Mark E. Picou - Page 5

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          The purpose of paragraph 11 was to protect Ms. Picou “from any              
          bad debt”; in particular, to protect Ms. Picou from sole personal           
          liability in the event that petitioner filed for bankruptcy and             
          Union Planters Bank sought recourse against her for the Lakewood            
          home mortgages.  There was no subsequent modification to the                
          divorce decree.                                                             
               As part of the divorce action, Ms. Picou delivered to                  
          petitioner a quitclaim deed conveying all of her right, title, or           
          interest in and to the Lakewood home.                                       
               In July 1999, petitioner filed for bankruptcy under chapter            
          13 of the Bankruptcy Code and received a discharge in July 2004.            
          As part of the bankruptcy plan, the bankruptcy trustee garnished            
          petitioner’s wages and used the funds to pay petitioner’s debts,            
          including the mortgage payments to Union Planters Bank.  The                
          bankruptcy trustee made mortgage payments of $13,176 and $11,780            
          in 2002 and 2003, respectively, to Union Planters Bank on behalf            
          of petitioner.3                                                             
               In October 2005, petitioner refinanced the first and second            
          mortgages held by Union Planters Bank with another financial                
          institution, and he became the only borrower listed on the new              
          mortgage for the Lakewood home.  The refinance extinguished any             


               3  Respondent does not dispute that the payments made by the           
          bankruptcy trustee constituted payments made by petitioner.                 






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