Opinion
Case No. 15-34200 Adv. No. 16-3024
07-14-2017
In re: WARREN R. KEARNEY REBECCA J. KEARNEY, Debtors REBECCA J. KEARNEY, Plaintiff v. NAVIENT SOLUTIONS, INC. ET AL., Defendant
Copies to: Brian D. Flick (Counsel for the Plaintiff) Douglas L. Lutz Erin Severini (Counsel for the Defendant)
Judge Humphrey
Chapter 7
Decision Denying Educational Credit Management Corporation's Motion for Summary Judgment
This decision concerns whether a creditor is entitled to summary judgment on a Chapter 7 debtor's complaint to discharge student loans.
I. Jurisdiction
This court has jurisdiction pursuant to 28 U.S.C. § 1334(b). This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(I). This court has constitutional authority to enter final orders in this dischargeability adversary proceeding.
II. Findings of Fact
The debtors, Rebecca J. Kearney ("Rebecca") and Warren R. Kearney ("Warren") (collectively, "the Kearneys"), filed a petition for relief under Chapter 7 of the Bankruptcy Code on December 29, 2015. estate doc. 1. On March 29, 2016 Rebecca filed an adversary proceeding seeking to discharge two student loans pursuant to 11 U.S.C. § 523(a)(8) as posing an undue hardship. doc. 1. Educational Credit Management Corporation ("ECMC") was assigned the loans in question and intervened as the proper defendant. doc. 27, Skerbinc affidavit, ¶ 7 and Exhibit B; docs. 10 & 14. ECMC is presently acting as a guarantor, holder, and collection agent for these loans for the United States Department of Education ("USDOE") and other applicable agencies, with the responsibility of defending this adversary proceeding. Skerbinc affidavit, ¶ 2.
On July 3, 2015 the Debtors filed a motion seeking to re-open a Chapter 7 case in which they received a discharge in 2006 for the purpose of pursuing this litigation. See Case No. 05-40637, doc. 17. The court set a hearing on the motion, but the Debtors withdrew it prior to the hearing and filed the underlying case instead. doc. 22.
Navient Solutions, Inc. was the servicer for the former holder of these obligations, United States Aid Funds, Inc. The United States Department of Education was separately dismissed as a defendant.
Jennifer Skerbinc is described as a Litigation Specialist for ECMC.
The principal balance on the Loans was paid by the USDOE. The bulk of funds collected by ECMC are returned to the USDOE. ECMC acts under the Federal Family Education Loan Program ("FFELP"). See doc. 27, Skerbinc Affidavit, ¶ 2.
The two loans in question, consolidating five loans, were distributed on September 17, 2004. Skerbinc affidavit ¶ 5; doc. 28, Exhibit B. The first loan was in the amount of $29,870.08 and the second loan was $34,492.38, for a total of $64,362.46 (collectively, the "Loans"). doc. 27, Skerbinc affidavit, ¶ 5. The Loans were scheduled to be paid over 30 years, with the last payment being due October 16, 2034. doc. 28, Exhibit B. Except for the last payment, the monthly payments were $458.36. Id. Due to various deferments and forbearances, the balance on the Loans as of February 21, 2017 increased to $149,504.74. Skerbinc affidavit, ¶ 12. The Loans accrue interest at the rate of 7.625% per annum. Doc. 28-1, Exhibit B. As of February 20, 2017 the Loans were accumulating interest at $29.37 per day. doc. 28, Exhibit A, Response to Admission Request 3.
Rebecca took courses at Sinclair Community College in 1992. doc. 28, Exhibit A, Response to Interrogatory 10. She earned an undergraduate degree in Elementary Education in 1994 and in 1998 a Master's Degree in Elementary Education, Literature and Whole Language, both from the University of Dayton. Id. The original five loans all appear to be related to this education.
Rebecca was employed as a full-time kindergarten teacher in the Dayton Public Schools for eight years after completing her Bachelor's Degree in 1994. Responses to Interrogatory 10, 18 and 24. She voluntarily chose to leave this position in 2002 to seek a position in a different school district or a private school, but was not successful. Response to Interrogatory 18. Instead, for the next five years, Rebecca was a substitute teacher and a private tutor. Id. Her income during this period was lower than when she was a kindergarten teacher. Id. Rebecca withdrew funds from her Ohio State Teachers Retirement Fund to help pay bills and expenses. Id. Although Rebecca paid the federal income tax due on that withdrawal, she failed to understand a federal tax penalty would be due for the withdrawal of those funds and paid a penalty of "thousands of dollars" over several years. Id.
