Cite as: Keith M. Lundin, Lundin On Chapter 13, § 159.6, at ¶ ____, LundinOnChapter13.com (last visited __________).
Student loans described in § 523(a)(8) are nondischargeable at the completion of payments under § 1328(a) and have been for many years.1 BAPCPA did not change the cross-reference to § 523(a)(8) in § 1328(a), but BAPCPA did materially modify § 523(a)(8) in ways that will affect the dischargeability of student loans in Chapter 13 cases.
As amended by BAPCPA, discharge at the completion of payments under a Chapter 13 plan does not discharge a student loan:
(8) unless excepting such debt from discharge under this paragraph would impose an undue hardship on the debtor and the debtor’s dependents, for—
(A)(i) an educational benefit overpayment or loan made, insured, or guaranteed by a governmental unit, or made under any program funded in whole or in part by a governmental unit or nonprofit institution; or
(ii) an obligation to repay funds received as an educational benefit, scholarship, or stipend; or
(B) any other educational loan that is a qualified education loan, as defined in section 221(d)(1) of the Internal Revenue Code of 1986, incurred by a debtor who is an individual.2
There are two changes in new § 523(a)(8), one clearly important and the other of uncertain content. Under prior law, a student loan was nondischargeable unless excepting the debt from discharge “will” impose an undue hardship on the debtor and the debtor’s dependents. BAPCPA reworded § 523(a)(8) to except a student loan from discharge unless excepting the debt from discharge “would” impose an undue hardship on the debtor and the debtor’s dependents. It is not clear what this change in wording signals. “Will” is perhaps a slightly higher standard of certainty than “would.”
The second BAPCPA change to § 523(a)(8) is clearer. The kinds of debts that are excepted from discharge by § 523(a)(8) now extend to educational loans that qualify under the Internal Revenue Code without regard to the source of the loan. In other words, qualifying educational loans from for-profit, nongovernmental entities and institutions can now qualify as nondischargeable debts under § 523(a)(8). This is likely to expand the universe of potentially nondischargeable educational loans in Chapter 13 cases. For-profit schools for everything from truck driving to hair dressing may qualify if their loans fit the definition in § 221(d)(1) of the Internal Revenue Code of 1986.
Kelly v. Sallie Mae, Inc. (In re Kelly), 594 F. App'x 413, 414 (9th Cir. Feb. 27, 2015) (Bea, Murguia, Kobayashi) (Debtor made good-faith effort to repay student loans by maximizing income, paying thousands of dollars toward student loan debt over eight-year period and at least "minimally" investigating payment alternatives. "[T]hough Kelly did not pursue loan repayment options, the bankruptcy court did not clearly err in its conclusion that Kelly had a good-faith belief that she was ineligible for the program, and that applying for the program would have been futile since she could not afford the payments after consolidation."), rev'g No. C11-1263RSL, 2012 WL 1378725 (W.D. Wash. Apr. 20, 2012) (unpublished) (Lasnik) Applying third prong of Brunner v. New York State Higher Educational Services Corp., 831 F.2d 395 (2d Cir. Oct. 14, 1987) (Lumbard, Oakes, Kearse), failure to minimize expenses and to apply for loan modification through Ford program indicated lack of good faith. Student loan debt was nondischargeable.).
Education Res. Inst., Inc. v. Zumbro (In re Zumbro), No. 13-11868, 2013 WL 5486231 (11th Cir. Oct. 3, 2013) (unpublished) (Pryor, Jordan, Cox) (Brunner v. New York Higher Education Services Corp., 831 F.2d 395 (2d Cir. Oct. 14, 1987), test was satisfied when debtor was cosigner of student loans for former husband and not eligible for long-term repayment under 34 C.F.R. § 685.208.).
