Debtor filed for bk filed 2016 (2nd bk, also filed 2005). He listed $205,000 student loans incurred 24 years ago. He filed adversary suit claiming he couldn’t repay student loan due to undue hardship.
He works as security guard ($27.50 hr.) and his wife is full time teacher, with 4 children. He has a BA and two Master’s degrees. He did not work 92-95, as he returned home to Haiti. In 2002 returned to Haiti to care for his mother. 2015 started craft beer business that failed, his total investment approx. $91,000. He also visited China, Taiwan, Mexico, London and Sweden to generate business. (It would seem he is over-educated, and one can’t tell if the business was for fun or for profit).
Debtor claims his loans have “now ballooned to over $200,000 after 28-years of diligently delaying payment through the proper use of forbearances and deferments or negotiated alternative repayment plans.” (Actually, that doesn’t sound good.) Forbearance ran out 2015, applied for income-contingent repayment loan.
DOE email debtor his debt was $205,000 and he could repay $331 a month for 25 years. Or $1189 until he turned 65.and then terminate
Debtor said he wanted to retire at 60 and save for retirement rather than pay student loan (that doesn’t sound that good either), he could not pay $1189, that would also leave him with tax liability, and he had support his daughter’s college education.
The 3 prong test for undue hardship, is known as Brunner test.
First prong- minimal standard of living.
The Court looks to the income on a household basis, not just person filing.
Household income (H & W) $6603. Living expenses- H $48 left over and W $536 for total of $584, therefore, he could repay $331 per month, and this is before making expense adjustments.
Expense Adjustment: Internet, cell phone, cable tv not necessary for maintain minimum standard of living. Voluntary retirement contribution not necessary. His budget list $340 cell phone exp., and $500 credit card payments even though those debts have been discharged in bankruptcy (this was a bold attempt to inflate expenses.) Therefore, he has more than enough to make $331 to make monthly payments requested by the government.
Second Prong – Financial position hopelessness.
He is not ill, disable, doesn’t have large number of children. Has more than $331 per month left over, no, he is not hopeless.
Third Prong – good faith.
Has he made any good faith payments in past 25 years? Continual deferments without making a payment or seeking out other payment options does not show good faith. He also refused to accept DOE offer of $331 per month
Conclusion – NOT dischargeable.
One other fact, debtor filed without assistance of counsel.
While there are a few cracks in the non-discharge student loans, and some Courts are finding these loans are dischargeable, I don’t think even those Courts would find this case dischargeable.
Marvin
Law Office Marvin Mann
https://scholar.google.com/scholar_case?case=11509212493725776749&hl=en&lr=lang_en&as_sdt=2003&as_vis=1&oi=scholaralrt
