Mendenhall v. Navient Corp.

UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF IDAHO

)

In re: )

) Bankruptcy Case.

STEPHEN DERRICK MENDENHALL, ) No. 18-41006-JMM

)

Debtor. )

)

)

STEPHEN DERRICK MENDENHALL, )

)

Plaintiff, )

) Adversary Case.

v. ) No. 19-8010-JMM

)

NAVIENT CORPORATION and U.S. )

DEPARTMENT OF EDUCATION, )

)

Defendants. )

)

Introduction

Stephen Derrick Mendenhall “(Plaintiff”) seeks a discharge of his student loan

debt on the basis of undue hardship. Dkt. No. 16. The lender, Navient Corporation

(“Defendant”) opposes the discharge. The parties tried the case before this Court, after

which the matter was deemed under advisement. After considering the briefing, exhibits,

MEMORANDUM OF DECISION ̶ 1

testimony, and oral argument presented, as well as the applicable law, the Court now

issues the following decision. Fed. R. Bankr. P. 7052; 9014.1

Findings of Fact

Plaintiff, now forty years old, attended Brooks Institute of Photography in

California from July 2004–September 2007, at which time he graduated with a bachelor’s

degree in film and video production. That educational institution has been the subject of

a class action suit based upon fraudulent misrepresentations to prospective students, and

has since closed its doors.

In order to pay the tuition, Plaintiff obtained both federal and private loans. His

federal loans total about $75,000 and are owed to the United States Department of

Education, but are serviced by Defendant (“Federal Loans”). The Federal Loans are

currently in forebearance after Plaintiff filed a borrower defense application for students

who were defrauded by the school. His claim was denied, but he and other similarly

situated Brooks Institute graduates have appealed that decision, which appeal is pending.

Prior to the forebearance, the Federal Loans were approved for income-based repayment,

and the payment was approximately $300 per month. While the Department of

Education was originally a named defendant in this action, it entered into a stipulation

with Plaintiff by which the parties agreed that the loans owed to it by Plaintiff do not

impose an undue hardship upon Plaintiff and are not dischargeable. Dkt. No. 32 at ¶¶ 5-

1 Unless otherwise indicated, all chapter and section references are to the Bankruptcy Code, 11 U.S.C.

§§ 101-1532.

MEMORANDUM OF DECISION ̶ 2

6. A judgment and order of nondischargeability was entered by this Court on February

26, 2020, Dkt. No. 35, and as such, the United States Department of Education did not

participate in the trial.

The remaining loans are private loans owed to and serviced by Defendant,

formerly known as Sallie Mae, and it is these loans that are specifically at issue. Between

March 12, 2004 and September 20, 2005, Plaintiff applied for three separate loans with

Sallie Mae (“Loans”). Ex. 200. Following approval of the Loans, Sallie Mae or

Defendant disbursed a total of $76,654 in funds to Plaintiff between July 2004 and May

2006. Ex. 202. However, thanks to the capitalization of interest,2 the passage of time,

plus a myriad of added fees, by July 2013 the principal was $143,552.06, the

accumulated interest was $76,912.39, and the accumulated fees were $39,893.20, for a

grand total of $260,357.65 owed. Id. As of sometime after October 31, 2018, the interest

rate on the Loans with Defendant was 13.625%. Ex. 205 at p. 6.3 As of November 1,

2018, the amount owed on the Loans totaled $407,912.84. Ex. 104.

2 When interest is capitalized, it becomes principal. As such, from that time forward, interest literally

accrues on interest.

3 The only reference to the interest rate on the Loans is found in responses to Defendant’s first set of

interrogatories. Ex. 205. Although the document is undated, Plaintiff’s answer references the balance of

the Loans as of October 31, 2018, thus the Court may presume that the document is dated sometime after

that date. Ex. 205 at p. 5. At trial, the Court questioned the parties about the current interest rate, but they

did not know what it was.

MEMORANDUM OF DECISION ̶ 3

For a short time following graduation, Plaintiff testified that he made small4

payments toward the Loans, but is unclear about how the payments were disbursed. He

further testified that in the early years of the Loans, he was required to make a $150

payment each time he requested forebearance.

Upon graduating, Plaintiff discovered that film work is often contract work by

nature and generally does not produce the income levels advertised by the school.

Rather, an individual with his skills and education is usually hired on contract to

complete a certain job. The work is not steady, and often provides no benefits. More

concerning, the pay did not come even close to providing the “doctor’s salary” promised

in the advertisements for the school, which suggested their students would pay a doctor’s

tuition but would receive a doctor’s wages in the end. As noted above, these claims gave

rise to a lawsuit. Plaintiff did not actively participate in this suit,5 but believes as a

graduate he may be part of the class.

In 2008, Plaintiff married Alina Mendenhall. He continued to perform contract

work, but found the work generated a very modest income, which was not steady and

provided no benefits. The couple moved around in search of employment opportunities.

Between 2007 and 2015, the couple lived in several states, and Plaintiff had a couple of

4 He refers to the payments as “token” payments, see Ex. 205 at pp. 7, 14; at trial he testified that he made

$600 monthly payments for a time.

5 Plaintiff testified that he filed a borrower defense claim which was initially denied, and that decision has

been appealed. The suit against the Brooks Institute was apparently a separate, possibly class action,

litigation. There was no additional evidence provided to the Court about either the claim or the lawsuit.

MEMORANDUM OF DECISION ̶ 4

salaried jobs, but never earned more than $45,000 annually. This salary barely met the

needs of their growing family, and did not provide sufficient income to repay the Loans.

In 2015, Plaintiff obtained an hourly position with Brigham Young University –

Idaho (“BYU-I”), located in Rexburg, Idaho, as the school’s video production

coordinator. His hourly wage paid him about $45,000 annually. However, he earned

overtime and, importantly, he was provided with health insurance coverage, which he had

previously been paying for out of pocket in the amount of nearly $500 per month. Since

beginning his work at BYU-I, Plaintiff has applied for and received several promotions.

Beginning in 2018, he was promoted to his current position of media creation

manager, in which he supervises three employees and numerous student employees. The

position is salaried, with a current gross income of approximately $72,300 annually, or

$3,012.48 gross per paycheck, which translates to roughly $6,024.96 gross per month.

Exs. 100; 104. Plaintiff receives cost of living increases annually of about 2.5–3 percent,

but does not foresee any increases in income beyond that. He has also sought other jobs

even while at his present employment, including internal jobs at BYU-I. It is his hope to

one day obtain a master’s degree or to perhaps move into a faculty position, in order to

further increase his income.

