BAP Affirms Bankruptcy Court’s Denial of Student Loan Discharge for Single Mother on Food Stamps and Medicaid Where her Income Based Payment Would be $0

BAP Affirms Bankruptcy Court’s Denial of Student Loan Discharge for Single Mother on Food Stamps and Medicaid Where her Income Based Payment Would be $0

Plaintiff  appeals from the Bankruptcy Court’s determination that she failed to meet her burden of proof to establish an undue hardship pursuant to 11 U.S.C. §523(a)(8) to discharge her student loans owing to the United States Department of Education.

In 2011 Debtor obtained a bachelor’s degree in anthropology. Following graduation she participated in a volunteer internship position in her field of study. From 2011 until May 2013 she did not work. Since that time she has only worked in part-time positions. To finance her education Debtor borrowed funds from Department of Education (“DOE”), Aspire Resources, Inc. (“Aspire”) and The Scholarship Foundation. No payments have been made on any of these student loans and at the time of trial these lenders were owed more than $79,000.

In a detailed ruling the Bankruptcy Court concluded that the DOE and Aspire loans were not eligible for discharge based upon undue hardship. Debtor appeals this decision raising two primary arguments. First, that the Bankruptcy Court engaged in speculation related to her employment history, search for employment, future employment and her housing expense. Second, that the Bankruptcy Court committed error by misinterpreting, discounting or ignoring the evidence of Debtors’s unique and unusual circumstances in reaching its conclusion that she does not qualify for discharge of her student loans.

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