## United States Bankruptcy Appellate Panel FOR THE EIGHTH CIRCUIT

____________ No. 97-6098NE

____________ In re: *
* Michael Moeder *
* Debtor. *
* Martha Moeder *
* Appeal from the United States Plaintiff-Appellee, * Bankruptcy Court for the
* District of Nebraska
-v.- *
* Michael Moeder *
* Defendant-Appellant. *
*

____________ Submitted: March 13, 1998
Filed: April 28, 1998

____________ Before KOGER, Chief Judge, SCOTT, and DREHER, Bankruptcy Judges.

____________ DREHER, Bankruptcy Judge.
This ap peal allows us to revisit the issue of th e discha rgeabilityof marital obligations under § 523 of th e Ba nkruptcy Code. The bankruptcy court in this case held that certai ndebts owed to the debtor's former spouse ar e nondischargeable under 11 U.S.C. § 523(a)(5) and (a)(15)

.2

After carefully considering the arguments of the parties an d the record on appeal, we affirm in part and reverse in part.3 I. BACKGROUND

Mi chael ("Michael") and Martha ("Martha") Moeder wer e marriedon November 20, 1982. During their marriage, th e pa rties adopted Nicole Michelle Moeder, a minor child born on Se ptember 13, 1990. Eventually Michael and Martha separated, and, on March 22, 1996, they were divorced by decree entere d in Nebra ska state court. Under the terms of the divorc e de cree, Martha was awarded sole custody of Nicole and Michael
wa s ordered to pay child support in the sum of $265 per month until Nicole reached the age of majority, died or becam e emancipated. In addition, the sta te court ordered Michael to: (1 ) pay alimony in the amount of $100 per month for a term of fo rty-eight months; (2) provide health insurance for Nicole ; (3) pay 78% of all unreimbursed medical expenses incurred o n Nic ole's behalf; (4) pay a $985 outstanding debt to Nicole' s childpsychologist; and (5) pay to Martha the sum of $10,39 2 plus interest, representing Martha's share of the marita l property awarded to Michael under the decree.
On September 24, 1996, Michael filed a petition for reli ef under Chapter 7 of the United States Bankruptcy Code. O n Octo ber 24, 1996, Martha commenced the present adversar y pr oceeding, seeking a determination that certain of Michael's obligations under the divorce decree are nondischargeabl e pu rsuant to 11 U.S.C. § 523(a)(5) and (a)(15). Afte r conducti ng a trial on the issue, the bankruptcy court rule d that Michael's obligation to pay alimony, his obligation to pay Nicole's medical expenses, and his obligation to pay the child psychologist constituted nondischargeable "alimony, maintenanc e
or support" under § 523(a)(5). The bankruptcy court furthe r
ru ledthat Michael's $10,392 property settlement obligatio n constituted a nondischargeable pro perty settlement pursuant to § 523(a)(15). In making its decision under § 523(a)(15), the ban kruptcycourt found that Michael did not have the abilit y to payhis debt to Martha from his disposable income, bu tIn addition to his appellate brief, Michael has submitted for consideration by the Court a 1 Reply Brief and an Affidavit of John D. Rouse, to which Martha has objected. In light of Michael's pro se status, we believe that a certain degree of flexibility is warranted, and we therefore deny Martha's motion to strike Michael's Reply Brief. As for Michael's submission of the Rouse Affidavit, however, it is quite clear that the time for submitting evidence in this case has passed and we deny Michael's request to submit additional evidence on appeal. Finally, as for Michael's objection to the admissibility of exhibit #16 (a letter from Dr. Konar), Michael failed to make this objection at trial and any objection he may have had has been waived.
4 nevertheless concluded that the debt was nondischargeabl e beca use the benefit to Michael of discharging the debt wa s outwei ghedby the detrimental effect that nonpayment of th e debt would have on Martha. Michael appeals. 15 II. DISCUSSION