Hann v. Educational Credit Mgmt. Corp. (In re Hann), 711 F.3d 235, 239-43 (1st Cir. Mar. 29, 2013) (Torruella, Stahl, Thompson) (Order that "allows the claim of ECMC in the amount of $0.00" after hearing at which debtor put on unrebutted evidence that student loans were paid in full precluded postbankruptcy collection by ECMC without regard to nondischargeability. Sanctions were appropriate for abuse of bankruptcy process by ECMC. Debtor objected to ECMC's unsecured proof of claim for $54,756.44. ECMC neither responded to the objection nor appeared at the hearing. The debtor testified that the student loans had been paid in full. Bankruptcy court allowed the ECMC claim in the amount of "$0.00." ECMC did not appeal the claim disallowance order but resumed collection efforts after the debtor completed payments and the Chapter 13 case was closed. "Dischargeability . . . is not really at issue here. . . . [A] claim disallowance order can dissolve an underlying nondischargeable debt if it is based on a factual finding that the debtor has been repaid . . . . [T]he Claim Order was indeed based on the conclusion that Hann had repaid her loans. . . . ECMC's entire course of conduct . . . led the BAP to conclude that ECMC had abused the bankruptcy process. . . . [E]ven if ECMC's conduct did not violate the discharge injunction, . . . it was an abuse of the bankruptcy process."), aff'g 476 B.R. 344, 356-57 (B.A.P. 1st Cir. Aug. 7, 2012) (Hillman, Feeney, Hoffman) (Order sustaining objection to student loan claim and stating that claim is allowed in the amount of $0 precludes ECMC from any further collection of the debt; although nondischargeability was not at issue, the determination that no money was owed to ECMC precluded post-discharge collection action and warranted sanctions. "The issue is not whether a nondischargeable debt can be discharged by virtue of its disallowance, but whether there is a debt at all where the claim has been disallowed on the grounds of pre-petition payment in full. By definition, where there is no claim, there is no debt and nothing is discharged. . . . [B]y filing the Claim Objection, Hann invoked the appropriate procedural mechanism provided by the Bankruptcy Code to obtain a determination of both the validity and amount of the Claim. . . . [T]he bankruptcy court conducted a thorough review . . . . This process yielded a ruling that the amount of the Claim on the date of Hann's bankruptcy petition was zero. . . . The court having concluded that there is no extant claim, there can be no liability on a claim and hence no debt . . . . [T]he June 2006 Order . . . effectively precluded any further attempt by ECMC to collect on the alleged student loan debt.").
Educational Credit Mgmt. Corp. v. Kirkland (In re Kirkland), 600 F.3d 310, 316 (4th Cir. Mar. 12, 2010) (Motz, King, Agee) (On messy facts, after completion of payments and discharge, bankruptcy court lacks subject matter jurisdiction to determine amount of postpetition interest and collection costs that remain nondischargeable on a student loan. "[T]he bankruptcy court lacked subject matter jurisdiction to determine the issues of post-petition interest and collection costs to award ECMC. ECMC's claim to post-petition interest and collection costs is not a matter 'under Title 11,' nor is it a civil proceeding 'arising in,' or 'related to' Kirkland's bankruptcy petition. This is so because ECMC's claims to post-petition interest and collection costs arose entirely independent from Kirkland's bankruptcy proceeding.").
Cassim v. Educational Credit Mgmt. Corp. (In re Cassim), 594 F.3d 432 (6th Cir. Feb. 4, 2010) (Moore, Cook, Ludington) (The dischargeability of a student loan debt is constitutionally ripe at the beginning of a Chapter 13 case.), aff'g 395 B.R. 907 (B.A.P. 6th Cir. Nov. 7, 2008) (Parsons, Rhodes, Shea-Stonum).).
Educational Credit Mgmt. Corp. v. Pulley, 532 B.R. 12, 27-29 (E.D. Va. Apr. 30, 2015) (Hudson) (Student loan creditor cannot be equitably estopped from collecting nondischargeable debt notwithstanding that it disabled itself to receive payments under confirmed plan. Plan confirmed in 2006 provided 71.8% payment of student loans originated by Bank of America. ACS filed a proof of claim as agent for BOA. ECMC guaranteed the loans. ACS received payments from the trustee over several years. ACS returned some of the checks uncashed and eventually told the trustee that it was unable to locate the account and would no longer accept payments. The trustee stopped making payments to ACS and coded the proof of claim paid in full. The debtor completed payment of 71.8% to other unsecured creditors and received a discharge. Months later, ACS demanded payment from the debtor. Debtor filed an adversary proceeding to estop BOA, ACS and ECMC from collecting amounts that would have been paid during the Chapter 13 case but for negligence by ACS. For tactical reasons, ECMC did not make an appearance in the adversary proceeding. "Because student loans are non-dischargeable, the debtor remains personally responsible for them after the bankruptcy. . . . The Bankruptcy Court's Judgment Order, in effect, was the functional equivalent of a discharge, and there is no statutory basis by which the Bankruptcy Court, or any court for that matter, can equitably estop a creditor from reaching non-dischargeable student loans. . . . Such a result, while perhaps inequitable, is fitting where Congress expressly intended that students not merely 'receive the major benefits of a taxpayer-funded education,' but also the responsibility 'to repay them in all but the most dire circumstances.' . . . [T]he Court will Vacate and Remand the Bankruptcy Court's Order equitably estopping ECMC from enforcing its guarantee and collecting payment on Pulley's student loans debt without a particularized finding of undue hardship.").