Since graduation, Plaintiff has sought to enhance his skills. He has obtained

certificates in specialized editing software, sound design, color editing, and even drone

piloting. Some of these courses were subsidized by BYU-I. Until his most recent

promotion, Plaintiff regularly sought outside contract work to provide additional income,

MEMORANDUM OF DECISION ̶ 5

including contract video editing and providing training to others. He established an “S”

corporation through which he managed his side work. But the work was always

inconsistent. On a good month, Plaintiff testified he would receive about $200, but other

months he netted nothing.6 Moreover, the side work comes with some attendant

expenses, such as having to keep and maintain a separate computer for the video editing,

as well as tax preparation costs. Since receiving the most recent promotion at BYU-I,

however, Plaintiff does not actively seek as much contract work. The supervisory nature

of his position does not lend itself to such outside work, as Plaintiff finds he is essentially

always “on call” to answer questions and provide assistance.

Plaintiff’s spouse, Alina Mendenhall, has only worked outside the home for a

short time early in their marriage, and has completed only a small amount of inconsistent

post-high school education. She began her studies at Boise State University, but then the

couple moved to Utah. While living there, she began dental assistant school, but then the

family moved again so she had to give up those studies. After they had children, Alina

remained at home to raise them. Given her education and general lack of work

experience, she believes at best she could net little more than the cost of childcare for the

children. However, a benefit of employment at BYU-I is that spouses may attend classes

at no cost, having to pay only for textbooks. She is currently studying Family and

Consumer Science, with a desire to obtain a teaching degree and teach in the secondary

6 Plaintiff’s schedule I indicates that he earns $448 monthly from this outside source.

MEMORANDUM OF DECISION ̶ 6

schools, but recognizes that Rexburg, Idaho is not a large job market. Moreover, she

currently takes only 1-2 classes per semester due to the demands of raising small

children, so she anticipates it will be at least 4-5 years before she can graduate. She

occasionally brings home a small amount of income by babysitting other children on an

as-needed basis.

The family has always been careful with their finances and their assets are modest.

The family of six owns two vehicles. Both were purchased used, are over ten years old,

and have high mileage. Ex. 104. They have $15,000 in a 401k and $4,500 in another

retirement account. Id. They rent a home and make monthly rent payments in the

amount of $1,175. Ex. 103. The “S” corporation, Mendenhall Inc., has $268 in assets.

Ex. 104.

The family takes infrequent and inexpensive vacations, and generally live quite

modestly. Alina has a credit card, but does not maintain a balance on the card. They

save for retirement, rainy days, and for larger purchases such as vehicle purchases and

repairs. At the time of the trial, Plaintiff was depositing approximately eight percent of

his gross income into a savings account, totaling $241.84 per paycheck.7 Exs. 100; 102.

Plaintiff and Alina testified they do this because their budget will not support

emergencies and large expenses, so they save each month for those eventualities. They

tap this fund when car and appliance repairs require it. The savings balance has been

7 As will be discussed below, the Court is using the most current income figures available to it.

MEMORANDUM OF DECISION ̶ 7

able to build up recently—$13,909.89 at the time of trial8—but they have an expensive

car repair coming up, and new tires will be necessary in the near future. Ex. 102.

Moreover, due to their current debt-to-income ratio, it is extremely difficult for Plaintiff

and Alina to qualify for credit, and next to impossible to obtain a loan for a large

purchase, such as for a vehicle, and so they must save up as much as possible in advance.

For example, they had to use Alina’s mother as a credit reference to obtain an

approximately $8,000 loan to buy one of their used family vehicles. They have

completely drawn down the savings fund in the past, when necessary.

Plaintiff has funds deducted from his paycheck to go toward retirement. The sum

of $210.89 per paycheck is deposited into a 401(k) account. Ex. 100. These retirement

investments reflect just over seven percent of his gross income each paycheck. The

couple has met with financial managers who have recommended that they put even more

money toward retirement, but they cannot afford to do so. Plaintiff’s paystub also

reflects an employer contribution to his retirement account, but it is not clear whether

Plaintiff must make a retirement contribution in order to qualify for the employer

contribution.

Finally, Plaintiff also makes a charitable contribution to his church of

approximately $400 per month, which represents approximately ten percent of the

8 Some of this total is apparently attributable to the 2020 CARES Act stimulus payment, which Plaintiff

testified he deposited into the savings account.

MEMORANDUM OF DECISION ̶ 8

couple’s net monthly income. Ex. 103. Both Plaintiff and Alina testified that they do not

consider this optional or discretionary.

In 2009, the minimum payment on the Loans was $1,900 per month. Ex. 205 at

pp. 7; 14. As of 2018, Plaintiff’s minimum monthly payment requirement was

$2,990.94, but payments in that amount would never pay off the balance, especially given

the 13.625% interest rate. Ex. 205 at pp. 5–6. Plaintiff estimates that in order to pay

down the Loans over a 20-year period, monthly payments of at least $5,000 would be

required, and in the end, total payments on the loans would be approximately $1.2

million. Id. at p. 6. He testified that he has sought help from debt counseling/debt

reduction services, and in 2010, the counselor informed Plaintiff that a monthly payment

of $4,500 would be necessary to pay down the debt; in the Fall of 2018, another

counselor indicated that a payment of nearly twice that amount would be necessary. Id.

at p. 8.

Since graduation, Plaintiff has attempted many times to negotiate a payment plan

with Defendant. He testified that he spoke with the servicer of the Loans numerous times

per year early on, and once or twice per year recently. Plaintiff testified that Defendant

has never offered an income-based solution, or anything other than payments of at least

$1,900 per month. It has offered forebearance, and Plaintiff has accepted that offer on a

number of occasions. However, somewhat belatedly, Plaintiff discovered that each time

the Loans were placed into forebearance, the interest was capitalized, and as such, it

MEMORANDUM OF DECISION ̶ 9

became principal, and interest began to accrue on that new, higher, amount, driving the

balance up considerably.

On three occasions, Plaintiff has attempted to use bankruptcy to manage his

student loan debt. The first time was in Iowa in 2010, when he discharged his debts

(largely his wife’s wedding ring, a vehicle loan, and a small amount of credit card debt)

so that he could free up sufficient income to pay off his student loans. But even with the

consumer debt discharged, he still did not have sufficient income to make any significant

headway on the student loan debt.