In addition, Rebecca indicated, for reasons not specified, that she was required by the city of Dayton to improve her home. Id. Rebecca borrowed funds based on an apparently inflated appraisal from what is described as a "predatory lender", owed more on the house than its value and eventually, unable to sell the house, was forced to file Chapter 7 bankruptcy in 2005. Id. The Kearneys surrendered the house, but title remained in their names until 2011 and the Kearneys paid homeowners insurance for a period of years after leaving the house. Id.
In August 2007 Rebecca obtained her current position as a Children's Services Librarian at the Dayton Metro Library and works 40 hours each week. Response to Interrogatory 4. She is now at the highest pay grade available for her educational background. Interrogatory 12. Rebecca, sixty-one years old, intends to work at this position until she retires. Response to Interrogatory 4.
Warren Kearney, Rebecca's husband, is 65 years old and retired, excepting that he provides music lessons on an "intermittent basis" at $20 each lesson, teaching 1 to 4 lessons each week. Responses to Interrogatory 2, 3 and 18. Prior to his retirement, Warren "was unemployed or worked part time for several years in the late nineties[.]" Response to Interrogatory 18. He subsequently started what is only described as an "internet retail company with a partner," but profits were "minimal" and the business ended in 2004. Id. At about that time, he was hospitalized with no insurance for high blood pressure, and those bills contributed to the 2005 bankruptcy filing. Id. He worked at temporary jobs and then took a minimum wage job in a music store. Id. He retired in 2012, taking early social security, from which, as of August 2016, he receives $1,266.40 monthly. Id.
Rebecca has asthma related to allergies. In addition, she has osteoarthritis, which she describes as "self treated." Response to Interrogatory 13. These medical issues do not affect her ability to work. Warren has various chronic health issues, "including congestive heart failure, leaky heart valves, chronic hypertension, renal artery blockage (he has one kidney), gout, cataracts . . . and pre-diabetes." Id.
The record is undisputed that Rebecca has not paid sufficient funds to keep the balance on the Loans from steadily increasing. Rebecca stated: "At times, I made affordable payments on the student loans, but it was never enough to get ahead or even pay the interest on the loans." Response to Interrogatory 4. The complete forbearance history from September 2004 until March 2015 shows the limited payments made by Rebecca. Skerbinc affidavit ¶¶ 9 & 10, Exhibit C (forbearance history) and Exhibit D (payment history).
Specifically, Rebecca did not make her first payment on the Loans on March 14, 2006 in the amount of $134. Skerbinc affidavit, ¶ 10. Through February 2012, Rebecca made reduced payments ranging from $79 to $140 each month. Id. In July 2007, based on her income at that time, Rebecca was approved for monthly loan payments of $40.24, for a 12-month period beginning with the August 2007 payment. doc. 28, Exhibit F. In August 2008 Rebecca continued with the income sensitive payment schedule, and was approved for monthly payments in the amount of $119.80 for a 12-month period. Id. In July 2009 the payment changed to $127.00. Id. During various forbearance periods, Rebecca was not required to make any payment. Skerbinc affidavit, ¶ 9, Exhibit C. As of March 2015 Rebecca was required to make payments at the standard repayment rate. Skerbinc affidavit, ¶ 11. The payments, re-amortized over 30 years, were $911.88 each month, about twice the original monthly payment when the Loans were made in 2004. doc. 28, Exhibit G. As of that time, Rebecca was no longer eligible for short-term forbearances or reduced payments without entering into the Income Contingent Repayment Program (the "ICR"), which will be discussed in more detail below.