Foster v. SLM Fin. Corp., No. 3:12-CV-00189-JGH, 2012 WL 3264991 (W.D. Ky. Aug. 9, 2012) (unpublished) (Heyburn) (Complaint filed by cosigner/guarantor of student loans for Chapter 13 debtor alleging that plaintiff's signatures had been forged need not be transferred to district where Chapter 13 was pending.).
Educational Credit Mgmt. Corp. v. Rhodes, 464 B.R. 918 (W.D. Wash. Jan. 24, 2012) (Coughenour) (Debtor failed to satisfy Brunner v. New York State Higher Education Services Corp., 831 F.2d 395 (2d Cir. Oct. 14, 1987) (Lumbard, Oakes, Kerse). Debtor failed to show that he could not maintain minimum standard of living if required to repay loans. Debtor did not suffer from mental condition affecting ability to work and did not prove good-faith efforts to repay student loans. In Ninth Circuit, debtor's failure to negotiate repayment plan for student loan debt is evidence of lack of good-faith attempt to repay, citing Educational Credit Management Corp. v. Mason (In re Mason), 464 F.3d 878 (9th Cir. Sept. 28, 2006) (Thompson, Tashima, Callahan).).
Corso v. Walker, 449 B.R. 838 (W.D. Pa. May 20, 2011) (Fischer) (Section 523(a)(8) did not apply to debtor's assumption in marital dissolution agreement of responsibility for daughter's student loans; agreement between spouses did not create student loan debt.).
Olson v. Aspire Res. Inc. (In re Olson), 592 B.R. 857, 862–63 (Bankr. D. Mont. Oct. 26, 2018) (Hursh) (Confirmed plan did not prohibit ECMC from applying payments to student loan consistent with contract and 34 C.F.R. § 682.209(b)(1)
Metz v. Navient Educ. Loan Corp. (In re Metz), 589 B.R. 750 (Bankr. D. Kan. Sept. 25, 2018) (Nugent) (Partial discharge of student loan debt is appropriate when 59-year-old Chapter 13 debtor completed plan that made some payments toward student loans but accruing interest will make complete repayment impossible and income-contingent repayment programs will create a “debt bomb” that will explode when debtor is 84 years old and living on Social Security. Original principal amount of student loans
McDaniel v. Navient Sols., LLC (In re McDaniel), 590 B.R. 537, 542–51 (Bankr. D. Colo. Sept. 24, 2018) (Tyson) (Confirmed plan that treated student loan claims as “deferred to end of plan” did not determine whether Navient’s claims were dischargeable for purposes of § 523(a)(8) litigation two years after completion of payments and discharge. Adopting emerging narrow reading, § 523(a)(8)(A)(ii) does not encompass Navient’s Tuition Answer Loans. Premature to dismiss claims that Navient violated discharge injunction and was in contempt for attempting collection of Tuition Answer Loans that were not excepted from discharge by § 523(a)(8)(A)(ii). “Plaintiffs borrowed . . . $107,467 through the Tuition Answer Loans, ‘made outside the financial aid office and [not] for qualified education expenses.’ . . . Debtors made payments totaling $26,782 on the Tuition Answer Loans during their Chapter 13 bankruptcy case. . . . Section 523(a)(8)(A)(ii) excepts from discharge ‘an obligation to repay funds received as an educational benefit, scholarship or stipend.’ . . . The crux of the dispute is whether the Tuition Answer Loans fall within the ambit of this subsection as a matter of law. Courts in other jurisdictions are divided on the issue . . . . The disjunctive ‘or’ in Section 523(a)(8)(A)(i) is significant, because it distinguishes an ‘educational benefit overpayment’ from a ‘loan.’ . . . [G]iven the specific language employed by Congress in Sections 523(a)(8)(A)(i) and (B) and the absence of the word ‘loan’ from Section 523(a)(8)(A)(ii), the Court concludes ‘an obligation to repay funds received as an educational benefit, scholarship or stipend’ does not include a loan. . . . Section 523(a)(8)(A)(ii) does not encompass the Tuition Answer Loans . . . .”).
