In re Robison

Jeffery P. Hopkins

The Plaintiff, Christopher D. Robison, seeks to discharge student loan debts owed to Defendants Access Group, Inc. ("AG") and Kentucky Higher Education Student Loan Corporation ("KHE"). Based upon the record established by evidentiary hearing, the Court concludes that the debts are nondischargeable.

THE BRUNNER TEST

Section 523(a)(8) provides in relevant part:

(a) A discharge under section 727 . . . of this title does not discharge an individual debtor from any debt

. . .

(8) for an educational . . . loan made, insured, or guaranteed by a governmental unit, . . . unless excepting such debt from discharge would impose an undue hardship on the debtor or the debtor's dependants[.]

11 U.S.C. § 523(a)(8). The debtor bears the burden of proof under § 523(a)(8). Dolph v. Pennsylvania Higher Educ. Assistance Agency (In re Dolph), 215 B.R. 832, 836 (B.A.P. 6th Cir. 1998); Ledbetter v. United States Dept. of Educ. (In re Ledbetter), 254 B.R. 714, 716 (Bankr. S.D. Ohio 2000) (Hopkins, J.).

"Undue hardship" is not a term that is defined under the Bankruptcy Code. To determine whether excepting a student loan debt from discharge would pose an undue hardship on the debtor or the debtor's dependants, the Sixth Circuit has adopted the three-part test set forth in Brunner v. New York State Higher Educ. Servs., 831 F.2d 395, 396 (2d Cir. 1987). See Oyler v. Educ. Credit Management Corp. (In re Oyler), 397 F.3d 382, 385 (6th Cir. 2005). The Brunner test requires proof of each of the following elements:

(1) that the debtor cannot maintain, based on current income and expenses, a "minimal" standard of living for herself and her dependents if forced to repay the loans; (2) that additional circumstances exist which suggest that this state of affairs is likely to persist for a significant portion of the repayment period of the student loans; and (3) that the debtor has made good faith efforts to repay the loans.

Brunner, 831 F.3d at 396.

In this case, Mr. Robison has failed to sustain his burden of proof on the second and third prongs of the Brunner test.

FACTS

I. Education

Mr. Robison is a thirty-five-year-old who obtained a bachelor's degree in 1999 and a law degree in 2003, with the assistance of student loans from AG and KHE. AG and KHE hold prepetition claims of $112,655.05 and $148,219.44, respectively.

II. Employment History

Despite nine attempts, Mr. Robison has not passed the Ohio bar exam. Subsequent to law school he has worked in various paralegal positions, primarily part-time, earning no more than $18,000 annually. He has not worked since May of 2006.

III. Family

Mr. Robison is married and has two children, ages seven and four. Mrs. Robison is currently employed as an office manager at a bank, earning $42,000 annually. In 2007, she earned $101,000 as a manager for Countrywide Home Loans, Inc. She was layed off from that position in September of 2008.

IV. Health

In 2005, Mr. Robison was diagnosed with bipolar disorder. Since then, he has twice been admitted to a hospital psychiatric care unit for suicidal ideations. According to Mr. Robison, his symptoms include sleeplessness, anxiety, depression, irritability, rage, and mood swings. He is not currently under the care of a mental health professional because he cannot afford it. Mr. Robison has not applied for disability benefits.

V. Payment History

Mr. Robison has paid approximately $5,000 toward his student loans. He stopped making payments in 2006 when he lost his last job. Thereafter, he attempted to reduce or defer the payments. The Defendants did not accept these offers.

STATE OF AFFAIRS LIKELY TO PERSIST?

Under the second prong of the Brunner test "the debtor must precisely identify [his] problems and explain how [his] condition would impair [his] ability to work in the future." In re Tirch, 409 F.3d 677, 681 (6th Cir. 2005). The record must reflect "a certainty of hopelessness." Id.

Mr. Robison believes that he cannot work because of his bipolar disorder. The only evidence in the record that "explains how [his] condition would impair [his] ability to work in the future" is the following exchange that occurred on direct examination of Mr. Robison.

Q: Do you feel that you can keep a job today?

A: No sir.

Q: Why is that?

A: I have concerns about having anxiety attacks while working. I worry about, especially since I'm not currently on any mood stabilizing medications, being around other people.

Q: What is the problem with being around other people?

A: I'm afraid that I might hurt somebody.

Q: Have you actually ever hurt someone as a result of a mood swing?

A: I have not.

Q: Have you threatened to hurt anyone? A: Yes I have.

Q: Who was that?

A: My wife.

The Court does not doubt the legitimacy of Mr. Robison's concern. A concern, however, does not preclude someone from working. Mr. Robison may have to find a job that diminishes the likelihood that the concern becomes reality. See Tirch, 409 F.3d at 681 ("Tirch should have sought employment in another field when the stress of clinical social work became debilitating."). Yet, there is nothing in the record that demonstrates that Mr. Robison cannot work. To the contrary, the record reveals that he was able to work subsequent to his bipolar diagnosis. In 2006, Mr. Robison taught copyright and constitutional law at the Art Institute of Ohio. The employment ended when the school removed the copyright course from its curriculum.

