46 Year-Old Debtor, who Earned $63,000/year and Supported Adult Child Failed First Prong of Brunner Test and Could Not Discharge Student Loans

46 Year-Old Debtor, who Earned $63,000/year and Supported Adult Child Failed First Prong of Brunner Test and Could Not Discharge Student Loans

The Department of Education (“DOE”) seeks summary judgment on the complaint filed against it by the Debtor because it asserts that she owes educational loans which are presumptively nondischargeable under §523(a)(8) of the Bankruptcy Code and the Debtor cannot meet her burden to overcome that presumption. The Debtor argues that summary judgment is not appropriate because she will face an undue hardship if her student loan debt is not discharged. She alleges that she cannot maintain a minimal standard of living while making repayments, that such condition will continue for the foreseeable future, and that despite good faith efforts to repay her debts, these conditions will not change.

On January 23, 2015, the Debtor filed her petition seeking Chapter 7 bankruptcy relief. She then filed her complaint initiating this adversary proceeding on August 14, 2015. She received a discharge in her Chapter 7 case while this adversary proceeding remained unresolved on August 25, 2015. On October 25, 2015, she then filed a second bankruptcy petition, this time seeking Chapter 13 relief. Confirmation of the Debtor’s Chapter 13 plan has been held in abeyance pending the resolution of this adversary proceeding.

The Debtor is a 46-year-old finance and business administrator for the West Virginia University School of Dentistry. She currently lives with and supports her teenage son and adult daughter. She obtained a Bachelor’s degree and Master’s degree in public administration from West Virginia University in 1995 and 1999, respectively. In order to fund her education, she borrowed money through the William D. Ford Federal Direct Loan Program and also borrowed money for her children’s education. Those obligations now total $333,423.85 in outstanding principal and interest. As of December 15, 2016, the balance owed to the DOE broke down as follows: $6,013.35 for loans related to the education of her children and $327,410.50 for her own education.

On January 23, 2015, when the Debtor filed her Chapter 7 petition, her income was scheduled at $2,905.94 and monthly expenses at $2,904.92. Between January 23, 2015 and November 25, 2015, however, both her income and expenses increased considerably. The Debtor’s most recent schedules I and J, as amended on November 25, 2015, in her Chapter 13 case, list her monthly net income at $3,979.33 and her household expenses at $3,493.08. The change in her income and expenses resulted in an increase in her net monthly income after expenses from $1.02 a month to $486.25 a month. Her Amended Schedule J shows that each month the Debtor  pays $1,050 in rent, $478.60 in utility costs, $750 in household supplies and food, $30 for clothing and related costs, $50 for personal care, $128 for medical and dental expenses, $200 for transportation-related expenses, $19.86 for life insurance, $75.80 for health insurance, and $152 for car insurance. She also donates $525 to charity each month. She did not schedule her monthly car payment which is an additional $486.25, and that, in essence, constitutes the proposed Chapter 13 plan payment. Including that expense, the Debtor’s monthly income and expenses are identical. Additionally, the Debtor did not list any student loan payments on Schedule J or provide for them in the proposed Chapter 13 plan.

Although the Debtor is currently employed full-time, she suffers from a number of ailments. Specifically, she has diabetes and chronic pain, both of which require medications, however, she remains capable of working. Her condition is chronic, although her pain is currently in remission. Moreover, she will be on pain medication and medication for diabetes for the rest of her life. However, because she is currently capable of working, relief is not available to her under the DOE’s Total and Permanent Disability discharge provisions.

As a business administrator for the West Virginia University School of Dentistry, the Debtor receives an annual salary of $63,000. She recently was transferred to this position, at which time she received a pay raise. Despite the salary increase, she transferred departments and positions unwillingly. However, the Debtor was informed that her position would be eliminated on July 1, 2017 due to budgetary constraints. The Court is unaware what changes, if any, have occurred regarding the Debtor’s employment. Notably, she has not amended her Schedule I in her Chapter 13 case or otherwise notified the court of any change in her employment or financial circumstances.

Although the Debtor is not currently enrolled in the DOE’s Income Contingent Repayment Plan, she is eligible to participate in the program. If she elected to participate in the program, at her current income, she would be obligated to pay approximately $480 per month.


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