Sectio n523(a) of the Bankruptcy Code excepts certai n catego ries of debts from a debtor's discharge granted unde r sect ion727, 1141, 1228(a), 1228(b) or 1328(b). Among th e de bts rendered nondischargeable by this provision are marital obligations owed to a spouse, former spouse, or child of th e debtor incurred by the debtor in the course of a divorce o r separation. Specifically, § 523(a)(5) of the Code excepts fro m discharge any debt:

to a spouse, former spouse, or child of the debtor , fo r alimony to, maintenance for, or support of suc h sp ouse or child, in connection with a separatio n ag reement, divorce decree or other order of a cour t of record, determination made in accordance wit h St ate or territorial law by a governmental unit, o r property settl ement agreement, but not to the extent that -- (A) such debt is assigned to another entity , volu ntarily, by operation of law, or otherwis e (oth er than debts assigned pursuant to sectio n 408(a)(3) of the Social Security Act, or any such debt which has been assigned to the Federal Govern ment or to a State or any politica l subdivision of such State); or (B ) such debt includes a liabilit y desi gnated as alimony, maintenance, or support, unle ss such liability is actually in the nature of alimony, maintenance or support.
11 U.S.C. § 523(a)(5) (1994). Thu s, under § 523(a)(5), a debt that is "actually in the nature of alimony, maintenance o r support" of a spouse, former spouse, or child of the debtor " is nondischargeable in bankruptcy.
In 1994, Congress expand ed the exception to discharge for marita l obligations by adding § 523(a)(15) to the Bankruptc y Code. Section 523(a)(15) renders nondischargeable any debt:6

not o f the kind described in paragraph (5) that i s incurred by th e debtor in the course of a divorce or separationor in connection with a separatio n ag reement, divorce decree or other order of a cour t of record, a determination made in accordance wit h State or territorial law by a governmental uni t unless -- (A) the debtor does not ha ve the ability to pay such debt from income or property of th e debt or not reasonably necessary to be expende d for the maintenance or support of the debtor or a de pendant of the debtor and, if the debtor is engagedin business, for the payment o f expenditures necessary for the continuation , preservation, and operation of such business; or (B) discharging such debt would result in a bene fit to the debtor that outweighs th e de trimental consequences to a spouse, forme r spouse, or child of the debtor.
Id. § 523(a)(15). Section 523(a)(15) excepts from discharg e those debts arising out of marital dissolution proceedings tha t do n ot constitute nondischargeable alimony, maintenance o r suppor t under § 523(a)(5); i.e. property settlement awards

. The legislative history of this provision indicates that it wa s added to the Bankruptcy Code to pr ovide greater protection for
no ndebtor divorcing spouses who agree to take reduced alimony and su pport payments in exchange for an increased propert y sett lement. H.R. R EP . N O . 103-385, at 54 (1994), reprinted in 1994 U .S.C.C.A.N. 3340, 3363. Thus, while a debtor' s obl igationto make a settlement of marital property would b e disch argeable under § 523(a)(5), such an obligation i s nond ischargeable under § 523(a)(15), with two importan t except ions: (1) subsection (A) of § 523(a)(15) provides tha t a property settlement award arisin g out of divorce proceedings is dischargeable where the debtor does not have the ability to paythe debt from disposable income; and (2) subsection (B ) provides that such a property settlement award is dischargeabl e where discharging such debt would result in a benefit to th e debtor that outweighs the detrimental consequences to th e7

nondebtor spouse. See Jodoin v. Samayoa (In re Jodoin) , 20 9 B.R. 132, 139 (B.A.P. 9th Cir. 199 7); Schaefer v. Deppe (In re Deppe) , 217 B.R. 253, 259 (Bankr. D. Minn. 1998); Johnson v

. Ra ppleye (In re Rappleye) , 210 B.R. 336, 340 (Bankr. W.D. Mo. 1997); Williams v. Williams (In re Williams) , 210 B.R. 344, 34 6 (Bankr. D. Neb. 1997); Wellner v. Clark (In re Clark) , 207 B.R

