Mark W. Tetzlaff v. Educational Credit Management, 794 F.3d 756

Debtor Mark Tetzlaff filed Chapter 7 in 2012 seeking discharge of ~ $260,000 in federally guaranteed student loans (guarantor: Educational Credit Management Corp.).
Tetzlaff is 56, unemployed, has an MBA and a law degree (failed bar attempts), and has a history of depression, alcohol abuse, and several misdemeanor convictions.
Bankruptcy court trial (May 2014) found Tetzlaff met Brunner prong 1 (cannot maintain minimal living standard if forced to repay) but failed prongs 2 and 3; district court affirmed.
Bankruptcy court excluded two late-disclosed expert witnesses (forensic psychologist and vocational counselor) for lack of good cause under the scheduling order; exclusion was affirmed on appeal.
Court found Tetzlaff capable of improving his financial situation given education and work history; expert testimony suggested possible malingering of psychological symptoms.
Court also found Tetzlaff made no good-faith effort to repay the loans at issue (payments to a different school’s debt were not creditable toward Educational Credit debt).

Issue	Plaintiff's Argument	Defendant's Argument	Held
Additional-circumstances prong (Brunner prong 2): whether Tetzlaff’s inability to pay is likely to persist for a significant portion of repayment period	Tetzlaff: mental health, employment barriers, and age make future earning unlikely	Educational Credit: Tetzlaff’s education, skills, and lack of clinical mental illness show ability to earn and improvement is likely	Affirmed for Educational Credit — bankruptcy court not clearly erroneous; Tetzlaff can likely earn a living and situation may improve
Good-faith prong (Brunner prong 3): whether debtor made good-faith efforts to repay the loans	Tetzlaff: past payments to Florida Coastal demonstrate willingness to repay debt	Educational Credit: payments to a different creditor are not evidence of good faith toward these loans; incentives for those payments differ	Affirmed for Educational Credit — court properly declined to consider payments on unrelated loan and found no good-faith effort to repay these loans
Trial evidence/expert exclusion: whether bankruptcy court abused discretion by excluding late-disclosed experts	Tetzlaff: experts would show memory impairment and limited earning capacity, relevant to prongs 2 and 3	Educational Credit: late disclosure after multiple extensions; no good cause to modify schedule	Affirmed — district and appellate courts upheld exclusion for lack of good cause under Rule 16(b)

In re Roberson, 999 F.2d 1132 (7th Cir. 1993) (adopts Brunner test for undue hardship in student-loan discharge)
Brunner v. N.Y. State Higher Educ. Servs. Corp., 831 F.2d 395 (2d Cir. 1987) (formulates three-part undue-hardship test)
Krieger v. Educational Credit Management Corp., 713 F.3d 882 (7th Cir. 2013) (discusses deferential review of factual determinations on Brunner prongs)
In re Spence, 541 F.3d 538 (4th Cir. 2008) (payments on different student loans do not show good faith to repay other loans)