Ray v. Education Credit Mgmt. Corp. (In re Ray), 591 B.R. 834 (Bankr. W.D. Wis. Sept. 20, 2018) (Furay) (That objection to student loan claim was sustained in prior Chapter 13 case has no effect on dischargeability of student loan debt in current case. Debtor presented no evidence of undue hardship. Other arguments
Love v. U.S. Dep’t of Educ. (In re Love), 594 B.R. 779 (Bankr. D. Kan. Aug. 10, 2018) (Karlin) (Chapter 13 debtor’s motion for summary judgment in student loan dischargeability litigation under § 523(a)(8) is denied because Department of Education and Navient have not had opportunity to take discovery or respond to motion.).
Pyle v. Performant (In re Pyle), No. 17-03286, 2018 WL 1996400 (Bankr. S.D. Tex. Apr. 3, 2018) (Brown) (Chapter 13 debtor not entitled to discharge of 30-year-old student loans notwithstanding that United Travel School closed before debtor could finish course of study.).
De La Rosa v. Kelly (In re Kelly), 582 B.R. 905 (Bankr. S.D. Tex. Mar. 23, 2018) (Bohm) (Guarantor of student loan who paid debt when debtor defaulted is entitled to judgment of nondischargeability under § 523(a)(8).).
Hunter v. New Jersey Higher Educ. Student Assistance Auth. (In re Hunter), No. 15-02052-JKS, 2018 WL 6978704 (Bankr. D.N.J. Jan. 5, 2018) (Sherwood) (For § 523(a)(8) purposes, New Jersey Higher Education Student Assistance Authority is a governmental entity and dischargeability is determined under § 523(a)(8)(A)(i); § 523(a)(8)(B) and § 523(a)(8)(A)(ii) are not relevant. Debtor’s claims that she was “overloaned” failed to state claim for fraud, breach of contract or consumer protection violation.).
Coplin v. US Dep’t of Educ. (In re Coplin), No. 13-46108, 2017 WL 6061580, at *1–*10 (Bankr. W.D. Wash. Dec. 6, 2017) (unpublished) (Heston) (45-year-old bipolar single mother of seven children with unbelievable family medical problems is granted partial discharge of student loans totaling $485,000; nondischargeable portion is $222,000. “The Plaintiff is a 45
Doernte v. Educational Credit Mgmt. Corp. (In re Doernte), No. 10-24280-JAD, 2017 WL 2312226, at *6 (Bankr. W.D. Pa. May 25, 2017) (Deller) (“Debtor can maintain a minimal standard of living, and yet have sufficient funds left over every month to make payment on account of her student loans. As a result, the Debtor has failed to prove the first element of the [Brunner v. New York State Higher Education Services Corp., 831 F.2d 395 (2d Cir. Oct. 14, 1987) (Lumbard, Oakes, Kearse),] test . . . . Debtor is currently 47 years of age, is married, and is gainfully employed . . . . [H]er current gross salary is approximately $63,000 per year[.]”).
In re Kennedy, 568 B.R. 367, 375-76 (Bankr. D. Kan. Mar. 7, 2017) (Karlin) (Citing Black v. Educational Credit Mgmt. Corp., 459 F.3d 796 (7th Cir. Aug. 16, 2006) (Ripple, Wood, Williams), bankruptcy court defers to “reasonableness” of 22.5% collection cost added to student loan by Navient. “It is reasonable that the Department of Education has implemented regulations that permit collections costs based on a flat rate percentage, rather than an item by item accounting of actual costs . . . . Navient asserts that its collection cost rate of 22.5% is based on the formula provided in 34 C.F.R. § 30.60 . . . . And Navient’s 22.5% fee is below the Department of Education’s other limit on collection costs . . . 25%.”).