The second bankruptcy filing occurred in Idaho in 2017. He filed a chapter 13

case, In re Mendenhall, 17-40592-JDP, but the case was dismissed because Plaintiff’s

student loan debts exceeded the maximum debt permissible under chapter 13. Finally,

Plaintiff filed the instant bankruptcy petition on November 1, 2018. Ex. 104. Alina is

not listed as a co-debtor on the petition. Id.

The schedules list a total of $482,700.84 in student loans, comprising the Federal

Loans with totaled $74,788 at the time of filing, and the Loans at issue in this decision,

totaling $407,912.84. Ex. 104. Notably, the student loans are the only debts listed on

Plaintiff’s schedules. Id. The schedules were later amended to include an asset listed as

“potential recovery under multi-state settlement against Career Education Corp” in an

unknown amount. In re Mendenhall, 18-41006-JMM at Dkt. No. 20.

Plaintiff estimates receiving a tax refund in the amount of $4,100 this year, but

testified that some of it will be utilized to pay the tax preparation professional. He also

MEMORANDUM OF DECISION ̶ 10

already received $4,400 from the Internal Revenue Service for the 2020 CARES Act

stimulus payment. Plaintiff deliberately opted to not pay those amounts toward the

student loan debt, reasoning that any such payment would not make any impact on the

principal owed.

Plaintiff commenced this adversary proceeding on January 22, 2019, seeking a

discharge of his student loan debt. As noted above, he stipulated with the Department of

Education on the Federal Loan, and thus that loan is not part of this decision. The Court

conducted a trial on July 16, 2020, and the matter was thereafter taken under advisement.

Conclusions of Law and Disposition

A. Dischargeability of Student Loans Generally

Section 523(a)(8) of the Bankruptcy Code provides that certain kinds of

educational debts are not discharged in bankruptcy unless repayment of the debt would

result in undue hardship.9 Specifically, this section has been interpreted to except four

types of educational claims from discharge:

9 The Code provides that a discharge does not discharge an individual debtor from any debt–

(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[.]

MEMORANDUM OF DECISION ̶ 11

(1) loans made, insured, or guaranteed by a governmental unit; (2) loans

made under any program partially or fully funded by a governmental unit or

nonprofit institution; (3) claims for funds received as an educational

benefit, scholarship, or stipend; and (4) any “qualified educational loan” as

that term is defined in the Internal Revenue Code. Institute of Imaginal

Studies v. Christoff (In re Christoff), 527 B.R. 624, 632 (9th Cir. BAP

2015) (quoting Benson v. Corbin (In re Corbin), 506 B.R. 287, 291 (Bankr.

W.D. Wash. 2014)).

In re Kashikar, 567 B.R. 160, 165 (9th Cir. BAP 2017).

In the case at bar, Plaintiff has not advanced the argument that the loans he entered

into for the purposes of attending the Brooks Institute do not fall within the ambit of

§ 523(a)(8). As such, they are nondischargeable in Plaintiff’s bankruptcy case unless

Plaintiff can demonstrate an undue hardship.

B. “Undue Hardship” and the Brunner Test

While the Code does not contain a definition of “undue hardship,” a standard has

emerged, and endured, despite significant increases in the cost of college tuition. In this

circuit, the consideration of undue hardship relies on what is commonly known as the

“Brunner test,” first established in the case of Brunner v. New York State Higher Educ.

Servs., Corp. (In re Brunner), 831 F.2d 395, 396 (2d Cir. 1987), and adopted by the Ninth

Circuit in the case of United Student Aid Funds, Inc. v. Pena (In re Pena), 155 F.3d 1108,

1112 (9th Cir. 1998).

MEMORANDUM OF DECISION ̶ 12

Under this standard,10 the Plaintiff must prove that: (1) he cannot maintain, based

on current income and expenses, a “minimal” standard of living for himself and his

dependents if required to repay the Loans; (2) additional circumstances exist indicating

that this state of affairs is likely to persist for a significant portion of the repayment

period; and (3) he has made good faith efforts to repay the Loans. Educ. Credit Mgmt.

Corp. v. Mason (In re Mason), 464 F.3d 878, 882 (9th Cir. 2006) (citing In re Pena, 155

F.3d at 1111; Brunner, 831 F.2d at 396). The Court will consider each of these prongs in

light of the facts presented in this case.

C. Application of the Brunner Test to the Facts Presented

1. Minimal Standard of Living

This first prong necessitates that Plaintiff prove he cannot maintain a minimal

standard of living if he is required to repay the Loans. The Brunner test requires the

Court to consider the Plaintiff’s “current” income and expenses. In re Pena, 155 F.3d at

1112. To meet this requirement, he must demonstrate more than simply tight finances,

but need not reach the level of utter hopelessness. Educ. Credit Mgmt. Corp. v.

Jorgensen (In re Jorgensen), 479 B.R. 79, 87 (9th Cir. BAP 2012) (quoting United

10 In his brief and again at trial, Plaintiff asked this Court to disregard the binding precedent in this

jurisdiction and utilize some other, unspecified, standard. Dkt. No. 45 at p. 4. This Court declines to

accept that invitation. The Brunner test, via Pena, is the law of the Ninth Circuit, and this Court is not at

liberty to ignore that precedent. However, this Court urges the Ninth Circuit to reassess the test for undue

hardship in light of changes to § 523(a)(8) since the adoption of Brunner, as well as the realities of

modern student lending and college tuition costs. See In re Roth, 490 B.R. 908 (9th Cir. BAP 2013)

(Pappas, J., concurring).

MEMORANDUM OF DECISION ̶ 13

Student Aid Funds v. Nascimento (In re Nascimento), 241 B.R. 440, 445 (9th Cir. BAP

1999)). Rather, the proper inquiry is whether it would be “unconscionable” to require

Plaintiff to take steps to earn more income or reduce his expenses. Pa. Higher Educ.

Assistance Agency v. Birrane (In re Birrane), 287 B.R. 490, 495 (9th Cir. BAP 2002);

Rifino v. United States (In re Rifino), 245 F.3d 1083, 1088 (9th Cir. 2001); In re

Nascimento, 241 B.R. at 445. Plaintiff is expected to live, however, within the strictures

of a frugal budget in the foreseeable future. Ritchie v. Northwest Educ. Loan Assn. (In re

Ritchie), 254 B.R. 913, 917–18 (Bankr. D. Idaho 2000). In deciding whether Plaintiff

can maintain a minimal standard of living if required to repay the student loans, the Court

must carefully examine his monthly income and expenses. Id. (citing In re Pena, 155

F.3d at 1112; Weil v. U.S. Bank et al. (In re Weil), 00.2 I.B.C.R. 110, 111 (Bankr. D.

