E.D.N.C.: Baum v.  Baum- Date of Separation and New Debts for Nondischargeability under §523(a)(15)

Summary: On appeal from the bankruptcy court decision in Baum v.  Baum, the district court reviewed whether debts between separated spouse are discharged under 11 U.S.C. §523(a)(15), which  provides, that a debtor shall not be discharged from a debt: (15) not of the kind described in paragraph (5) [dealing with alimony, maintenance and child support] that is 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, or a determination made in accordance with State or territorial law by a governmental unit; First, the district court agreed with the bankruptcy court that while the parties were “informally” separated, sleeping in different rooms, at the time the debts were incurred, under North Carolina law separation requires a “cessation of cohabitation.”  Secondly, the district court also held that §523(a)(15) requires the creation of new debts.  The consent orders eventually entered into by the parties as part of their divorce did not create any new debts at that point.  Accordingly, the debts were discharged. For a copy of the opinion, please see: Baum v. Baum- Date of Separation and New Debts for Nondischargeability under §523(a)(15)