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UNITED STATES BANKRUPTCY COURT

FOR THE EASTERN DISTRICT OF VIRGINIA

Alexandria Division

In re:

JOHN R. WOBBLETON, JR. Case No. 19-10988-KHK

Debtor. Chapter 13

MEMORANDUM OPINION

Before the Court is Debtor John Wobbleton’s Objection to Claim 3 (Doc. No. 28) filed 

on behalf of Janice Wobbleton for a domestic support obligation in the amount of $178,000. The 

Claim is classified as a priority under 11 U.S.C. §507(a) and as such, is entitled to be paid in full 

under the debtor’s chapter 13 plan. The debtor objects to the classification and maintains that

the claim should be classified as a claim for equitable distribution and therefore may be treated 

as a dischargeable unsecured non-priority claim and paid pro rata along with his other unsecured

debt under the plan. An evidentiary hearing on the matter was conducted on August 1, 2019. At 

the conclusion of the hearing the Court took the matter under advisement. For the reasons stated 

below, this Court overrules the debtor’s objection and concludes that the claim must be treated as 

a priority unsecured claim entitled to be paid in full under the plan pursuant to § 1328 of the 

Bankruptcy Code. 

Findings of Facts

John and Janice Wobbleton were married on July 19, 1980. Exhibit (“Ex”) 1 (Consent 

Judgment) at 2. The marriage lasted for twenty-six years and two children were born of the 

union. Id. The Final Decree of Divorce (“Decree”) was entered on March 25, 2008 and

incorporated a Memorandum of Order that provided for the custody of the children, child 

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support, and the distribution of marital debt and property between the parties. Id. at 15. Both 

parties to the divorce were represented by counsel during the negotiations and proceedings. Id. at 

2. At the time of the divorce, Mr. Wobbleton was a licensed Certified Public Accountant and 

part owner of an accounting firm. He was earning approximately $80,000 per year. Trial 

Transcript (“Tr.”) at 16:22-25. Ms. Wobbleton was working part-time for the United States

Postal Service and was earning about $20,000 annually. Id. at 34:14.

The Decree provided the parties would share joint custody of the minor children. It also 

provided that Ms. Wobbleton would receive the former marital residence located at 1740 Dan 

Peele Rd, Williamston, NC 27892 (the “property”) as her sole property and most of its contents, 

monthly child support payments of $1,151, and 42.86% of Mr. Wobbleton’s military retirement.

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Ex. 1 at 4-8. The Decree required Mr. Wobbleton to transfer his interest in the marital residence 

to Ms. Wobbleton and to assume full responsibility for paying the mortgage and equity line of 

credit on the property. Id. He was also allowed to refinance the mortgages on the residence. Id. 

at 13. Mr. Wobbleton had to continue to maintain a life insurance policy for $750,000 and

assign a portion of that policy in an amount exceeding the mortgage liens on the marital 

residence to Ms. Wobbleton in the event of his death before hers. Id. at 16. 

Mr. Wobbleton no longer pays child support as both children are now adults and have 

moved out of the former marital residence. Tr. at 12:7-8. The monthly payments on the 

mortgage and equity line of credit total about $2,000 a month. Id. at 32. 

Claim 11 and the supporting documents filed by Loan Care, LLC (“Loan Care”)

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indicate 

the original loan amount of the first mortgage was $180,000 on February 23, 2004 and the 

monthly payment was $1,036.18 plus the escrow. Proof of Claim (“Claim”) 11 at 5. At the 

1 Child support payments under the Decree were reduced to $500 per month when the eldest child was no longer 

eligible to receive support.

2 Loan Care is successor in interest to Benchmark Mortgage, Inc., the original lender. 

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time of the divorce, the balance due on the mortgage was $174,442.43. Ex 1 at 14. On the 

petition date, the remaining balance on the note was $121,336.92 and the maturity date was 

extended by a recent loan modification to March 1, 2034. Claim 11 at 2 and 5. The monthly 

payment is currently $1,569.97. Id. at 4. But for an anticipated escrow shortage on the mortgage 

in the amount of $730.82, the payments on the mortgage and credit line were current when this

case was filed. Id. at 2.