. 651, 655-56 (Bankr. E.D. Mo. 1997).8

As w e have previously stated, the question of whether a pa rticular debt constitutes "alimony, maintenance or support"
or rather constitutes a property settlement is a question o f fe deral bankruptcy law, not of state law. Tatge v. Tatge (In
re Tatge) , 212 B.R. 604, 608 (B.A.P. 8th Cir. 1997) (citin g Williams v. Williams (In re Williams) , 703 F.2d 1055, 1056 (8t h Cir. 1983) (quoting H.R. R EP . NO . 95 -595, at 364 (1977))). The crucial issue in making this determination is the intent of th e parties and the function the award was intended to serve at th e time of the divorce. Holliday v. Kline (In re Kline) , 65 F.3d 749, 75 1 (8th Cir. 1995); Adams v. Zentz , 963 F.2d 197, 20 0 (8th Cir. 1992); Williams , 703 F.2 d at 1056; Boyle v. Donovan , 724 F.2d 681, 683 (8th Cir. 1984). Factors to be considere d bythe courts in determining whether an award arising out o f marita l dissolution proceedings was intended to serve as a n
awa rdfor alimony, maintenance or support, or whether it wa s intendedto serve as a property settlement include, but are no t limite dto: the relative financial conditions of the partie s at the time of the divorce; the respective employment historie s and prospects for financial support; the fact that one part y
oranother receives the marital property; the periodic nature of t he payments; and whether it would be difficult for th e former spouse and children to subsist without the payments

. Tatge , 212 B.R. at 608; Kubik v. K ubik (In re Kubik) , 215 B.R. 595, 5 99 (Bankr. D.N.D. 1997). The bankruptcy court' s determination of this issue consti tutes a finding of fact that maybe reversed only if it is clearly erroneous under th e evidence presented. First Nat'l B ank v. Pontow , 111 F.3d 604, 609 (8th Cir. 1997); Kline , 65 F.3 d at 750; Adams , 963 F.2d at 200; Williams , 703 F.2d at 1056.
Applying these principles to the first part of th e bankru ptcycourt's holding, we have no trouble affirming th e bankruptcy court's determination t hat Michael's obligations to pa y alimony, medical expenses and the psychologist's bill are nondis chargeable under § 523(a)(5). The record before u s9

indicate s that, in ordering Michael to pay these debts, th e divorc e court was concerned with balancing the income an d
ear ning capacities of the parties and with providing for th e proper care and support of Nicole. Thus, we hold that th e bankru ptcycourt's finding that these debts were intended t o
serve the function of "alimony, maintenance or support" was no t clearly erroneous.10

We reach a different conclusion with respect to th e bankru ptcycourt's holding that Michael's obligation to pa y Mart ha $10,392 plus interest is nondischargeable under § 523(a) (15), however. Although the court's finding that thi s de bt was intended to serve the function of a propert y settle ment rather than an award of alimony, maintenance o r support is supported by the evidence, we believe that th e ban kruptcycourt incorrectly applied the law in this case i n tw o respects. First, the bankruptcy court found the property settlement debt in this case nondischargeable despite it s specific finding that "the debtor does not have the ability to pay his obligations to his former spouse from income o r pr operty which is not reasonably necessary to be expended for his maintenance or support, and the support of his child , throug hchild support payments." As discussed above, a propertysettlement award that otherwise qualifies fo r
no ndischargeabilityunder § 523(a)(15) will be nevertheles s discha rgeable in bankruptcy if either of the two exception s containe din subsections (A) and (B) apply. The bankruptc y court's finding, if upheld, would indicate that subsection (A) of § 523 (a)(15) has been satisfied in this case and that th e pr operty settlement debt should therefore be dischargeable by the debtor.

Second , we think that the bankruptcy court improperl y alloca tedthe burden of proof in this case. In making it s finding that Michael did not have the ability to pay under § 523(a)(15)(A), the bankruptcy court indicated that the evidenc e
on M ichael's ability to pay his debts was incomplete; tha t Michae l's testimony was not credible; that Michael failed t o recall specific information; that he was evasive an d argume ntative; and that he did not respond directly t o questions asked of him. Despite this apparent failure of proo f
onthe debtor's part, the bankruptcy court held that the burde n fell on the objecting creditor to prove the inapplicability of an exception to nondischargeabilit y under § 523(a)(15)(A), and11

