Piccinino v. U.S. Department of Education (In re Piccinino)Piccinino v. U.S. Department of Education (In re Piccinino)
Plaintiff, Amy Piccinino, appeals from the Bankruptcy Court’s
BACKGROUND
In 2011 Piccinino obtained a bachelor’s degree in anthropology. Following graduation she participated in a volunteer internship position in her field of study. From 2011 until May 2013 Piccinino did not work. Since that time she has only worked in part-time positions. To finance her education Piccinino borrowed funds from Department of Education (“DOE”), Aspire Resources, Inc.
In a detailed ruling the Bankruptcy Court concluded that the DOE and Aspire loans were not eligible for discharge based upon undue hardship.
STANDARD OF REVIEW
The determination of undue hardship is a legal conclusion subject to de novo review. Long v. Educ. Credit Mgmt. Corp. (In re Long),
Student loans can only be discharged in bankruptcy when repayment would constitute an “undue hardship on the debtor [or] the debtor’s dependents ...” 11 U.S.C. § 523(a)(8). It is the plaintiffs burden to prove an undue hardship by a preponderance of the evidence. Grogan v. Garner,
1. Past, Present and Future Financial Resources
Piccinino is a thirty-year-old single mother to a six-year-old daughter for whom she receives no child support. Her annual income from 2013 through 2015 ranged from $4,250 to $9,674 from part-time employment. Piccinino’s current monthly income is derived from her employment at $850 per month as a substitute teacher during the school year and $800 per month in July and August when she provides childcare. Monthly SNAP benefits in the amount of $319 supplement her monthly income. She and her daughter are also qualified for Medicaid assistance. In 2016 Piccinino received a federal income tax refund in the amount of $4,364
The Bankruptcy Court found that: “Although some limitations on the Debtor’s retention of full-time employment have been out of her control, the Debtor’s underemployment is, to a certain extent, self-imposed.” Piccinino also challenges .the Bankruptcy Court’s “speculative conclusion that her working only part-time has been voluntary” and references a notebook
Based upon the evidence of her age, health, skill sets and abilities Piccinino has failed to meet her burden to demonstrate that her future employment opportunities will not result in higher wages and full time employment. See Jesperson,
2. Reasonable and Necessary Living Expenses
“To be reasonable and necessary, an expense must be ‘modest and commensurate with the debtor’s resources.’ ” Id. (citing DeBrower v. Pa. Higher Educ. Assistance Agency,
Piccinino’s current monthly income is $1,453.50 and she identifies monthly expenses totaling $1,476.00. Taken at face value there is a shortfall between her income and expenses in the amount of $22.50 a month. On appeal Piccinino argues that this information was submitted in an effort to provide general information as to her “fixed expenses” and does not include other variable monthly expenses. She defines these variable expenses as “very real and occur normally in each of our lives” and as not being easily quantified. No insight into the number or amounts of anticipated variable expenses was supplied which prevents any such items from being considered in evaluating Piccinino’s reasonable and necessary living expenses.
Piccinino argues the Bankruptcy Court speculated her mother would forego rent payments so the student loan obligations could be paid. The actual amount of her monthly housing expense was called into question. Piccinino states that she pays monthly rent of $500 to live in a portion of her mother’s home. This amount is admittedly based upon what would be charged to an unrelated third party. There is no agreement in place between mother and daughter as to the amount' of rent to be charged and no records have been kept to reflect the amounts that have actually been paid. With her mother’s consent she pays rent when she can in any amount. Piecini-no asserts that her mother would like to
Prior to filing bankruptcy Piccinino contacted each of her lenders to request a modification of her student loans. Notwithstanding her position that she lacks sufficient net income to pay her student loans, Piccinino’s offers to make modest payments to her lenders indicate she believes she is able to pay some amount on her loans.
Based on the foregoing, the Bankruptcy Court found Piccinino has sufficient income in excess of her expenses to make modest monthly payments to her lenders. This conclusion is amply supported by the evidence.
3. Other Relevant Facts and Circumstances
This factor permits evaluation of a wide range of facts and issues that may be relevant to determining undue hardship, including:
(1) total present and future incapacity to pay debts for reasons not within the control of the debtor; (2) whether the debtor has made a good faith effort to negotiate a deferment or forbearance of payment; (3) whether the hardship will be long-term; (4) whether the debtor has made payments on the student loan; (5) whether there is permanent or long-term disability of the debtor; (6) the ability of the debtor to obtain gainful employment in the area of the study; (7) whether the debtor has made a good faith effort to maximize income and minimize expenses; (8) whether the dominant purpose of the bankruptcy petition was to discharge the student loan; and (9) the ratio of student loan debt to total indebtedness.
Brown,
Self-imposed restrictions are relevant to a determination of undue hardship. Jesperson,
Piccinino explains that she sustained a shoulder injury in a car accident at the fault of an uninsured driver which required some medical attention. She also has dental concerns which she cannot afford to address, No medical evidence was supplied to demonstrate that these conditions have resulted in an impairment that prevents Piccinino from working.
The availability of a repayment plan is another singular factor that can be considered when evaluating whether undue hardship exists. Lee v. Regions Bank Student Loans,
Piccinino points to taxes she may owe at the end of the repayment period as an additional basis for discharge of her student loans. We have previously concluded that the “mere possibility” of tax liability is not dispositive of undue hardship. In re Nielsen,
Whether the dominant purpose of a bankruptcy filing is to discharge student loans is also relevant to a determination of undue hardship. Admittedly, Piccinino’s filing was done in an attempt to eliminate her student loan debt. This intent is further corroborated by the ratio of student loan debt which constitutes over 98% of her total debt.
CONCLUSION
For the reasons stated above, Piccinino has failed to demonstrate that any of the factual findings by the Bankruptcy Court were clearly erroneous. Further, the Bankruptcy Court carefully analyzed the facts presented under the relevant categories and nothing in our de novo review of the record supports a different outcome. Accordingly, the Bankruptcy Court’s order is AFFIRMED.
Notes
. The Honorable Barry S. Schermer, United States Bankruptcy Judge for the Eastern District of Missouri.
. Aspire services the loan on behalf of Iowa Student Loan Liquidity Corporation, the holder of the promissory note,
.The Bankruptcy Court concluded that the obligation owed to The Scholarship Foundation was subject to discharge and that determination was not appealed.
. There was no evidence provided as to any state income tax refunds received.
. The docket reflects that Piccinino filed a document described as "Designation of Items to be Included in Record of Appeal,” but the identified exhibits were not transmitted to the Clerk for docketing. Consequently, a review of the facts under the clearly erroneous standard is necessarily limited to the trial transcript and the exhibits identified and supplied by the DOE and Aspire in their joint Designation of Record on Appeal which does not include the notebook referenced by Piccinino.