583 B.R. 275
M.D. Ala.2018Background
- Alexandra Acosta-Conniff (debtor) sought discharge of student loans under 11 U.S.C. § 523(a)(8); bankruptcy court granted discharge and calculated a $915 monthly payment benchmark.
- Educ. Credit Management Corp. (ECMC) argued debtor could enroll in an income-contingent repayment plan (ICRP) reducing payment to $346/month.
- This court previously reversed the bankruptcy court on Brunner's second prong; the Eleventh Circuit vacated and remanded instructing clear-error review of factual findings and de novo review of legal conclusions.
- On remand the district court found the bankruptcy court had legal and factual errors: it misapplied precedent about considering ICRP payments, failed to determine ICRP eligibility/payment, and made clearly erroneous expense findings.
- The district court remanded to the bankruptcy court for additional factual findings and legal conclusions as to all three Brunner prongs (minimal standard of living; additional circumstances; good faith).
Issues
| Issue | Plaintiff's Argument (Acosta-Conniff) | Defendant's Argument (ECMC) | Held |
|---|---|---|---|
| Whether district court may make independent factual findings on remand | District court previously relied on debtor testimony; urged affirmance | ECMC argued lower ICRP payment should control analysis | Remand required: district court cannot make independent factual findings and must remand to bankruptcy court for additional fact-finding under Sublett standard |
| Whether courts must consider ICRP eligibility/payments in Brunner prong 1 (minimal standard of living) | ICRP eligibility/payment are relevant and may be outcome-determinative; court should consider reduced payments | Bankruptcy court declined to consider ICRP, relying on cases it treated as controlling | Court held ICRP eligibility and payments should be considered under Brunner prong 1; bankruptcy court erred by not determining eligibility/payment |
| Correctness of bankruptcy court's monthly expense/payment calculation (prong 1) | Debtor's budget may permit ICRP payment if voluntary retirement contribution cut; expenses require itemized review | ECMC relied on bankruptcy court's $915 payment calculation | Bankruptcy court's expense analysis was clearly erroneous/lacked itemized findings; remand to assess reasonableness of expenses required |
| Whether bankruptcy court made adequate findings on Brunner prong 2 (additional circumstances) and prong 3 (good faith) | Debtor argued conditions (childcare, earnings capacity, geographic limits, teaching status) support persistence of hardship and showed steps to repay | ECMC pointed to alternatives (ICRP, counseling) and challenged sufficiency of evidence | Bankruptcy court cited almost no supporting evidence for prong 2 and failed to consider ICRP/applications to minimize expenses or maximize income for prong 3; remand for specific factual findings and legal conclusions on both prongs required |
Key Cases Cited
- Brunner v. N.Y. State Higher Educ. Serv. Corp., 831 F.2d 395 (2d Cir.) (establishes three-prong test for student-loan undue hardship)
- Hemar Ins. Corp. of Am. v. Cox (In re Cox), 338 F.3d 1238 (11th Cir. 2003) (Eleventh Circuit adoption of Brunner and high bar for discharge)
- Educ. Credit Mgmt. Corp. v. Mosley (In re Mosley), 494 F.3d 1320 (11th Cir.) (good-faith inquiry; ICRP not per se dispositive)
- Equitable Life Assurance Soc'y v. Sublett (In re Sublett), 895 F.2d 1381 (11th Cir.) (district court cannot make independent factual findings; remand required for silent/ambiguous facts)
- Penn. Higher Educ. Assistance Agency v. Faish (In re Faish), 72 F.3d 298 (3d Cir.) (minimal standard of living requires more than tight finances)
- Educ. Credit Mgmt. Corp. v. Frushour (In re Frushour), 433 F.3d 393 (4th Cir.) (enrollment in repayment programs relevant to good-faith inquiry)