Claim 8 and the supporting documents filed by Wells Fargo Bank, N.A. (“Wells Fargo”) 

indicates the original ten-year equity line of credit at its inception was for $67,000 on February

23, 2004. Claim 8 at 7. When the divorce became final, the amount due on the credit line was 

$66,988.67. The credit agreement was modified by the Wobbletons on February 23, 2014 to pay 

the outstanding balance of $62,666 at a fixed rate of interest and to extend the maturity date to 

July 1, 2034. Ex. 1 at 14. The monthly payment remained the same at $466.02. Claim 8 at 29.

On the petition date, the remaining balance on the equity line of credit was $54,149.48. Id. at 2. 

The aggregate balance due on the mortgage and equity line of credit was $175,486.40

when this bankruptcy was filed. Under the amended plan dated June 27, 0219, the debtor 

proposes to surrender the property and pay a dividend of 75 cents on the dollar on the allowed 

non-priority claims in this case. (Docket No. 27). 

Conclusions of Law

“The analysis of dischargeability under § 523 must begin with the assumption that 

dischargeability is favored under the Code, unless the complaining spouse, who has the burden 

of proof, demonstrates the obligation at issue is actually in the nature of alimony, maintenance or 

support.” Tilley v. Jessee, 789 F.2d 1074, 1077 (4th Cir. 1986) (quoting In re Morris, 10 B.R. 

448 (Bankr. N.D. Iowa 1981)). In this case, the burden of proof rests with Ms. Wobbleton.

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For a court to characterize an obligation as a domestic support obligation, it must find 

there was a “mutual intent” to create an obligation in the nature of alimony, maintenance, or 

support. Id. To help determine whether the mutual intent standard has been satisfied, courts in 

the Fourth Circuit have applied a four-factor test. They consider: 1) the function served by the 

obligation at the time of the Decree (i.e. daily necessities); 2) the financial situation of the parties 

at the time of the Decree; 3) the actual substance and language of the Decree; and 4) whether 

there is any evidence of overbearing or overreaching at the time of the Decree.” Cases applying

this test include, In re Catron, 43 F.3d 1465 (4th Cir. 1994); In re Krueger, 457 B.R. 465 (Bankr. 

D.S.C. 2011); In re Mirea, No. 11-11266-BFK, 2012 WL 3042239 (Bankr. E.D. Va. July 25, 

2012); and In re Combs, 543 B.R. 780 (Bankr. E.D. Va. 2016).

However, “courts may look beyond the four corners of a divorce decree or the agreement

of the parties to determine the nature of the payments constituting debts sought to be 

discharged.” In re Johnson, 397 B.R. at 289, 297 (Bankr. M.D.N.C. 2008) (finding an obligation 

that is essential ... to protect a residence constitutes a nondischargeable obligation).

The first factor to be considered is the function served by the obligation at the time of the 

divorce – in other words – whether the funds obligated at the time of the Decree would be used 

to cover the necessities of daily life. In this case, the former marital residence served as the 

home of Ms. Wobbleton and her children, so paying the lienholders on the property was essential 

to the support and maintenance of its occupants. The Decree fails to mention an award for 

alimony for Ms. Wobbleton. It would have been impossible for her to maintain the residence on 

her $20,000 salary and child support without the additional assistance. 

The second factor to be considered is the financial situation of the parties at the time the 

Decree was entered. Judge St. John, in Combs v. Combs stated that an evaluation of the role the 

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obligation was intended to perform involves an examination of several factors including: 1) how 

long the parties had been married; 2) whether the parties had any children; 3) whether the award 

was intended to balance a disparity in incomes; and 4) whether, without the debt at issue, the 

support award would have been sufficient. In re Combs, 543 B.R. 780, 795-96. In the instant 

case, the parties had been married for twenty-six years, had children, and Mr. Wobbleton’s 

nearly $80,000 annual income and prospects for advancement far exceeded the income and 

financial prospects of his ex-spouse. When the divorce became final, Ms. Wobbleton’s $20,000

annual salary was insufficient to cover the mortgage and equity line of credit payments of 

approximately $24,000 per year. Since she received no separate award for alimony, it is clear 

that if Mr. Wobbleton had not been required to pay the mortgage and equity line of credit, Ms. 