Idaho 2000)).

a. Plaintiff’s Income and Expenses11

Plaintiff’s most recent paystub12 indicates the following income and deductions:

11 For ease, the Court will use rounded numbers.

12 In order to consider the most current salary and deduction figures, the Court utilized Plaintiff’s most

recent paystub, dated June 23, 2020, and because Plaintiff is paid bi-monthly, the Court multiplied each of

the figures by two in order to generate monthly totals. Ex. 100.

MEMORANDUM OF DECISION ̶ 14

Plaintiff’s Income

Gross monthly wages from BYU-I $6,025

Side income from “S” Corp. + 15013

Total gross monthly income $6,175

Payroll Deductions

Tax, Medicare, Social Security $574

Voluntary retirement: 422

Insurance: + 18314

Total payroll deductions: $1,179

Total Monthly Income Calculation

Total gross monthly income $6,175

Total payroll deductions -1,179

Total monthly income $4,996

The testimony and evidence admitted at trial, including the Plaintiff’s bankruptcy

schedules, proved the following expenses:

Expenses Listed on Schedule J

Rent $1,175

Renter’s insurance 13

Home upkeep expenses 100

Total utilities 480

13 While Plaintiff listed $448 in monthly income from the “S” Corporation in his schedules, at trial he

testified that “on a good month,” his side jobs would net $200, but some months he made no extra

income. He also testified that those side jobs bring in “less than $200” per month, and that his current

position leaves little time for outside projects. Based upon the evidence presented, for the purposes of

this analysis, the Court will include $150 in monthly income from outside jobs.

14 In reaching this figure, the Court included not only the pre-tax deductions, totaling $ 91.45 per

paycheck, but also the “24 Hour AD&D” totaling $0.28 per paycheck. At trial, Plaintiff testified that the

payroll deductions are now $1,179 per month.

MEMORANDUM OF DECISION ̶ 15

Food/housekeeping 1,05015

Education costs 100

Clothing and laundry 200

Personal care products 150

Medical and dental expenses 276

Transportation 200

Entertainment 20

Life insurance 62

Vehicle insurance 86

Tax preparation and home office supplies 50

Birthday/holiday gifts 75

Avery Law 300

Alina’s credit card payment + 25

Total monthly expenses on schedule J $4,36216

Additional Expenses Described at Trial

Charitable contributions $400

Savings deposits + 484

Total additional expenses $884

Total Expense Calculation

Total monthly expenses from schedule J, as modified $4,362

Total additional expenses + 884

Total monthly expenses $5,246

Taking the Income and Expense totals together yields the following:

Net Monthly Income Calculation

Total monthly income $4,996

Total monthly expenses - 5,246

Net monthly income $ -250

15 Alina testified the monthly food expense is now over $1,000, as the children are getting older.

16 The Court recognizes the inherent fallacy of utilizing income numbers from June 23, 2020 and expense

figures from the petition date, November 1, 2018. The Court has modified all expense figures where

there was trial testimony to support the modification.

MEMORANDUM OF DECISION ̶ 16

From this figure, the Court will consider if any of Plaintiff’s expenses are not

reasonably necessary for purposes of a § 523(a)(8) undue hardship analysis, in order to

determine if there is discretionary income left over with which to pay some or all of the

Loans. Craig v. Educ. Credit Mgmt. Corp. (In re Craig), 579 F.3d 1040, 1045 (9th Cir.

2009).

At trial, counsel for both Plaintiff and Defendant questioned Plaintiff and Alina

regarding some of their expenses. After considering the testimony presented, the Court

finds the bulk of Plaintiff’s expenses to be reasonable and consistent with a minimal

standard of living. However, there are certain expenditures which the Court will address

specifically: voluntary retirement contributions, life insurance, charitable contributions,

payments to Plaintiff’s counsel, and savings account deposits.

b. Retirement Contributions

The Ninth Circuit has held that whether to decline a discharge due to expenses

which may be beyond the minimal standard of living is discretionary with the court. In

re Birrane, 287 B.R. at 496 (citing In re Rifino, 245 F.3d at 1087). For example,

[s]ome courts have declined to discharge student loan debt where the

debtor's budget included items such as cable television, a new car, and

private schooling for a child. See Commonwealth of Va. State Educ.

Assistance Auth. v. Dillon, 189 B.R. 382, 385–86 (Bankr. W.D. Va. 1995)

(denying discharge of educational debt and finding debtor incurred $35 per

month on cable television); [Pa. Higher Ed. Assistance Agency v. Faish (In

re Faish), 72 F.3d 298, 307 (3rd Cir. 1995)] (rejecting claim of undue

hardship by debtor who wanted to buy a car rather than continue to take the

bus); Perkins v. Vermont Student Assistance Corp., 11 B.R. 160, 161

(Bankr. D. Vt. 1980) (finding that purchase of new car was self-imposed

hardship); Conner v. Ill. State Scholarship Comm’n (In re Conner), 89 B.R.

MEMORANDUM OF DECISION ̶ 17

744, 749 (Bankr. N.D. Ill. 1988) (finding that choosing to send children to

private school was self-imposed hardship).

In re Rifino, 245 F.3d at 1088.

Under the facts presented here, the Court cannot find that Plaintiff’s contributions

to his retirement account constitute expenses which are beyond the minimal standard of

living. At trial, Plaintiff testified that he deposits a total of $ 210.89 per paycheck, or just

over seven percent of his gross income into a Roth 401(k) account. Despite being

counseled to contribute a larger amount, he testified he cannot afford to do so. The Court

finds this amount to be reasonable. See McDowell v. Educ. Credit Mgmt. Corp. (In re

McDowell), 549 B.R. 744, 754–55 (Bankr. D. Idaho 2016) (this Court did not question a

retirement fund payroll deduction in the amount of approximately $300, which

represented about seven percent of her gross income, but simply utilized the net pay

amount included in the schedules); In re Carlson-Callow, No. 05-04260-JDP, 2008 WL

2357012, at *5 (Bankr. D. Idaho June 6, 2008) (acknowledging that courts have been

willing to allow a modest contribution by a student loan debtor towards retirement, and

finding that the debtor’s contribution of eight percent of her gross income to her 401(k)

account was reasonable, as was her repayment of a loan from her 401(k) account, but

held that the three percent contribution to the employee stock purchase plan was

excessive); Twitchell v. Educ. Credit Mgmt. Corp. (In re Twitchell), 04.2 I.B.C.R. 66, 67

(Bankr. D. Idaho 2004) (considering a 40-year-old debtor in poor health, the Court found

it “reasonable and prudent that [the debtor] set aside a modest sum each month for her

MEMORANDUM OF DECISION ̶ 18

retirement needs,” and that “forcing [the debtor] to indefinitely forego contributions to

her 401(k) plan seems short-sighted”). In the case at bar, the Court finds the Plaintiff’s

retirement contributions to be modest and reasonable.

c. Life Insurance

Plaintiff’s schedule J shows a $61.92 monthly expense for life insurance. Ex. 104.

