the picture has improved slightly, with a peak of approximately 50 settlements in April 1998, and hovering in the range of approximately 30 to 35 per month for the first half of 1999.
As noted above, the debtor testified that Settlement Services, Inc., which took over the functions of Escrow Services, Inc., has since been closed because there was no longer an economic benefit to having a settlement company separate from a law practice.
E. Final reconciliation
Based on the foregoing findings and conclusions, the court determines that the principal amount due from the debtor to Ms. McLain on account of the equitable distribution and attorney's fee awards, net of credits, is as follows:Due 1.350.00
% value of Buck, Anderson Assocs. and TLAA $27,648.00 attorney's fee award 46,354.00 unpaid share of fix-up costs for Cedarwood 2,438.65 1/2 of cash value of life insurance policy 3,980.11 loss to McLain's shares of Escrow Services and TitleCert 15,429.33 100 shares Prosperity Bank stock Total $97,200.09Credits 6.143.869 Difference 55.303.22 $41.896.87
The debtor shows this figure as $8,050.00. That amount is indeed the difference between what he advanced and what Ms. McLain advanced as loans to carry the negative cash flow for the properties, but the amount he overpaid is only one-half the difference. That is, had she paid $4,025.00 more, he would have paid $4,025.00, and their contributions would have been equal ($9,270.00 each).
The debtor shows this amount as $6,657.00, based on what he characterized as a retroactive support reduction of $2,218 per month for three months. But support payments were due on the first of the month, and the reduction was retroactive only to March 8, 1995, not to the beginning of March. Thus, the credit is properly calculated on the basis of 2.11 months, not three months.
V.
The contradictory figures before the court in the form of the schedules of income and expenses filed by the debtor in his bankruptcy case, and his revised statement of income and expenses presented at trial, make it difficult to pin down with certainty just what amount of income is available to the debtor after payment of expenses "reasonably necessary to be expended for the maintenance and support of the debtor or a dependent of the debtor." This would be true even if the debtor's income were not highly variable from month to month and even if that income were not attended by considerable uncertainty as to what the debtor may be earning in the future — since, as previously discussed, the question is not whether the debtor can afford the pay the $41,896.87 (plus interest) today, but whether he could reasonably pay it over time.
In this connection, the court readily concludes that the debtor could not pay that amount today. The court also accepts that traditional real estate law practices in Virginia are unlikely ever again to be as profitable as they once were. Nevertheless, the court finds it difficult to accept, as the debtor's counsel attempted to suggest, that the debtor is somehow too old to retool and to branch out into a more profitable area of the law. Taking the debtor's own trial figures as to his current monthly income and expenses, he has a modest surplus, without consideration of college tuition for his two sons that he has not historically paid, of $288.00 per month. From the debtor's trial exhibit reflecting title orders for the Fairfax office, it appears that business is on a slight increase from the prior year. Having carefully considered the exhibits and testimony, the court finds that the debtor could, over time, reasonably pay $375.00 per month for the next ten years on account of the equitable distribution award and attorney's fees. The present value of such payments, using a discount rate of 8%, and rounded to the nearest ten dollars, is $30,910.00.
The debtor still has most of the Prosperity Bank stock, although 1,800 shares have been retitled in his and Ms Anderson's names as tenants by the entirety.
It is ironic that the debtor should take the position that he has only limited future earning capacity, despite his college degree and law degree, while at the same time urging the court to find that Ms. McLain, who has only a bachelor's degree in a subject area in which she has not worked for many years, is capable of earning enough so that she does not need the amounts owed under the equitable distribution award.
Under the disjunctive test of § 523(a)(15), however, the additional question remains whether — regardless of the debtor's ability to pay — the benefit of discharge would outweigh the resulting detriment to Ms. McLain. Certainly, the benefit to the debtor would be great and would materially assist in providing him with that "new opportunity in life and a clear field for future effort, unhampered by the pressure and discouragement of pre-existing debt" which the Supreme Court has described as the goal of bankruptcy relief. Local Loan Co. v. Hunt, 292 U.S. 234, 244, 54 S.Ct. 695, 699, 78 L.Ed 1230 (1934). At the same time, Ms. McLain is by no means independently wealthy. Her expenses and debts are considerable, and her earning potential is more limited than the debtor's. She would clearly be hurt by not receiving the equitable distribution award. Having weighed the evidence, the court does not find that the debtor has carried his burden of showing that the benefit to him of discharge outweighs the detriment to Ms. McLain.
It was argued at the trial that the purchase of a $300,000.00 home, and the incurrence of a $1,617.00 per month mortgage payment, were unreasonable for someone in Ms. McLain's financial position. Ms. McLain testified without contradiction, however, that no decent housing was available near to her employment at a more modest price. The house, to judge from her testimony, is no mansion: it was built in 1955, has three bedrooms, a floor area of 2,044 square feet, and is "kind of like a cottage." In any event, even if her monthly housing costs were reduced by several hundred dollars, she would by no means be out of the woods financially.
VI.
A separate judgment will be entered (a) determining that spousal and child support payments due under the divorce decree, and any future modification thereof, are non-dischargeable under § 523(a)(5), and fixing the arrearage, as of July 22, 1999, at $1,525.00; and (b) determining that the remaining sums due under the divorce decree are nondischargeable under § 523(a)(15) in the amount of $31,910.00, together with interest at the Federal judgment rate until paid, and the costs of this action, but that all other sums due under the decree are dischargeable and have been discharged. The court will order the debtor to transfer 100 shares of the Prosperity Bank stock to Ms. McLain if they are still in his possession; and upon such transfer, the judgment principal will be credited in the amount of $1,350.00.