The Kearneys' adjusted gross income was $57,179 in 2015, $41,444 in 2014, $49,448 in 2013, and $41,264 in 2012. doc. 28, Exhibit C. Rebecca's monthly gross income is presently $4,137.47 and her net monthly income is $2,443.42. Response to Interrogatory 4. Rebecca has the following payroll deductions:
| Ohio Public Employee Retirement (OPERS) | $413.75 |
| Personal Savings (Fifth Third Bank) | $195.00 |
| Health Insurance | $92.50 |
| Vision Insurance | $2.68 |
| Medicare | $55.81 |
| Union Dues | $34.48 |
| Health Savings Account | $150.00 |
| Dental Insurance | $20.88 |
| Federal Tax | $524.59 |
| City Tax | $85.32 |
| Yellow Springs School Tax | $33.82 |
| Ohio Tax | $85.32 |
| $850.00 | |
| Utilities | $209.34 |
| Gas and Car Maintenance | $126.57 |
| $52.63 | |
| Cell Phone | $96.08 |
| Groceries | 584.50 |
| Health Insurance | 147.62 |
| $203.00 | |
| Eating Out | $265.05 |
| Misc. Spending / Necessities | 416.96 |
| Clothing | $30.00 |
| Entertainment | 11.00 |
| Medical | $60.00 |
| Total | $3,241.19 |
Except as separately noted, all the current living expenses listed are from Response to Interrogatory 4.
doc. 28, Exhibit H.
The insurance figures are found in the Debtors' Fifth Third Bank Statements (doc. 28, Exhibit I), but ECMC did not itemize the entries from the bank statements for the court to determine if $203.00 is the exact figure for car, Vespa, life and rental insurance. In addition, Rebecca lists $316.36 for "all insurance." Response to Interrogatory 6. However, that figure may or may not include payroll deducted health and dental insurance.
The Kearneys stated that they "tried to live within [their] means" and found it "impossible" to save for "large expenses." Response to Interrogatory 12. They took out loans and used credit cards for such expenses, which include vehicles, vehicle repair, moving expenses, replacement of electronics and appliances, and furniture. Id. Rebecca estimates that, for the next 12 months, household expenses will be $3,500 each month or $42,000 each year. Response to Interrogatory 7.
Due to the Kearneys' Chapter 7 discharge, aside from the Loans, the Kearneys have no other pre-petition debts with the exception of two reaffirmed secured loans. Responses to Interrogatory 8 and 15. The Kearneys have a 2007 Chevrolet Cobalt automobile, which costs $250 each month. Response to Interrogatory 8. That loan will be paid off by October 2017. Id. In addition, the Kearneys are paying $171.07 for a 2012 Vespa, and that loan will be paid off by March 2018. Id. The Kearneys plan to replace the Chevrolet Cobalt due to "depreciation," but have not provided any further explanation as to the car's condition. Id.
The Kearneys received aggregate federal and state tax refunds of $1,503 in 2012, $1,160 in 2013, $2,867 in 2014 and $2,386 in 2015. Response to Interrogatory 16. In addition, in August 2015, $4,905.24 was deposited in the Kearneys' checking account, but those funds were not applied to the Loans. doc. 28, Exhibit K.
ECMC has detailed the Kearneys' post-petition spending for the period of January 23, 2016 through February 23, 2016 based upon the Kearneys' bank statements. Doc. 28, Exhibit J. Over that period of time, ECMC asserts that the Kearneys spent $645.95 on groceries and $165.15 on food and drink outside the home. In addition, ECMC states that the Kearneys spent $302.06 on various retailers, such as Amazon and Barnes & Noble, although the purpose and context of some of these expenses is not clear. ECMC further documented grocery spending, food and drink outside the home, and miscellaneous retail spending through November of 2016.
Although it appears such expenses may be a significant trial issue, the court cannot determine the exact figure without reviewing every line item of the bank statements and independently calculating these figures. Abdulsalaam v. Franklin Bd. of Comm., 637 F. Supp. 2d 561, 576 (S.D. Ohio 2009) (court not required to scour the record for evidence on summary judgment). In addition, certain line items may require more explanation. A line item from "Kroger" may include expenses that are not groceries.
The parties have communicated about Rebecca pursuing the ICR. doc. 28, Exhibit L. Counsel for ECMC informed Rebecca's counsel, by email, that to apply for the ICR, the adversary proceeding would need to be dismissed and the loan transferred back to Navient. Id. ECMC was willing to agree to a dismissal without prejudice. Id. Rebecca ultimately concluded that the ICR payments were not "feasible." Id. According to her counsel, Rebecca may have attempted to apply for ICR prior to the motion to re-open her prior case. Id. Also, as further discussed in the analysis section, the parties appear to dispute Rebecca's current eligibility for ICR. Eligibility aside, based upon her 2015 tax return, Rebecca's payment, according to ECMC, would be $686 each month. Skerbinc affidavit at ¶ 14. That figure, which the parties dispute can be paid within a "minimal standard of living" budget, would not be sufficient to pay the monthly interest on the Loans, but is still permitted by the ICR regulations.