Sheppard v. U.S. Dep’t of Educ. (In re Sheppard), No. 2:16-bk-20208, 2017 WL 690927 (Bankr. S.D. W. Va. Feb. 21, 2017) (Volk) (Student loan dischargeability complaint is constitutionally ripe but not prudentially ripe before confirmation in Chapter 13 case. That debtors are permanently disabled and not likely to improve circumstances does not change speculative nature of undue hardship consideration in advance of confirmation of a plan and entitlement to discharge.).
Hoffman v. Educational Credit Mgmt. Corp. (In re Hoffman), 557 B.R. 177, 185–90 (Bankr. D. Colo. Sept. 7, 2016) (Tallman) (Disallowance of ECMC’s student loan claim does not affect nondischargeability of underlying debt. Debtor’s failure to allege undue hardship is fatal to adversary proceeding with respect to dischargeability. Dismissal of debtor’s challenge to administrative wage garnishment action collaterally estopped debtor to challenge collection of student loan debt. ECMC filed a proof of claim for $39,195.35 for student loans. Debtor objected and ECMC did not respond. The proof of claim was disallowed. Debtor later brought an adversary proceeding claiming the student loans were dischargeable. “Since it is undisputed that the loans at issue in this case are of the type nondischargeable under § 523(a)(8)(A)(i), and because the Debtor makes no argument going to the issue of undue hardship, the only remaining issue for this Court to decide is whether Debtor owes the debt. . . . [T]he entry of a decision in an Administrative Wage Garnishment Hearing held pursuant to 20 U.S.C. § 1095(a) constitutes a final agency decision. . . . [T]he agency determination that the Debtor owes the student loan debt at issue is final for the purposes of applying collateral estoppel.”).
Wheeler v. Educational Credit Mgmt. Corp. (In re Wheeler), 555 B.R. 464, 466 (Bankr. M.D. Pa. July 18, 2016) (Thomas) (Complaint to determine dischargeability of student loan debt at front end of Chapter 13 case is dismissed without prejudice. “[S]hould the Debtor’s Plan succeed . . . , her circumstances would be quite different in 2020 than they are right now. Such being the case, I am satisfied that this adjudication should take place at a different time closer to the date of discharge.”).
In re Jordan, 555 B.R. 636, 643–55 (Bankr. S.D. Ohio July 1, 2016) (Hoffman) (With respect to nondischargeable student loan debt, plan cannot enjoin the accrual of late fees, cannot declare defaults waived, and cannot prohibit the accrual of default interest during the Chapter 13 case. Collection costs and penalties are not allowable claims but accrue and are nondischargeable after the Chapter 13 case. “[T]he rule disallowing unsecured claims for postpetition interest even when the associated debt is nondischargeable applies in Chapter 13 cases . . . . Holders of nondischargeable debt may recover amounts they are owed—including postpetition interest—from debtors personally once the automatic stay terminates. . . . ‘[A] Chapter 13 plan that proposes to discharge a student loan debt without a determination of undue hardship violates §§ 1328(a)(2) and 523(a)(8).’ United Student Aid Funds, Inc. v. Espinosa, 559 U.S. 260, 276, 130 S. Ct. 1367, 176 L. Ed. 2d 158 (Mar. 23, 2010). . . . [W]henever plan provisions that attempt to effectively discharge student loan debt come to the Court’s attention . . . the Court will deny confirmation and consider the imposition of sanctions under Bankruptcy Rule 9011. That said, if an unconfirmable plan is confirmed because the Court’s review misses an objectionable provision and because the Chapter 13 trustee . . . and the student loan creditor . . . fail to bring the provision to the Court’s attention through an objection, the order confirming the plan will have the binding effect set forth in § 1327 of the Bankruptcy Code . . . . In other words, creditors that fail to review and object to Chapter 13 plans containing objectionable provisions potentially do so at their own peril.”).
Brantley v. United States Dep't of Educ. (In re Brantley), No. 16-8002-WRS, 2016 WL 3003429, at *2-*3 (Bankr. M.D. Ala. May 17, 2016) (Sawyer) (Complaint to determine the dischargeability of student loans fails prudential ripeness analysis at beginning of Chapter 13 case. Debtor converted from Chapter 7 to Chapter 13 to determine the dischargeability of $445,000 in student loan debt. "Undertaking an inquiry of the debtor's 'current' situation four or five years in advance of the actual discharge is unreasonably difficult and would require substantial speculation on the part of the Court. . . . There are . . . practical considerations for not adjudicating a § 523(a)(8) proceeding early in a Chapter 13 case. . . . Given the strong possibility that a Chapter 13 case will be dismissed long before discharge can occur, a determination of undue hardship early in the case would likely be rendered unnecessary and irrelevant.").
