In re Kearney (Kearney v. Navient Solutions, Inc., et
al.), Adv. Case No. 16-3024 – Southern District of
Ohio Western Division at Dayton
By Brian Flick, Esq.
The Dann Law Firm
Cincinnati, Ohio
Case Synopsis:
O
n July 14 th , 2017, Judge
Humphrey of the United
States
Bankruptcy
Court
for the Southern District of Ohio
Western Division at Dayton issued
his Memorandum Opinion denying
ECMC’s Motion for Summary Judgment
as to the Debtor’s Adversary Complaint
for dischargeability of her student loans
under 11 U.S.C. 523(a)(8).
In analyzing ECMC’s Motion for
Summary Judgment and Debtor’s
Memorandum in Opposition, the Court
did conduct an analysis under Brunner
v. New York State Higher Educ. Serv.
Corp., 831 F.3d 395, 396 (2d Cir. 1987).
As to the first Brunner prong – whether
the repayment of student loans affects
the debtor’s minimal standard of living
– the Court found there were triable
issues of fact as to whether the Debtor
can maintain a minimal standard of
living and repay her student loans.
The Debtor’s student loans total
$149,504.74. The Debtor is a 62 year
old woman. The Debtor’s monthly net
income is $2,443.42. The Debtor’s
household income is $3,709.82 as
her husband receives Social Security
benefits of $1,266.40. On Schedule
I/J of their petition the Debtor listed
household expenses of $3,241.19.
The required student loan payment
is $1,150.00 monthly even thouhgh
ECMC has stated there is a possibility
the Debtor is eligible for an Income
Contingency Repayment of $686.00 –
a fact which both parties dispute.
As to the second prong of Brunner, the
Court agreed there are triable issues of
fact with the certainty of hopelessness
given the Debtor’s age and the ability to
repay her student loans in the proposed
ICR – which would end when she is 86.
The Court then turns its focus to the third
prong of Brunner – whether the Debtor
made a good faith effort to repay her
student loans. The Debtor based on
her employment post-degree repaid her
student loans timely by contacting her
servicer and repaying via forbearance
plans or interest-only agreements. As
a result of almost 15 years of these
repayment plans, the Debtor has not
paid down any significant portion of
the principal balance. The Court notes
that the turning point for the third prong
National Association of Consumer Bankruptcy Attorneys
Summer 2017
of Brunner will rest upon the Court’s
finding of whether the Debtor has
maintained a minimal standard of living
during her repayment period.
This decision represents a victory
for student loan borrowers of near-
retirement age who may be able to
argue that even under Brunner a
finding of undue hardship rests upon
the inability to repay their student loans
once they reach a point of fixed income.
There are still a variety of major issues
regarding the applicability of an ICR
under 20 U.S.C. 1087e(d)(1) and 34
C.F.R. 685.208, 34 C.F.R. 685.209 and
34 C.F.R. 685.220(b) as the Debtor has
argued these loans, which consolidated
Parent Plus loans in addition to FFELP
loans, would be eligible for a second
consolidation or ICR.
CONSUMER BANKRUPTCY JOURNAL
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