47 -Year-Old Debtor Earning $63,000 Per Year who Contributed to Retirement Account Failed First Prong of Brunner Test and Could Not Discharge Student Loans

47 -Year-Old Debtor Earning $63,000 Per Year who Contributed to Retirement Account Failed First Prong of Brunner Test and Could Not Discharge Student Loans

Almost five years after filing her Chapter 13 Petition, and contemplating the entry of her discharge, the Debtor filed her Complaint, wherein she asks the Court to rule that she is discharged from having to repay her consolidated student  loans to ECMC.

After receiving her master’s degree in 2003, the Debtor was employed in a variety of jobs which compensated her at rates ranging from $47,000 in 2003, to a current salary of $63,000.  In addition to her current salary of $63,000, the debtor receives benefits, including medical insurance for her and her spouse.   The Debtor also acknowledged at trial that without her education she would not likely have her current position and that she derived a “significant benefit from the education in terms of her employment.”

The Debtor consolidated her student loans. Following the consolidation, the Debtor received various deferments and  grants of forbearance such that the she did not make any payments on account of the Consolidated Student Loan prior to the filing of her chapter 13
case in 2010.  Accordingly, her Consolidated Student Loan was not in default status when she filed her case.  Since the consolidation in 2003, only one payment has been made on the Consolidated Student Loan.  That payment was made during the pendency of this chapter 13 case and was disbursed by the Chapter 13 Trustee in the amount of $358.38.

During the trial, evidence was presented as to each of the three prongs of
the Brunner test.  To meet the first prong under Brunner, the Debtor must
demonstrate, based on current income and expenses, that she could not afford
to “maintain a minimal standard of living” if forced to repay her student loans.
With respect to evaluating this claim, this Court observes that a minimal
standard of living:

is not a fixed measure, and the concept is not defined by bright lines.  The upper limits of a minimal standard of living generally allow for a debtor to purchase “the basic necessities, such as food, clothing, housing and medical treatment.”  While it does not relegate a debtor to the depths of “abject poverty, a minimal standard of living does not accommodate ‘luxury type expenses.’’’ After providing for his or her basic needs, a debtor may not use her . . . financial resources for discretionary expenditures in lieu of repaying student loan creditors.

In re Crawley, 460 B.R. 421, 436 (Bankr. E.D. Pa. 2011)


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