As Plaintiff is the sole breadwinner for a family of six, it is entirely reasonable to carry

life insurance to provide for his dependents in the event something unfortunate befalls

him. The Court cannot conclude that this small expense is an impermissible expenditure

beyond a minimal standard of living under Brunner. See In re McDowell, 549 B.R. at

767 (“while [the creditor] criticizes it, the Court does not question Plaintiff's decision to

carry life insurance coverage that would, in the event of her death, pay her beneficiary

three times Plaintiff's annual income.”).

d. Charitable Contributions

Plaintiff contributes $400 per month to a charitable organization, specifically his

church. This Court has previously considered the issue of charitable contributions in the

context of a student loan discharge case. In In re Ritchie, this Court concluded that, “[a]ll

factors considered, the Court construes Section 523(a)(8) to exclude religious and

charitable donations as a proper expense item in determining whether a debtor would be

unduly burdened by not discharging qualifying student loan debt.” 254 B.R. at 921. This

Court reaffirmed that holding in Berchtold v. Educ. Credit Mgmt. Corp. (In re Berchtold),

328 B.R. 808, 814 (Bankr. D. Idaho 2005) (“As the Court has previously explained, a

MEMORANDUM OF DECISION ̶ 19

voluntary contribution to a charitable organization, while laudable, is clearly not a

necessary expense in [the § 523(a)(8)] context.) This Court sees no reason to deviate

from those prior decisions in this case.

Accordingly, the $ 400 Plaintiff spends monthly on charitable contributions is not

reasonable, and must be considered as available to pay back the Loans under the Brunner

test.

e. Payments to Counsel

Plaintiff’s schedules list a $300 monthly payment to Avery Law. At trial, Plaintiff

testified that those payments had concluded. Thus, the Court considers that amount now

available to pay back the Loans.

f. Savings

The Court will next consider whether Plaintiff’s contributions to a savings account

are expenses beyond a minimal standard of living under Brunner. The most recent

paystub indicates Plaintiff was depositing approximately eight percent of his gross

income into a savings account totaling $ 241.84 per paycheck, and $483.68 monthly.

Exs. 100; 102. Plaintiff testified these funds are intended for unbudgeted expenses,

vehicle repairs, and down payments toward the purchase of a vehicle or home. In this

undue hardship context, the Court views this expense with a wary eye, especially given

that the savings account balance totaled $13,909.89 at the time of trial.17 However, the

17 As noted above, some of that balance is likely attributable to Plaintiff’s receipt of a $4,400 stimulus

payment through the 2020 CARES Act.

MEMORANDUM OF DECISION ̶ 20

Court finds that Plaintiff has satisfactorily explained the need for such savings. Both

Plaintiff and his spouse testified that because their budget will not support large expenses,

they must save each month toward those eventualities, such as vehicle and appliance

repairs, moving expenses, tires for their vehicles, and the like. While saving in advance

for such eventualities is prudent, the Court is mindful of the fact that the expense

categories on schedule J include some of these same types of expenses. For example,

Line 4c includes expenses for “home maintenance, repair, and upkeep,” and Line 12

provides for the inclusion of transportation expenses other than car payments. While the

Court is necessarily concerned about double dipping by Plaintiff for these expenses, it

does not believe Alaina included those amounts in the expense figures on schedule J.

Plaintiff testified that she handles the finances for the family. In turn, she testified that

she simply took receipts and tallied them up to arrive at the expense numbers for

schedule J. There is no testimony or suggestion that she looked forward or estimated

foreseeable expenses and included those in her figures on schedule J, and thus the Court

concludes those types of expenses have not been counted twice.

Both Plaintiff and Alaina testified that they have an expensive car repair coming

up, and new tires will be necessary in the near future. In addition, they both are driving

vehicles that are more than ten years old with high mileage, and both testified that due to

their current debt-to-income ratio, they cannot qualify for credit or obtain a loan to pay

for larger expenses, requiring them to save in advance. Although a closer call, under the

particular facts presented here, the Court concludes that Plaintiff’s savings account

MEMORANDUM OF DECISION ̶ 21

contribution is not an expense beyond a minimal standard of living, and finds this

expense to be reasonable.

Based upon the foregoing, the Court concludes that Plaintiff’s monthly charitable

contributions and payments to his attorney are not reasonable. The Court will therefore

reduce Plaintiff’s monthly budget by those amounts. In re Craig, 579 F.3d at 1045.

Beginning with the monthly net income figure from above and taking the foregoing

analysis into account, the Court’s amended calculations are as follows:

Adjusted Monthly Net Income Calculation After Adding in Unreasonable Expenses

Monthly net income $ -250

Charitable contributions + 400

Payments to counsel + 300

Adjusted monthly net income $ 450

g. The Federal Loan

There is one more outstanding payment that was not discussed much at trial which

Plaintiff is not currently paying, but will almost certainly come back into play in the near

future. Recall, Plaintiff has a Federal Loan with a balance of approximately $75,000 that

is currently in forebearance awaiting the conclusion of an appeal of a decision rendered

against he and other similarly situated graduates of the Brooks Institute. Plaintiff has

stipulated with the Department of Education that the loan is nondischargeable. While this

Court cannot speculate about the likelihood of success in the appeal, nor of the relief

which would be granted in the event the appeal is successful, it seems unlikely the

Federal Loan would be wholly eliminated. Rather, when that loan comes out of

forebearance, it is subject to an income-based repayment plan. The payment amount,

MEMORANDUM OF DECISION ̶ 22

prior to entering forebearance, was $300 per month. While not a certainty, it is a distinct

possibility that Plaintiff will have to begin payments on that loan in the future.