This conclusion is further supported by the testimony of the Defendants' expert witness, Dr. Scott Bresler. Dr. Bresler is a psychologist who performs fitness-for-duty assessments for a number of large corporations throughout the country. After an extensive examination of Mr. Robison, Dr. Bresler concluded that Mr. Robison has bipolar disorder. However, Dr. Bresler could not say that the disorder precluded Mr. Robison from working.

Lastly, Mr. Robison has limited his job search to the following fields: legal, government, teaching, career services, sales, retail and customer service. During his evaluation, Dr. Bresler asked Mr. Robison if he ever applied to work at a fast food restaurant. Mr. Robison said he refused to do so because he wants a job that is consistent with his education and experience. This approach is contrary to the second prong of Brunner, which requires a debtor to: (1) "do everything in his power to improve [his] financial situation"; and (2) "look for all job opportunities before claiming undue hardship." See Oyler, 397 F.3d at 386 (emphasis added); see also In re Jones, 392 B.R. 116, 129 (Bankr. E.D. Pa. 2008) (unemployed law school graduate, who never obtained bar admission notwithstanding multiple examination attempts, must seek employment in other fields if positions in chosen field are unavailable).

Because the record does not reflect a "certainty of hopelessness," Mr. Robison did not sustain his burden of proof under the second prong of the Brunner test.

GOOD FAITH EFFORT TO REPAY?

The third prong of Brunner requires a good faith effort to repay. Under the third prong, the Sixth Circuit has noted "it is a difficult, although not necessarily an insurmountable burden for a debtor who is offered, but then declines the government's income contingent repayment program, to come to this Court and seek an equitable adjustment of their student loan debt." Tirch, 409 F.3d at 682.

Mr. Robison said he considered repayment plans offered by the William D. Ford Federal Direct Loan Program. Mr. Robison concluded that he could not afford payments under any of the plans. According to Mr. Robison, he would have to pay at least $508 monthly, over 300 months, to repay only $99,000 of the $260,874.49 that he owes.

One of the repayment plans offered by the Ford program is the Income Contingent Repayment Plan ("ICRP"). The ICRP is a twenty-five year repayment plan. 34 C.F.R. § 685.209(c)(4). The annual payment, made in monthly installments, never exceeds 20% of a borrower's discretionary income. Id. at § 685.209(a)(2). Discretionary income is the difference between adjusted gross income ("AGI") and the applicable federal poverty guideline. Id. at § 685.209(a)(3). The annual payment is recalculated each year, based upon the borrower's most recent AGI. Id. at § 685.209(a)(5).

Based upon current income, Mr. Robison's ICRP payment for the entire $260,874.49 obligation would be no more than $332.50 monthly. Moreover, Mr. Robison's unemployment may be deemed a special circumstance that warrants a downward adjustment of the monthly obligation. Id. at § 685.209(c)(3).

IT IS SO ORDERED. --------------- Notes: The Robison's AGI should be approximately the same as Mrs. Robison's gross annual income of $42,000. See 34 C.F.R. § 685.209(b)(1) ("The AGI for both spouses is used to calculate the monthly repayment amount."). The 2009 federal poverty guideline for a family of four is $22,050. Thus, the monthly ICRP payment would be no greater than: [($42,000-$22,050) × .2] ÷ 12.

Given Mr. Robison's options under the ICRP, the Court does not believe that he has sustained his "difficult burden" of demonstrating good faith while rejecting the ICRP.

Although not part of the record, Mr. Robison's counsel stated that the Robison's 2008 AGI was $54,585. If this figure were used to calculate the initial payment, the monthly payment would be $542.25. However, "if . . . the borrower's reported AGI does not reasonably reflect the borrower's current income, the Secretary may use other documentation of income provided by the borrower to calculate the borrower's monthly repayment amount." Id. at § 685.209(c)(1). The Brunner test controls the outcome under § 523(a)(8), not the ICRP. Nevertheless, the Court believes that the ICRP provides the best resolution for the parties, short of settlement. The most difficult aspect of this dispute is not knowing what the next 25-30 years hold for the Robisons. Both Mr. and Mrs. Robison have potential to earn significantly more than they are currently earning. Yet, as the record demonstrates, various circumstances (whether economic, health or otherwise) can adversely affect that potential. The ICRP accounts for such changed circumstances, whether for the better or worse, with annual reassessments over a 25 year period. ---------------

CONCLUSION

This is not an easy decision. The student loans certainly impose a hardship upon the Robisons. But every debtor could argue the same. Therefore, the issue is whether the hardship is undue. Based upon the Sixth Circuit's interpretation of the Brunner test, the Court does not believe it is. Although difficult, this ruling is consistent with the following principle that governs § 523(a)(8).

Debtors receive valuable benefits from congressionally authorized loans, and Congress in turn requires loan recipients to repay them in all but the most dire circumstances. This heightened standard protects the integrity of the student-loan program and prevents debtors from easily discharging their debts at the expense of the taxpayers who made possible their educations.

In re Spence, 541 F.3d 538, 545 (4^th Cir. 2008). Accordingly, the debts will be deemed NONDISCHARGEABLE. An order to this effect will be entered. Copies to: