In Re Williams
- Reporters:
- , ,
- Before:
- Mixon
ORDER
JAMES G. MIXON, Bankruptcy Judge.Before the Court is an Objection to Confirmation of the modified plan filed on behalf of the University of Arkansas. A hearing on this matter was held on June 22, 1984.
From the evidence presented the Court makes the following findings of fact and conclusions of law:
FINDINGS OF FACT
1. The debtor’s plan lists $14,155.12 total debt. Of this amount, there exists no securеd debt and $11,625.00 in unsecured debts consisting entirely of student loans. Of this amount, $5,925.00 is owed to the University of Arkansas, where dеbtor earned her nursing degree.
2. The debtor’s plan proposes to pay $150.00 per month for a рeriod of 36 months. The University of Arkansas would, therefore, receive a 37% repayment of its total dеbt.
3. From January to August of 1983, debtor worked as a registered nurse at St. Vincent’s Infirmary in Little Rock. During that time her two сhildren, ages 10 and 11, lived with her parents in Mountain View. Debtor has since moved to Mountain View and taken a job there in order to be with her children. Due to the fact that her two children are now living with her, her estimаted $141.00 extra in her monthly budget will be reduced substantially. The debtor testified that she will still have $100 left after monthly exрenses.
4. Although debtor has been separated or divorced for seven years, she has never applied for, or received, maintenance, child support, or alimony. Her ex-husband is now employed as a mechanic.
5. The debtor has never before filed for relief under the National Bаnkruptcy Code.
6. All classes of unsecured creditors are treated equally in the plan.
7. Educatiоnal loans cannot be discharged in a Chapter 7, and since this type debt constitutes practically all debtor’s indebtedness, this clearly was debtor’s motivation for filing Chapter 13.
8. Although the debtor mentioned certain medical expenses she incurred and would incur, because no testimony was given as tо the cost of these expenses, the Court cannot find special circumstances exist due tо “inordinate” medical expenses.
9. The Court finds the debtor is sincere, and that the plan will not imposе an administrative burden on the Chapter 13 trustee.
CONCLUSIONS OF LAW
1. The Court has reviewed the plan and the evidence in light of the eleven criteria cited by the Eighth Circuit Court of Appeals in In Re Estus, 695 F.2d 311 (8th Cir.1982). After such review, the Court finds confirmation should be denied.
2. The most important evidence considered by the Court is the fact that this petitiоn was filed, clearly, to avoid repayment of educational loans. $11,625.00 of the total debt of $14,155.12 consists of student loans. Such loans are not dischargea-ble in a Chapter 7.
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8. The debtor never arranged to defer her рayments to the University of Arkansas. In fact, immediately upon graduation, she took a nursing job but has never mаde a single payment on her student loans. The debtor has not sought to collect child support although the whereabouts of her employed husband are known. These factors led the Court in In Re Betz, 31 B.R. 565 (1983), to find student lоans nondis-chargeable. The Court, here, holds that these factors substantiate its finding of bad faith.
9. Debtor’s аttorney argues that, at least, the debtor is making an effort at repayment through this plan when she could have been totally discharged of these debts in a Chapter 7. Such is not the case, however, bеcause debtor does not meet the “undue hardship” standard of
10. The purpose and spirit of Chapter 13 is rehabilitation and reрayment. In Re Kull, 12 B.R. 654 (1981). Debtor violates that spirit by proposing to pay only $150/month for 36 months. Debtor has $100 remaining each month after expenses. A portion of that $100 could be paid into the plan for a more mеaningful repayment of loans which have enabled the debtor to have a job. Furthermore, if the current monthly payments were made for 60 months instead of the proposed 36, obviously, a more meaningful repayment would occur.
11. Where all the facts lead inexorably to the conclusion that thе petition has been filed to avoid, at minimal cost, a non-dischargeable debt, the Court will find “good fаith” to be absent and will refuse confirmation. In Re Meltzer, 11 B.R. 624 (1981); In Re Cole, 3 B.R. 346 (1980); In Re Yee, 7 B.R. 747 (1980); In Re Smith, 8 B.R. 543 (1981); In Re Iacovoni, 2 B.R. 256 (1980); In Re Murallo, 4 B.R. 666 (1980); In Re Satterwhite, 7 B.R. 39 (1980). Congress never intended, of course, that Chapter 13 serve as a haven for debtors who wish to receive a discharge of unsecured debts without making an honest effort to repay those debts. Deans v. O‘Connell, 692 F.2d 968 (1982).
The objection to confirmation is sustained.
IT IS SO ORDERED.