III. Summary Judgment Standard
Federal Rule of Civil Procedure 56(a), made applicable to adversary proceedings through Bankruptcy Rule 7056, sets forth the standard to address ECMC's motion. The court shall grant summary judgment if "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). "To meet such a burden on a motion for summary judgment, the moving party may 'point[] out to the district court that there is an absence of evidence to support the nonmoving party's case.'" Connolly v. Deutsche Bank Nat'l Trust Co., 581 Fed. Appx. 500, 503 (6th Cir. 2014) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986)).
On summary judgment, ECMC's burden as the movant is to show, as a matter of law, that Rebecca cannot meet one or more of the three prongs of the Brunner test.
IV. Analysis
Student loans (as defined by § 523(a)(8)) are not discharged in bankruptcy unless repayment "would impose an undue hardship on the debtor and the debtor's dependents[.]" 11 U.S.C. § 523(a)(8); Barrett v. Educ. Credit Mgmt. Corp. (In re Barrett), 487 F.3d 353, 358 (6th Cir. 2007). An adversary proceeding is required to establish the nondischargeability of a student loan. See Fed. R. Bankr. P. 4007(a) and 7001(6).
The Sixth Circuit follows the three-part Brunner test to determine whether a student loan imposes an undue hardship and, therefore, may be discharged. That standard requires:
(1) that the debtor cannot maintain, based on current income and expenses, a "minimal" standard of living for [himself] and [his] dependents if forced to repay the loans; (2) that additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period of the student loans; and (3) that the debtor has made good faith efforts to repay the loans.Barrett, 487 F.3d at 359 (quoting Brunner v. New York State Higher Educ. Serv. Corp., 831 F.3d 395, 396 (2d Cir. 1987)). The debtor has the burden of establishing these elements. Tirch v. Pa. Higher Educ. Assistance Agency ( In re Tirch), 409 F.3d 677, 680-81 (6th Cir. 2005). This burden must be met by a preponderance of the evidence. Campton v. U.S. Dep ' t of Educ. (In re Campton), 405 B.R. 887, 891 (Bankr. N.D. Ohio 2009).
A. First Brunner Prong
A minimal standard of living requires a debtor, after addressing her basic needs, to "not allocate any of his or her financial resources to the detriment of . . . student loan creditor(s)." Grove v. Educ. Credit Mgmt. Corp. (In re Grove), 323 B.R. 216, 223 (Bankr. N.D. Ohio 2005). This standard may require the debtor to make "major sacrifices" to their standard of living. Mitcham v. U.S. Dep't of Educ. (In re Mitcham), 293 B.R. 138 (Bankr. N.D. Ohio 2003) (citation omitted). A minimal standard of living does not require a debtor to live in poverty. See Wallace v. Educ. Credit Mgmt. Corp. (In re Wallace), 443 B.R. 781 (Bankr. S.D. Ohio 2010) (quoting Ivory v. United States (In re Ivory), 269 B.R. 890, 899 (Bankr. N.D. Ala. 2001) (defining "a minimal standard of living in modern American society"). Minimal also does not mean a debtors' pre-existing lifestyle or a comfortable one. Nixon v. Key Educ. Resources (In re Nixon), 453 B.R. 311 (Bankr. S.D. Ohio 2011).
ECMC contends Rebecca has not presented any evidence of belt-tightening and points to the Kearneys' household expenditures being capable of reduction. Through a chart included in its motion, ECMC argues that by reducing her discretionary spending, Rebecca would have, at a minimum, $867.63 in surplus funds each month (doc. 26 at 12):
| Description | Current | Proposed | Net |
|---|---|---|---|
| Internet | $52.63 | $0.00 | $52.63 |
| Shopping/Misc. | $440.00 | $250.00 | $190.00 |
| 401K | $413.75 | $263.75 | $150.00 |
| Tax Refund | $165.00 | $0.00 | $165.00 |
| Savings Deducted From Paycheck | $195.00 | $100.00 | $95.00 |
| Eating Out | $265.00 | $200.00 | $65.00 |
| Funds Moved to Savings AccountAfter Paycheck Deposited | $300.00 | $150.00 | $150.00 |
| Total | $867.63 |
In dicta, in 2004 the Sixth Circuit referred to "personal internet service" as "non-essential." Miller v. Pa. Higher Educ. Assistance Agency, 377 F.3d 616 (6th Cir. 2004). Given technological advances and changes in society, that proposition may not be true today and may be dependent upon the employment and other situations of the person in question.