Wobbleton would not have been able to pay for comparable shelter along with the other 

expenses of daily living including food, fuel, other utilities and taxes.

The third factor the to be considered is the actual substance and language of the Decree. 

There are several clauses in the Decree that address the treatment of the former martial residence 

and the liens secured by the property. Clause 8 allocates the former marital residence solely to 

Ms. Wobbleton, and in fact Mr. Wobbleton transferred his title and interest in the property to his 

ex-spouse subsequent to the divorce in accordance with the directive in the Decree. Ex. 1 at 7.

Clause 9D(11)(a) provides that Mr. Wobbleton would be responsible for paying the 

mortgage owed to Benchmark Mortgage, Inc. (now Loan Care, LLC) and Clause 9D(11)(b) 

provides that he would be responsible for paying the equity line of credit owed to Wells Fargo. 

The last paragraph of Clause 9 provides: 

1. The Defendants' payments and liability for these notes shall 

include the escrowed insurance and property taxes;

2. The Defendant can refinance either or both debts, as long as the 

total indebtedness does not increase and the escrowed payments for property taxes 

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and insurance are included. The Plaintiff shall sign any necessary documents to 

accomplish this refinancing if requested by the Defendant.

3. The Defendant may pre-pay in whole or in part either of said debts. 

Upon payment in full of both of said debts, the responsibility of the Defendant to 

pay insurance or property tax escrow payments ceases.

4. If the Plaintiff sells the former Marital Residence, the two notes 

secured by the aforesaid Deeds of Trust will be paid from the proceeds; however, 

the Defendant will remain obligated to make the note payments under the terms of 

either or both of said notes directly to the Plaintiff and will pay the scheduled, 

amortized, monthly payments, excluding escrow payments for taxes and 

insurance, directly to the Plaintiff for the remaining term or until her death 

whichever occurs first. Thus, the Defendant will be paying the note payments 

directly to the Plaintiff as if she had purchased them from the respective lenders.

Ex. 1 at 13-14.

The last two sentences of Clause 9 state even if Ms. Wobbleton sells the house, the debtor 

is required to continue paying her directly the monthly payments minus the amounts reserved for 

taxes and insurance just as though she had purchased the notes from the respective lenders. In 

other words, the parties intended and agreed that a portion of the payments would continue until

the earlier of 2034 or the death of the ex-spouse. This treatment tends to support the supposition 

that the payments represented a domestic support obligation. See In re Pagels, No. 10-71138-

SCS, 2011 WL 577337 (Bankr. E.D. Va. Feb. 9, 2011) (finding the termination of the obligation 

upon the remarriage or death of the ex-spouse evidences the shared intention of the parties to 

create an obligation in the nature of alimony maintenance or support.)

Clause 12 of the Decree provides that Mr. Wobbleton must maintain an insurance policy 

for $750,0000 to be paid upon his death. The Decree required that he “assign an amount 

exceeding the debt secured by the marital residence . . . until such time as the debts are paid in 

full.” Ex. 1 at 14. This clause clearly indicates that the obligation to pay the mortgages was 

sufficiently important to require further security to Ms. Wobbleton to insure she would receive 

the equivalent of the amounts due on the mortgages until the sooner of 2034 or the end of her 

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life. In the Court’s view, this reading supports a finding that the obligation was intended to be in 

the nature of support during Ms. Wobbleton’s lifetime rather than an equitable distribution of 

property.

The fourth factor to be considered is whether there is any evidence of overreaching at the 

time the Decree was entered. The Decree states, and the testimony of the Wobbletons confirms 

that each party was represented by competent counsel. Tr. at 12:12-17. Ms. Wobbleton has 

presented no evidence to the contrary, so the Court finds that neither party held undue influence 

over the other and that they were on equal legal footing at the time of the divorce.

After considering all of the clauses in the Decree that address the disposition of the 

residence and the payment of the mortgage and equity line of credit secured by the property, the 

Court concludes that the language and substance of the Decree support a finding that the 

obligation to make the payments was intended to be in the nature of support.