Murray v. Educational Credit Mgmt. Corp. (In re Murray), No. 15-6016, 2015 WL 3929582, at *4-*5 (Bankr. D. Kan. June 24, 2015) (Sommers) (Complaint to determine dischargeability of student loans in a Chapter 13 case is not ripe six months after the petition; 12 months before debtor becomes eligible for discharge would be tipping point for ripeness. "[T]he undue hardship finding will be based upon a projection of the debtor's anticipated post-bankruptcy financial circumstances. . . . [H]earing the matter years before the beginning of the projection period would only compound the difficulty. . . . [A] proceeding to include student loans in a Chapter 13 discharge would be ripe if filed not more than approximately twelve months before the completion of plan payments . . . .").
Conner v. U.S. Dep't of Educ. (In re Conner), 526 B.R. 218, 229 (Bankr. E.D. Mich. Jan. 14, 2015) (McIvor) (Sixty-one-year-old public school teacher not entitled to undue hardship discharge of $213,000 student loan debt when debtor could make monthly payment required by income-based repayment plan while maintaining minimal standard of living for purposes of Brunner v. New York State Higher Education Services Corp., 831 F.2d 395 (2d Cir. Oct. 14, 1987) (Lumbard, Oakes, Kearse), test. That debtor is eligible to retire in one year, resulting in a significant reduction in income, and will lose an adoption subsidy when her daughter obtains majority in two years, does not support a finding of a "certainty of hopelessness" because debtor remains capable of working in the future and is not being forced out of employment. Finally, debtor's "failure to make a single voluntary payment on her student loan obligation, outside of the nine required to obtain a further deferment, does not demonstrate the level of good faith required to obtain a discharge of her student loan debt.").
In re Martish, No. 14-02975-5-DMW, 2015 WL 167154, at *3-*4 (Bankr. E.D.N.C. Jan. 12, 2015) (Doub) (Student loan interest and collection costs continued to accrue and were nondischargeable in current Chapter 13 case notwithstanding disallowance of student loan claim for untimeliness and entry of discharge at completion of payments in prior Chapter 13 case. "[C]ollection costs are part of a student loan obligation and are not excepted from discharge under 11 U.S.C. § 523(a)(8). . . . [C]ollection costs and postpetition interest [are] neither affected by the disallowance of ECMC's 1999 POC or the Debtor's discharge in the 1998 Bankruptcy as collection costs and postpetition interest on the Loan are nondischargeable.").
Bene v. Educational Credit Mgmt. Corp. (In re Bene), 474 B.R. 56, 59, 59-60, 75-76 (Bankr. W.D.N.Y. June 26, 2012) (Kaplan) (Availability of repayment terms for student loans through William D. Ford program did not defeat 64-year-old debtor's discharge of student loan borrowed 25 years previously. "[I]ndenturing" herself to Ford Program would require another 25 years of payment. Ford Program does not imply repeal of § 523(a)(8). "[C]hanges in the ways that a former student may 'satisfy' a student loan, without ever 'repaying' it, do not supplant 11 U.S.C. § 523(a)(8) and do not supplant the Brunner interpretation of the statute. . . . Brunner has achieved 'biblical' status among [student loan lenders], and has consequently spawned some myths—myths that some courts have adopted as law. . . . [T]he Brunner decision's words of 1987 must be reconciled with the words of today. That decision used the words 'poverty' and 'minimal standard of living.' Those words have a different meaning today. It also used the phrase 'the repayment period,' as if that were a 'term of art' meaning 8 to 10 years. Now it can be 25 years." Current version of Ford Program "collides with Brunner." Debtor borrowed $17,000, 25 years ago, never completed education, for valid reasons, and as of trial date, debt exceeded $56,000. Because of forbearance and deferrals, debtor had only paid $2,400, which represented "the best she could do. The latest incarnation of the Ford Program offers her debt-forgiveness if she completes a 25-year program of affordable payments. That was not available when Brunner was decided. . . . In sum, the Court will conclude that the Brunner Test comes first, and that the Debtor has passed that test. Then comes the effect of changes in the repayment options offered by the current version of the Ford Program. The Debtor here passes a 'totality' test as well. The