Overall, the budget does suggest Rebecca could devote more funds toward the Loans and maintain a minimal standard of living, but the court cannot make the determination of whether the proposed ICR payment is consistent with a minimal standard of living without a trial. It appears unlikely that Rebecca could ever repay the Loans and maintain a minimal standard of living, without a modification from a program such as ICR. See Conner v. U.S. Dep't of Educ. (In re Conner), 526 B.R. 218, 225 (Bankr. E.D. Mich. 2015), aff'd Case No. 15-10541, 2016 WL 1178264 (E.D. Mich. Mar. 28, 2016), appeal pending 16-1588 (6th Cir.) (in a case involving a 61-year-old debtor, the court noted that "it might seem obvious" that the total student loan debt of $213,000 would constitute an undue hardship, but "the relevant inquiry for purposes of evaluating 'undue hardship' is whether Plaintiff could make the monthly payment as required by an income-based repayment plan."). ECMC does not contend otherwise.
The court finds there is a material issue of fact whether Rebecca can pay the Loans, even with ICR, and maintain a minimal standard of living.
B. Second Brunner Prong
The second prong of the Brunner test states "that additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period of the student loans[.]" Barrett, 487 F.3d at 359 (citation omitted). The Sixth Circuit has spoken of "a certainty of hopelessness, not merely a present inability to fulfill financial commitment." Oyler v. Educ. Credit Mgmt. Corp. (In re Oyler), 397 F.3d 382, 386 (6th Cir. 2005) (quoting In re Roberson, 999 F.2d 1132, 1136 (7th Cir. 1993). (Factors that the court would consider are "illness, disability, a lack of usable job skills, or the existence of a large number of dependents." Oyler, 397 F.3d at 386. The most important factor for the second Brunner prong is whether the debtor's circumstances are beyond [her] control, not borne of free choice." Barrett, 487 F.3d at 359 (citation omitted).
The record does not show Rebecca's health issues prevent her from working presently and her husband receives a fixed social security income. The Kearneys have no dependents and Rebecca currently is employed full time. As previously discussed, ECMC asserts that the budget is more than sufficient to allow for the applicable ICR payments if Rebecca participated in that program.
ECMC further argues that Rebecca's age and retirement eligibility should not be a factor for the court to consider. See Educ. Credit Mgmt. Corp. v. Spence, 341 B.R. 825 (E.D. Va. 2006), aff'd 541 F.3d 538 (4th Cir. 2008) (quoting in part Chapelle v. Educ. Credit Mgmt. Corp., 328 B.R. 565, 572 (Bankr. C.D. Cal. 2005) (In reversing a bankruptcy court's discharge of student loans for a debtor in her mid-sixties, "[t]he court finds that [the debtor's] age does not constitute an additional circumstance, especially where she does not have any 'age-related illnesses that affect her ability to work.'")); Educ. Credit Mgmt. Corp. v. Waterhouse, 333 B.R. 103, 112 (W.D.N.C. 2005) (quoting Mandala Educ. Credit Mgmt. Corp., 310 B.R. 213, 222 (Bankr. D. Kan. 2004) (finding that 51-year-old debtor incurring student loans cannot use age to avoid repaying the loans when "[t]he fact this obligation will persist into [the debtor's] late age is a result of [] choosing to return to school on borrowed money at age .").
In simply considering Rebecca's age, it appears unlikely she could continue to work until she was 86, although presently she has no medical issues preventing her from working. If Rebecca was in ICR, the monthly payment would be reduced based upon Rebecca's lower post-retirement income. While age may be a relevant inquiry in some instances, it appears the present circumstances were caused in part by Rebecca voluntarily leaving the kindergarten teaching position. That job appears to have had the highest long-term earning potential and Rebecca began in that position after borrowing significant funds for both an undergraduate and graduate degree in education. Other factors, such as Warren's health issues, medical bills, and perhaps his failed business, were beyond Rebecca's control. Whether the future represents a "certainty of hopelessness" to address the Loans, most likely through ICR, is a material issue of fact for trial.
C. Third Brunner Prong
The third prong of the Brunner test concerns whether the debtor has made a good faith effort to repay the loans. Barrett, 487 F.3d at 359.