Moreover, because the payments are income-based, they will increase as his income

does, and absorb much of the benefit of any future pay raises. It would indeed be short-

sighted of the Court to ignore the likelihood that Plaintiff will have to resume making

payments toward the Federal Loan at some point. Accordingly, “[Plaintiff’s] monthly

installment payments should be increased to reflect the payments [he] has now committed

to pay to [Department of Education]).” See In re McDowell, 549 B.R. at 767.

As such, the Court’s final tally reads this way:

Calculation of Monthly Net Income for Brunner Analysis

Adjusted monthly net income $450

Federal Loan payment expense - 300

Monthly net income for Brunner analysis $150

The testimony is undisputed that Defendant has never offered Plaintiff a minimum

payment of less than $1,900 per month, and that offer was made many years ago. The

evidence is also undisputed that in order to make any payment that would reduce the

principal and eventually pay off the full balance, the current minimum monthly payment

would need to be in excess of $4,500 per month. Accordingly, as to payment of the

entirety of the Loans, the Court finds this prong of the Brunner test has been met, as

Plaintiff could not maintain a minimal standard of living and repay the Loans in full.

However, because Plaintiff has $150 in net disposable income remaining after

MEMORANDUM OF DECISION ̶ 23

payment of expenses, the Court concludes that Plaintiff has not demonstrated that he

would be subject to an undue hardship as to the amount of $150 each month.

2. Persistence of Current Situation

In order to be eligible for a discharge of student loans, the second prong of the

Brunner test requires Plaintiff to prove both a current inability to repay the debt, as well

as that “exceptional” circumstances exist demonstrating “insurmountable barriers to the

[Plaintiff’s] financial recovery and ability to repay the student loan now and for a

substantial portion of the loan's repayment period.” Carnduff v. United States Dept. of

Educ. (In re Carnduff), 367 B.R. 120, 128 (9th Cir. BAP 2007) (citing Nys v. Educ.

Credit Mgmt. Corp. (In re Nys), 308 B.R. 436, 444 (9th Cir. BAP 2004) aff’d, 446 F.3d

938 (9th Cir. 2006) (citing In re Pena, 155 F.3d at 1114) (finding that the debtors

satisfied the Brunner test in part because “their unfortunate financial situation was likely

to continue for a substantial portion of the repayment period”))). Plaintiff must prove

these required facts by a preponderance of the evidence. Id. The Ninth Circuit explained

that this prong “is intended to effect ‘the clear congressional intent exhibited in section

523(a)(8) to make the discharge of student loans more difficult than that of other

nonexcepted debt.’” In re Rifino, 245 F.3d 1083, 1088–89 (citing In re Pena, 155 F.3d at

1111 (quoting Brunner, 831 F.2d at 396)). The Ninth Circuit has held that what separates

a “garden-variety debtor” from a debtor who can show “undue hardship” is the realistic

possibility that a “garden-variety debtor” could improve her financial situation in the

future. In re Nys, 446 F.3d 938, 944 (9th Cir. 2006). “In comparison, forcing debtors

MEMORANDUM OF DECISION ̶ 24

who cannot reasonably be expected to increase their future income to make payments on

their student loans when it causes them to fall below a minimal standard of living

constitutes an ‘undue hardship.’” Id.

In considering this prong, the Court begins with the presumption that Plaintiff’s

income will increase to a point where he can make payments and maintain a minimal

standard of living. However, Plaintiff may rebut that presumption with “additional

circumstances” indicating that his income cannot reasonably be expected to increase and

that his inability to make payments will likely persist throughout a substantial portion of

the Loan's repayment period. In re Nys, 446 F.3d at 946. However, the Court notes that

the “additional circumstances” need not be “exceptional” in the sense that Plaintiff must

prove a “serious illness, psychiatric problems, disability of a depend[e]nt, or something

which makes [his] circumstances more compelling than that of an ordinary person in

debt.” Id. (quoting In re Nys, 308 B.R. at 444 (internal quotation marks omitted)

(emphasis in original)). Moreover, the Ninth Circuit clarified the opinion in In re Nys,

holding that a “debtor does not have a separate burden to prove ‘additional

circumstances,’ beyond the inability to pay presently or in the future.” In re Mason, 464

F.3d at 882–83 (citing In re Nys, 446 F.3d at 945 (holding that that bankruptcy court

erred in requiring debtor to show exceptional circumstances beyond the inability to pay in

the present and a likely inability to pay in the future)).

The rule of the “additional circumstances” is to aid debtors in proving that their

present financial situation will persist well into the future, as it is difficult for the Court to

MEMORANDUM OF DECISION ̶ 25

predict future income. In re McDowell, 549 B.R. 768 (citing In re Nys, 446 F.3d at 945).

An unexhaustive list of representative circumstances was provided by the Bankruptcy

Appellate Panel and utilized on appeal by the Ninth Circuit in In re Nys:

(1) Serious mental or physical disability of the debtor or the debtor's

dependents which prevents employment or advancement; (2) The debtor's

obligations to care for dependents; (3) Lack of, or severely limited

education; (4) Poor quality of education; (5) Lack of usable or marketable

job skills; (6) Underemployment; (7) Maximized income potential in the

chosen educational field, and no other more lucrative job skills; (8) Limited

number of years remaining in [the debtor's] work life to allow payment of

the loan; (9) Age or other factors that prevent retraining or relocation as a

means for payment of the loan; (10) Lack of assets, whether or not exempt,

which could be used to pay the loan; (11) Potentially increasing expenses

that outweigh any potential appreciation in the value of the debtor's assets

and/or likely increases in the debtor's income; (12) Lack of better financial

options elsewhere.

In re Nys, 308 B.R. at 446-47; 446 F.3d at 947; see also In re McDowell, 549 B.R. at 768.

The case law requires neither a specific number, nor a majority, nor in truth, any single

one of these factors to be met. Rather, the Court is looking for facts which tend to show

that Plaintiff’s present financial situation will more likely than not persist well into the

future.

In the case at bar, the Court finds several of the Nys factors to be present. Plaintiff

has ongoing obligations to care for dependents. He has four young children; at least two

are not yet in school and one is still in diapers, thus his financial obligations as a parent

will continue for many years into the future. Moreover, Plaintiff proved through his own

experience that relocation will not assist him in repaying the Loans, as his employment in

the past paid less, was not steady, and provided no benefits. At his current job, Plaintiff

MEMORANDUM OF DECISION ̶ 26

receives a decent salary and good benefits, and is making more than ever before.

Furthermore, if he chooses to pursue work in a different field than that supported by his

college degree, the Court predicts he may earn less than his current job pays.

