529 B.R. 250
Bankr. E.D. Tenn.2015Background
- Debtor Hubbard, in Chapter 7, sues to discharge certain DOE student loans under 11 U.S.C. § 523(a)(8).
- PHEAA initially claimed it was only a servicer; DOE later added as defendant after court granted motion to dismiss.
- Plaintiff amended to add DOE; defendant moved for summary judgment; plaintiff opposed.
- Debtor’s complaint alleges undue hardship due to caregiving for a permanently disabled mother and low income.
- DOE asserts no genuine issue of material fact; Debtor’s income/expenses and future prospects do not meet Brunner prongs.
- Court grants summary judgment for DOE without prejudice to refiling if circumstances change.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Brunner three-prong test governs 523(a)(8) undue hardship. | Hubbard argues standard applies and burdens the debtor. | DOE contends Brunner framework controls for undue hardship analysis. | Brunner standard adopted; Brunner framework applies. |
| Whether debtor shows hopelessness requirement under Brunner's second prong. | Hubbard asserts future income unlikely and hardship will persist. | DOE argues circumstances do not show certainty of hopelessness. | No genuine issue; second prong not satisfied. |
| Whether debtor demonstrated sufficient good-faith efforts to repay. | Hubbard points to PSLFP enrollment and nonprofit formation as good-faith efforts. | DOE finds efforts insufficient to overcome lack of hopelessness. | Not enough to change outcome given second prong failure. |
| Whether potential income growth and future prospects negate hardship. | Hubbard argues future promotions and income increases could enable repayment. | DOE contends prospective income does not demonstrate current ability to repay as required. | Future income prospects do not create undue hardship under current record. |
Key Cases Cited
- Brunner v. New York State Higher Educ. Servs. Corp., 831 F.2d 395 (2d Cir. 1987) (three-prong Brunner test for undue hardship)
- Oyler v. Educational Credit Mgmt. Corp., 397 F.3d 382 (6th Cir. 2005) (adopts Brunner rubric; emphasizes hopelessness must be beyond debtor's control)
- In re Miller, 377 F.3d 616 (6th Cir. 2004) ( Sixth Circuit precedes adoption of Brunner framework)