conclu dedthat the debtor did not have the ability to pa y becaus e Martha had failed to prove otherwise. Althoug h "s everal courts have grappled with the issue of burden proof" in§ 523(a)(15) cases, see Crossett v. Windom (In re Windom) , 207 B.R. 1017, 1020-21 (Bankr. W.D . Tenn. 1997), we think that the burden of proof lies with the debtor to show that a n
ex ception to nondischargeability under § 523(a)(15)(A) or (B) applies in a given case. It is true that in general the burde n falls on the objecting creditor to prove an exception t o discharge under § 523; nevertheless the majority of courts hav e ruled that, once the objecting12

creditorproves that the debt constitutes a property settlemen t awardincurred in the course of divorce proceedings, the burde n shifts to the debtor to prove either of the exceptions t o
no ndischargeability contained in subsections (A) or (B). See Jo doin , 209 B.R. at 139; Rappleye , 210 B.R. at 340; Williams , 210 B.R. at 346; Clark , 207 B.R. a t 655-56; Scigo v. Scigo (In
re Scig o) , 208 B.R. 470, 473 (Bankr. D. Neb. 1997); Wynn v

. Wynn (In re Wynn) , 205 B.R. 97, 101 (Bankr. N.D. Ohio 1997) ; Sc hmitt v. Eubanks (In re Schmitt) , 197 B.R. 312, 316 (Bankr. W.D. Ark. 1996); Johnston v. Henson (In re Henson) , 197 B.R

. 299, 302-03 (Bankr. W.D. Ark. 1996); Bodily v. Morris (In r e Mo rris) , 193 B.R. 949, 952 (Bankr. S.D. Cal. 1996). See also Kirch ner v. Kirchner (In re Kirchner) , 206 B.R. 965, 97 0 (Bankr. W.D. Mo. 1997); Florio v. Florio (In re Florio) , 18 7 B.R. 654, 657 (Bankr. W.D. Mo. 1995); Silvers v. Silvers (I n re Silvers) , 187 B.R. 648, 649 (Ba nkr. W.D. Mo. 1995) (holding that the debtor bears the burden o f going forward with respect to § 523(a)(15)(A) and (B), but no t the burden of proof). But
see Ma rquis v. Marquis (In re Marquis) , 203 B.R. 844, 84 7 (Bankr. D. Me. 1997); Greenwalt v. Greenwalt (In re Greenwalt) , 200 B.R. 909 (Bankr. W.D. Wash. 19 96); Willey v. Willey (In re Willey) , 198 B.R. 1007 (Bankr. S.D. Fla. 1996); Dressler v

. Dressler (In re Dressler) , 194 B.R . 290, 302-03 (Bankr. D.R.I. 19 96); Kessler v. Butler (In re Butler) , 186 B.R. 371, 373-74 (B ankr. D. Vt. 1995) (holding that the objecting creditor has the burden of proving that the exceptions t o nondischargeability contained in § 523(a)(15)(A) and (B) do no t apply). We believe that the statutory language of § 523(a)(15 ) indicates that the exceptions cont ained in subsections (A) and (B) constitute affirmative defenses to nondischargeabilit y which must be proven by the debtor to escap e nondischargeability of the dispute d debt. Therefore, although th e bankruptcy court found that the debtor did not have th e ability to pay his debts from disposable income under § 523(a)(15)(A), we conclude that the bankruptcy court improperl y plac edthe burden of satisfying this test on the objectin g13

cr editor, rather than on the debtor. Accordingly, we believe that t he bankruptcy court's decision under § 523(a)(15) mus t be re versed and remanded to the bankruptcy court for ne w find ings of fact while placing the burden on the debtor t o prove either of the exceptions to nondischargeability containe d in § 523(a)(15)(A) or (B).14 III. CONCLUSION

We conclude that the bankruptcy court's decision under § 52 3(a)(5) should be affirmed, but that the bankruptcy court's decisi onunder § 523(a)(15) incorrectly applied the law an d improp erlyallocated the burden of proof. Accordingly, th e bankru ptcycourt's decision is AFFIRMED IN PART, REVERSED I N PART, and REMANDED for further proceedings consistent with thi s opinion.

A true copy.

Attest:

CLERK, U.S. BANKRUPTCY APPELLATE PANEL FOR THE EIGHTH CIRCUIT