two paths do come together under a Brunner analysis." Ford Program originally forgave principal balance of loan after 20 or 25 years of income dependent payments, but current version implicates all three prongs of Brunner test: "A. When the Court adjusts for predictive changes in the Brunner Court's understanding of the sociological terms 'poverty' and 'minimal standard of living,' and recognizes that the 'repayment period' was 10 years in 1987 and now is 25 years, the Court finds that the Debtor has passed the Brunner test, but for interposition of the Ford Program changes that substitute 'satisfaction' for 'repayment.' B. This Court predicts that the Second Circuit would de-emphasize its focus on 'the bargain' between a student loan borrower and the government, given the many ways in which the government has unilaterally changed its position in the past 25 years, and may re-shift in the Debtor's favor. C. This Court predicts that the Second Circuit would look first to the Brunner test without regard to the current Ford Program options, and then look at those options only if a debtor passed the original Brunner Test. D. This Court predicts that when a debtor passes the Brunner Test but for the Ford options, the Second Circuit would adopt a 'totality of circumstances' test. E. This Debtor has passed the Brunner Test, and now must face the 'totality' presented by the current version of the Ford Program. F. The following facts satisfy the 'totality test:' 1. She is 64 and facing job loss. 2. She never had a profession. 3. She has no debt other than 24-year-old student loan debt. 4. She gave up educational opportunities in order to care for her ill parents two decades ago. 5. She lives an austere life. 6. She has worked on an assembly line for 12 years at less than $13.00/hr. leading up to trial. 7. She never completed her education, and so has no options for higher income now. 8. She paid little toward her student loans, but paid what she could. 9. The $25,000 payment from her parents in 1986 could have paid-off her student loans, but she used it to care for her parents. There is nothing culpable about that in the Bankruptcy Code. 10. Finally, Brunner involved a debtor starting out on her career. . . . This Debtor is at the end of her 'rope' at age 64, facing job loss and no prospects other than Social Security. The 1978 legislative history regarding efforts to discharge student loan debt concerned 'abuses' of the 'bargain.' . . . There is no abuse here. . . . Collier warned that changes in the Ford Program ought not to be viewed as an implied repeal of 11 U.S.C. § 523(a)(8). Rather, this Court must 'decide how much personal sacrifice society expects from individuals who accepted the benefits of guaranteed student loans but who have not obtained the financial rewards they had hoped to receive as a result of their educational expenditures.' (Collier on Bankruptcy, 15th Edition ¶ 523.14). Ms. Bene has satisfied that standard. This loan must be discharged.").
Rumer v. American Educ. Servs. (In re Rumer), 469 B.R. 553 (Bankr. M.D. Pa. Mar. 5, 2012) (France) ($456,000 in 14 student loans to joint debtors was nondischargeable after application of factors in Brunner v. New York State Higher Education Services Corp., 831 F.2d 395 (2d Cir. Oct. 14, 1987) (Lumbard, Oakes, Kearse). Loans all qualified as education loans under § 523(a)(8)(B) based on definition of qualified education loan under 26 U.S.C. § 221(d)(1). Each college attended by debtors was Higher Education Act Title IV eligible when loans were made.).
Espinosa v. United Student Aid Funds, Inc. (In re Espinosa), No. 4:10-ap-01202-EWH, 2011 WL 2358562 (Bankr. D. Ariz. June 8, 2011) (Hollowell) (On remand, student loan creditor willfully violated discharge injunction by knowingly attempting collection of debt that was discharged by confirmed plan. Espinosa was entitled to damages including attorney fees and costs from August 12, 2004, to date of Supreme Court decision in 2010.).
Stevenson v. Educational Credit Mgmt. Corp. (In re Stevenson), No. 08-1245, 2011 WL 1362595 (Bankr. D. Mass. Apr. 11, 2011) (Feeney) (Issues of fact prevented summary judgment in § 523(a)(8) litigation. Applying totality-of-circumstances test from Bronsdon v. Educational Credit Management Corp. (In re Bronsdon), 435 B.R. 791 (B.A.P. 1st Cir. Sept. 21, 2010) (Haines, Lamoutte, Tester), availability of Income Contingency Repayment Program was merely one factor in analysis.).