The record is undisputed that Rebecca has made some payments on these Loans; however, as noted, due to a series of forbearances and agreements providing for reduced payments, Rebecca has not made any progress toward reducing the principal balances owed on the Loans.
Although the forbearances and reduced payment schedules were consented to by the lender, directly or through the servicer, obtaining such agreements, without a meaningful effort to repay the Loans is not sufficient to show good faith simply because the lender agreed to the payment schedule. See, e.g. Nixon, 453 B.R. at 324 (court noting it was "troubled" by "overspending" when student loans were being deferred). The court must make a determination at trial as to why Rebecca entered into each of these agreements and whether she could have made a more meaningful effort to address the Loans at the time of these forbearances and payment reductions. In short, did the Kearneys allocate funds to unnecessary expenses rather than repay the Loans? At trial, the burden rests with Rebecca.
Kearney alleges prior servicers, particularly Navient, provided the advice to seek forbearances and did not suggest programs such as ICR and has cited a lawsuit against Navient reported in the news media. See doc. 31 at 12. These allegations are unsupported by evidence in the record and the court gave them no weight in determining ECMC's motion.
As to the effort to repay more recently, a decision not to enroll in the ICR is not a per se indication of lack of good faith. Tirch, 409 F.3d at 682; Barrett, 487 B.R. at 364. Congress did not treat the ICR as a mandatory requirement to substitute one non-dischargeable debt for another. Barrett, 487 B.R. at 364. However, the decision is probative of intent to repay. Id.
Depending on the court's determination as to a minimal standard of living for the Kearneys, Rebecca's decision to not enter into the ICR may be significant to the court's determination of this third Brunner prong. ECMC has provided evidence that Rebecca has not applied for any repayment option, including ICR, since the adversary proceeding was filed. Skerbinc affidavit, ¶ 15. As noted, according to ECMC, based on Rebecca's 2015 gross income, Rebecca would qualify for a monthly payment of approximately $686. Id. at ¶ 14. This figure is based upon "the lesser of 20% of discretionary income or the amount [Rebecca] would pay on a repayment plan with a fixed payment over 12 years, adjusted to [Rebecca's] income." Id. at ¶ 13. Such a monthly payment would not even pay for the current interest on the Loans, but still appears to be an option available to her. Under the ICR program, the maximum repayment period is 25 years, at which point Rebecca would be 86 years old and any balance on the loan would be forgiven. Id. Rebecca has not formally accepted or declined an ICR offer. The court finds that there is a material question of fact as to whether the Kearneys can maintain a minimal standard of living if Rebecca makes a monthly $686 ICR payment at Rebecca's present income.
Kearney asserts she is not eligible for ICR because she consolidated a Parent Plus loan. According to 20 U.S.C. § 1087e(d)(1), Kearney is not eligible for ICR because the proceeds of her loan were used to discharge a Parent Plus loan. However, as noted by ECMC, this exception only applies to a loan used to pay a "Federal Direct Plus" loan. Kearney can consolidate her current Federal Family Education Loan Program Plus loans (FFELP) into a Direct Consolidation loan immediately. At that point, the newly consolidated loan would be eligible for ICR. Skerbinc affidavit, ¶ 13. See also 34 C.F.R. § 685.209 (describing eligibility for Income-contingent repayment plans); 34 CFR §§ 685.208 (repayment plans) and 220(b) (consolidation). Before Rebecca could apply for ICR, this adversary proceeding would need to be dismissed and the Loans would need to be assigned back to Navient, but ECMC has agreed that in such case any dismissal would be without prejudice.
However, Kearney would have been 78 years old had the payments been made following the Loans' original 30 year amortization schedule.
The loan forgiveness may have significant tax consequences, but only if Rebecca is solvent at that time. Barrett, 487 F.3d at 365, n.8. --------
V. Conclusion
The record leaves material questions of fact as to whether the Loans constitute an undue hardship. Accordingly, ECMC's Motion for Summary Judgment is denied. The court will issue a separate order contemporaneously with this decision.
This document has been electronically entered in the records of the United States Bankruptcy Court for the Southern District of Ohio.
IT IS SO ORDERED.
/s/ _________
Guy R. Humphrey
United States Bankruptcy Judge Dated: July 14, 2017 Copies to: Brian D. Flick (Counsel for the Plaintiff) Douglas L. Lutz
Erin Severini
(Counsel for the Defendant)