In addition to the four-factor test, the Court may also consider whether the obligation 

arises from a past or future commitment and whether it represents an allocation of debt or a 

division of property. In re Austin, 271 B.R. 97, 108 (citing In re Petersen, 133 B.R. 508 (Bankr. 

W.D. Mo. 1991). Both Mr. and Ms. Wobbleton are listed as co-borrowers on the promissory 

notes supporting Claims 8 and 11. Allocation of these debts solely to Mr. Wobbleton in the 

Decree relieved Ms. Wobbleton of the obligations and is therefore further evidence that the

parties knew she could not afford to pay a portion of the debts and that she needed and would 

continue to need substantial financial support to augment her salary and child support award. 

Mr. Wobbleton argues that the Court should consider the parties’ treatment of the

obligations for tax purposes as evidence of their intent and cites In re Hardesty as support for 

this proposition. In re Hardesty, 553 B.R. 86 (Bankr. E.D. Va. 2016). However, the holding in 

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the Hardesty case is not applicable to the instant case. The property settlement agreement in that 

case included a clause providing that the parties specifically waived any rights to support. The 

agreement also included a clause specifying that the payment of the debt in question was not 

includable in gross income and not deductible which describes the appropriate tax treatment of 

an equitable distribution. Indeed, the Internal Revenue Code specifically states that an 

obligation may only be classified as an alimony or maintenance payment if “the divorce or 

separation instrument does not designate such payment as a payment which is not included in 

gross income ... and not allowed as a deduction.” 26 U.S.C. § 71. The Decree in the instant 

case does not include comparable clauses and therefore the holding in Hardesty is inapplicable to 

this case.

The Court acknowledges that both parties treated the obligation like an equitable 

distribution for tax purposes in this case and that this treatment was to the detriment of the debtor 

and to the benefit of the ex-spouse. However, this factor alone is insufficient to persuade the 

Court that the parties intended the payment of the obligations to be treated as an equitable 

distribution. Although the Decree addresses the tax treatment of the children as dependents, the 

document is silent regarding treatment of the mortgage obligations for tax purposes. In light of 

the requirements of the Internal Revenue Code and in the absence of specific language in the

Decree on this point, the Court assigns no weight to the way the parties treated the payments on 

their tax returns following the divorce. The Court’s inquiry remains focused on the intent of the 

parties at the time the Decree was signed, and not their conduct thereafter. 

Mr. Wobbleton also argues that his ex-spouse breached the Decree by not signing the 

documents that would have allowed him to refinance the debt on the residence. In fact, she 

cooperated on the modification of the equity line of credit as evidenced by her signature on the 

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Modification Agreement attached to Wells Fargo’s proof of claim. See Claim 8 at 32. However, 

Ms. Wobbleton refused to sign the documents to refinance the first mortgage because the lender 

would have required her to transfer a 50% ownership interest in the property back to the debtor 

and this action was clearly contrary to the intent of the parties at the time the Decree was signed. 

Thus, the Court will not consider her refusal to cooperate to refinance the mortgage as evidence 

of a breach of the Decree on her part in this matter. 

Having considered the four-factor test used in the Fourth Circuit, and other relevant case 

law, this Court finds that Ms. Wobbleton has carried her burden of proving that, at the end of a 

long marriage, there was a substantial disparity of incomes between the parties; that payment of 

the mortgage and equity line of credit provided shelter which was an essential necessity for Ms. 

Wobbleton and the two children born of the marriage; and that the language and substance of the 

Decree indicates that the parties mutually intended that the payment of the mortgage debt by the 

debtor was in the nature of support. Therefore, the Court concludes that Mr. Wobbleton’s 

obligation to pay Janice Wobbleton the equivalent of the mortgage and equity line of credit along 

with the escrow amounts due on those debts must be classified as a domestic support obligation 

under 11 U.S.C. §507(a) and is not dischargeable under 11 U.S.C. §§523(a)(5) and 1328(a)(2). 

The Court will issue a separate order consistent with the findings and conclusions in this 

Memorandum Opinion. 

Date: __________________ ___________________________

Klinette H. Kindred

United States Bankruptcy Judge

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Electronic copies to:

Robert R. Weed

Robert Sergio Brandt

Thomas P. Gorman

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