The record is also clear that he lacks assets with which to repay the Loans. The

couple has only a small sum in savings and retirement, no real property, and two older

used vehicles. Finally, while their expenses will almost certainly increase as their

children grow older, Plaintiff’s situation is compounded by the fact that the Federal Loan,

while currently in forebearance, is subject to an income-based repayment plan. Thus, any

increases in Plaintiff’s income will result in increases in the Federal Loan payment

amount.

In addition, while Plaintiff is utilizing the benefits of his college degree, and he is

young, healthy, and has many wage-earning years ahead of him, he has demonstrated that

he has likely maximized his income potential in his chosen field. At BYU-I, he has

ascended the ranks to the point where he has become a supervisor, but such may prove to

be the ceiling of his employability. He testified that he has applied for numerous jobs

both inside and outside of the university, but has not received any offers. Therefore, the

Court concludes Plaintiff has shown it is more likely than not that his financial situation

will not vastly improve in the future.

In his current position, the Court believes Plaintiff cannot expect to see any large

increases in income, but rather will probably only receive modest cost of living increases

going forward. And while this position is steady and pays more than Plaintiff has ever

MEMORANDUM OF DECISION ̶ 27

earned before, it also limits his time to make side income doing video editing and other

projects for paying customers. The Court does not find this to be material to the analysis,

however, as the side income never brought in a great deal of extra income anyway.

Plaintiff testified at trial of a hope to one day secure a faculty position, which would

provide a larger salary, but at this point, that goal is merely aspirational, and it is unclear

if Plaintiff is even currently qualified for such a position. Finally, while his spouse is

pursuing her degree and eventually hopes to teach school, that prospect is at least 4-5

years away, and is by no means a sure thing. Most importantly, Plaintiff’s income would

have to increase dramatically in order to repay the entire amount of the Loans in the

future. Assuming he would need to make monthly payments of at least $5,000, his net

income would need to increase by at least $60,000 annually. And while the Court has

found that Plaintiff has $150 in monthly disposable income available now to pay toward

the Loans, the Court does not expect that amount to increase substantially in the future, in

part because Plaintiff’s Federal Loans are payable according to an income-based

repayment plan. As such, any salary increases he obtains will result in higher payment

requirements for the Federal Loans.

Taking these facts together, the Plaintiff has established that he does not have the

current ability to pay the entire amount of the Loans, and, from the facts presented, it

appears likely that this inability will persist in the future. Therefore, the Court finds the

second prong of the Brunner test is met.

MEMORANDUM OF DECISION ̶ 28

3. Good Faith Effort to Repay

The final prong in the Brunner test requires the Plaintiff to demonstrate that he has

made a good faith effort to repay the debt. “Good faith is measured by the debtor's

efforts to obtain employment, maximize income, and minimize expenses.” In re Birrane,

287 B.R. at 499 (citations omitted); see also In re Pena, 155 F.3d at 1114. The Ninth

Circuit Bankruptcy Appellate Panel summarized some of the factors to consider when

measuring a student loan borrower’s good faith:

1) whether the debtor has made any payments on the loan prior to filing for

discharge, “although a history of making or not making payments is, by

itself, not dispositive”; 2) whether the debtor has sought deferments or

forebearances; 3) the timing of the debtor's attempt to have the loan

discharged; and 4) whether the debtor's financial condition resulted from

factors beyond her reasonable control, as a debtor may not willfully or

negligently cause her own default.

In re Roth, 490 B.R. 908, 917 (9th Cir. BAP 9th Cir. 2013) (internal citations omitted).

The Court has already noted Plaintiff’s efforts to obtain employment, maximize his

income, as well as the family’s frugal lifestyle. It will now consider these other factors.

a. Payment History

Considering the facts presented here in light of those factors, the Court will first

examine whether Plaintiff has made any payments on the Loans prior to filing for

discharge. The facts regarding Plaintiff’s attempts to repay the Loans are not overly well

developed. Plaintiff testified that he made payments in the amount of approximately

$600 each toward the Loans for a short period of time following his graduation in 2007.

He also testified that he was required to make a $150 payment each time he requested

MEMORANDUM OF DECISION ̶ 29

forebearance during the early years following graduation. The record from Navient,

which spans the time period from July 2004–July 2013, belies that testimony somewhat.

It shows a payment of $50 on each of the three loans on January 20, 2009. Ex. 202.

Those payments were credited toward fees, rather than interest or principal. Id.

However, the Court acknowledges the possibility that Plaintiff made the payments to the

Federal Loan. At one point during trial Plaintiff testified that he believed the income-

based repayment program that he had entered into was for all of the student loans, and

only later discovered that the private Loans were not a part of that agreement. There was

no timeline associated with that testimony. He also testified that when he made

payments, he did not know to whom they were disbursed. Recall, Navient is the servicer

for the Federal Loans as well as the private Loans. The Court finds credible Plaintiff’s

testimony that he made some student loan payments in prior years.

b. Deferments and/or Forebearances

Next, the Court will consider whether the Plaintiff has sought deferments or

forebearances. Plaintiff testified that he has spoken to the lender regularly over the

course of the lending relationship, and while he was never able to negotiate a payment

amount that was within his budget, the Loans were placed in forebearance on numerous

occasions. This testimony is undisputed. While the forebearances are not listed on the

account history submitted by Defendant, the Court does not know if forebearances would

MEMORANDUM OF DECISION ̶ 30

normally be listed on this document.18 However, capitalized interest appears seven times

for each loan, which Plaintiff testified is associated with forebearances. It is also

Plaintiff’s observation that by obtaining forebearances, he actually made his financial

position materially worse, as Defendant capitalizes interest with each forebearance,

resulting in a much larger principal amount with correspondingly greater interest accrual.

c. Timing of Attempted Discharge

The next factor for the Court to consider is the timing of the debtor's attempt to

have the Loans discharged. Courts have looked askance at debtors who seek to discharge

their student loans shortly after graduation, but such is not the case here. Plaintiff filed

for bankruptcy three years after graduation, but did not seek to discharge his student

loans at that time, but instead unsuccessfully attempted to use bankruptcy to free up

enough monthly income to pay his student loans. He filed the instant bankruptcy case

and adversary proceeding more than a decade after graduation.

d. Cause of Plaintiff’s Financial Condition

The last factor the Court will consider regarding Plaintiff’s good faith effort to

repay the loans is whether the debtor's financial condition resulted from factors beyond

his reasonable control. Within this factor, the Court is generally tasked with considering

whether Plaintiff in any way willfully or negligently caused his own default. The Court

has carefully considered Plaintiff’s situation. He fell victim to unscrupulous marketing

18 No representative of the Defendant testified at trial, thus the documents submitted in evidence were not

explained.