Uber v. Nelnet, Inc. (In re Uber), 443 B.R. 500 (Bankr. S.D. Ohio Mar. 8, 2011) (Humphrey) (Agreeing with Educational Credit Management Corp. v. Kirkland (In re Kirkland), 600 F.3d 310 (4th Cir. Mar. 12, 2010) (Motz, King, Agee), and McAlpin v. Educational Credit Management Corp. (In re McAlpin), 278 F.3d 866 (8th Cir. Jan. 28, 2002) (McMillian, Arnold, Bye), bankruptcy court lacked subject matter jurisdiction in post-discharge adversary proceeding to determine amount of postpetition interest and costs owed student loan creditors. Court had subject matter jurisdiction to determine whether creditors had complied with confirmed plan with respect to accounting for payments on prepetition claim.).
In re Kinney, No. 10-06411-8-RDD, 2010 WL 5376217, at *4 (Bankr. E.D.N.C. Dec. 27, 2010) (Doub) (United Student Aid Funds, Inc. v. Espinosa, 559 U.S. 260, 130 S. Ct. 1367, 176 L. Ed. 2d 158 (Mar. 23, 2010), made it "clear that a plan which proposes to discharge student loan obligations without an undue hardship determination violates §§ 1328(a)(2) and 523(a)(8)." Plan would not be confirmed that provided for partial discharge of student loan without adversary proceeding to determine undue hardship.).
Corso v. Walker (In re Walker), 439 B.R. 854 (Bankr. W.D. Pa. Oct. 22, 2010) (Deller) (Debtor's obligation to former spouse to pay college loan for parties' daughter was not educational loan for purposes of § 523(a)(8) exception; former spouse was not creditor contemplated by § 523(a)(8).).
Daniels v. Bank One (In re Daniels), No. 10-00044, 2010 WL 3733889 (Bankr. D. Mont. Sept. 15, 2010) (unpublished) (Kirscher) (Applying Brunner v. New York State Higher Education Services Corp. (In re Brunner), 831 F.2d 395 (2d Cir. Oct. 14, 1987) (Lumbard, Oakes, Kearse), good-faith factor was not satisfied when debtor had made no effort to consider income contingent repayment plan. Although debtor would not receive discharge until 2015, under Educational Credit Management Corp. v. Coleman (In re Coleman), 560 F.3d 1000 (9th Cir. Mar. 25, 2009) (O'Scannlain, Hawkins, Selna), determination of discharge complaint was ripe.).
In re Wright, No. 09-06323-JKC-13, 2010 WL 3522231, at *2-*3 (Bankr. S.D. Ind. Sept. 7, 2010) (Coachys) (Citing United Student Aid Funds, Inc. v. Espinosa, 559 U.S. 260, 130 S. Ct. 1367, 176 L. Ed. 2d 158 (Mar. 23, 2010), confirmed plan was binding and immune to Rule 60 challenge when no one objected to language discharging student loan based on hardship. "[T]he Court wants to make it extremely clear to Debtors and their counsel—and to the consumer bar in general—that it takes an extremely dim view of their inclusion of the Student Loan Provision. Counsel insisted that he included the provision in order to treat 'every claim' in the plan. If that were true, then the plan presumably could have merely stated only that Debtors intended to file an adversary proceeding to seek discharge of their student loan obligation as an undue hardship. . . . Debtors' counsel and the consumer bar are well advised to take heed of [the Espinosa Court's] language and to exercise more care in how they treat student loans within Chapter 13 plans; otherwise they could, and probably should, be looking down the barrel of a Rule 9011 motion for sanctions." Trustee's motion to set aside confirmation order due to mistake was denied, when alleged mistake was not type contemplated by Rule 60(b)(1).).
In re Moon, No. 04-05679-LT13, 2010 WL 3186711 (Bankr. S.D. Cal. Aug. 9, 2010) (unpublished) (Bowie) (Distinguishing United Student Aid Funds, Inc. v. Espinosa, 559 U.S. 260, 130 S. Ct. 1367, 176 L. Ed. 2d 158 (Mar. 23, 2010), ECMC did not violate discharge injunction when discharge order provided that student loan debt was excepted from discharge.).
In re Varick, No. A09-00241-DMD, 2009 WL 8478296 (Bankr. D. Alaska Aug. 7, 2009) (MacDonald) (Plan providing for discharge of student loans is denied confirmation on objection from trustee.).