MEMORANDUM OF DECISION ̶ 31

promises and pursued an education that, while it provided him marketable skills and

made him employable, was almost certainly not going to produce sufficient income to

repay the loans. But he doggedly worked in the field and pursued additional knowledge

on his own time to make him more skilled and therefore more employable. Finally, he

landed a decent paying job with good benefits, but by the time he got to this point, the

loans had ballooned so far beyond his ability to pay that he realistically has no hope of

ever paying off the full amount short of an unexpected inheritance or lottery win. All the

while, he and his family have been living frugally, staying out of debt, and trying to save

for emergencies and retirement, understanding that both will come eventually. He admits

that he would not have placed the loans into forebearance had he understood the principle

of interest capitalization, and that has proved a costly mistake. The Court, however,

cannot find that Plaintiff was negligent in pursuing this action. Indeed, as Plaintiff

pointed out, had he not placed the loans in forebearance, the Court would likely not find

that he made a good faith attempt to repay the loans. Furthermore, while Plaintiff’s

salary provides enough income to permit a certain amount of savings and retirement, the

glaring fact that Plaintiff understands is that no amount he can possibly pay on the Loans

will ever make a difference. The sheer amount of fees, the capitalized interest, and the

applicable interest rate make the principal untouchable. In sum, the Court does not find

that Plaintiff willfully or negligently caused his own default. Accordingly, the Court

concludes that Plaintiff has demonstrated a good faith effort to repay the Loans.

MEMORANDUM OF DECISION ̶ 32

Having found all three Brunner factors have been met with regard to the full

amount of the Loans, the Court now turns to the question of whether Plaintiff is

nevertheless able to pay some amount toward the Loans.

D. The Case for a Partial Discharge

The discharge of student loans is not an all or nothing proposition. The Court has

discretion to consider a partial discharge. In re Carnduff, 367 B.R. at 131; In re Saxman,

325 F.3d 1168, 1173 (9th Cir. 2003) (We “conclude that bankruptcy courts may exercise

their equitable authority under 11 U.S.C. § 105(a) to partially discharge student loans.”)

Put another way, in light of the evidence of Plaintiff’s current income and expenses, the

Court must determine whether, consistent with a “minimal” standard of living, the

Plaintiff currently can pay some, all, or none of the student loan debt. In re Carnduff,

367 B.R. at 131 (citing Pena, 155 F.3d at 1111 (quoting Brunner, 831 F.2d at 396)).

A debtor who wishes to obtain a discharge of his student loans has the burden to

establish the portion of the debt that results in undue hardship, and to demonstrate that it

meets the requirements of § 523(a)(8) as to that portion. Id. (citing In re Saxman, 325

F.3d at 1174-75); In re Mason, 464 F.3d at 884. The bankruptcy court has discretion in

determining the amount and terms of payment of a partial discharge. In re Jorgensen,

479 B.R. at 86 (citing Bossardet v. Educ. Credit Mgmt. Corp. (In re Bossardet), 336 B.R.

451, 457 (Bankr. D. Ariz. 2005)); In re McDowell, 549 B.R. at 772–73.

The Court has previously concluded that the second and third prongs of the

Brunner test have been met, and, regarding the first prong, the Court concluded that

MEMORANDUM OF DECISION ̶ 33

repayment of the Loans would present an undue hardship in monthly terms for all

payments over $150. The Court is mindful of the case law holding that it is Plaintiff’s

burden to establish the portion of the debt to be discharged—the portion that results in

undue hardship. In re Carnduff, 367 B.R. at 131 (citing In re Saxman, 325 F.3d at 1175.)

However, despite Plaintiff’s admission at trial that he could likely pay something toward

the Loans, his counsel reiterated that he was not asking for a partial discharge. As such,

neither Plaintiff nor Defendant established any amount for a partial discharge. However,

what the parties proved at trial was Plaintiff’s income and his expenses. Taking those

figures, the Court had only to perform the necessary calculations to arrive at the amount

Plaintiff can pay each month that will not present an undue hardship. Indeed, the first

prong of the Brunner test allows the bankruptcy court to determine the amount of student

loan debt that prevents the debtor from maintaining a minimal standard of living and

discharge only that amount. In re Jorgensen, 479 B.R. at 86.

That is what this Court does here. Having previously found that all of the Brunner

prongs are satisfied for any payments Plaintiff can make in amounts above $150 per

month, the Court concludes Plaintiff is entitled to a partial discharge. As noted above,

the Court has discretion about how to fashion the terms of payment in a partial discharge

situation.

MEMORANDUM OF DECISION ̶ 34

Here, the Court has carefully examined Plaintiff’s tight financial picture, and

concludes that only $150 remains after the payment of other reasonable expenses, and

thus the Court will endeavor to fashion a discharge that reflects that reality.19

Taking the $150 in available income per month, and multiplying that amount by

12 months results in a payments of $1,800 per year. As Plaintiff is now 40 years old, and

can be expected to work until age 65, if the Court multiplies the $1,800 yearly payment

by Plaintiff’s twenty-five remaining earning years, this yields the sum of $45,000. This

represents the amount Plaintiff can pay while still maintaining a minimal standard of

living. The Court holds that the Loans should be discharged above and beyond this

amount. Moreover, because the Court has tailored the payment amount closely to

Plaintiff’s finances, interest will not accrue on the $45,000 principal amount that is not

subject to discharge. The Court will not set any other specific payment terms.

Conclusion

The Court concludes that the requirements of Brunner have been met and that a

partial discharge of Plaintiff’s student loan debt owed to Defendant is warranted with the

exception of $45,000 of the Loans, which will not be subject to discharge.

19 While there are other potential sources of funds available to the Plaintiff, such as income tax refunds

and the rare stimulus payment, such as the CARES Act payment of this year, the Court does not consider

those to be regular sources of income which Plaintiff can count on to make payments on the Loans.

MEMORANDUM OF DECISION ̶ 35

Plaintiff is to prepare a judgment and submit it to the Court after Defendant agrees

as to its substance.

A DATED: October 15, 2020

3 alll } |

eae JOSEPH M. MEIER

CHIEF U. S. BANKRUPTCY JUDGE

MEMORANDUM OF DECISION — 36