Opinion
File No. 1:00-CV-598
February 23, 2001
ORDER AND JUDGMENT
In accordance with the opinion entered this date,
IT IS HEREBY ORDERED that the motion for summary judgment filed by the United States of America (Docket # 10) is GRANTED.
IT IS FURTHER ORDERED that JUDGMENT is entered in favor of the government and against Defendant Marilyn T. Totzkay in the amount of $6,450.17, plus interest at 9% per annum from June 5, 2000, to the date of judgment;
with further interest to accrue at the legal rate in effect on the date of judgment until paid in full; plus costs of $150.00 for the filing fee and $45.00 for the cost of personal service by the United States Marshals Service.
OPINION
Plaintiff United States of America, on behalf if its agency, the United States Department of Education, has moved for summary judgment on this student loan default case. For the reasons that follow, the motion will be granted.
I.
The government alleges in its complaint that on or about February 22, 1983, Defendant Marilyn T. Totzkay, a/k/a Marilyn T. Totzkay-Gilman ("Totzkay"), obtained a federally guaranteed student loan in the amount of $2,500.00 from Citibank-, she has made no payments on the loan; and as of June 5, 2000, the amount owing on the loan was $6,450.17, with interest continuing to accrue at 9% interest per annum.
In her answer to the complaint Defendant does not dispute any of these factual assertions. She merely asserts that the debt was discharged in a 1983 Chapter 7 bankruptcy case, or in the alternative, that payment of the debt would create an undue burden.
The government filed its motion for summary judgment on December 28, 2000. Defendant, who is represented by counsel, did not file a response to the motion within the twenty-eight-day period provided by Local Court Rule 7.2(c). By order dated February 5, 2001, this Court advised that Defendant's failure to file a response within fourteen days may result in the entry of an order granting the motion. To date this Court has not received a response to the government's motion. Because the deadline for filing her response has passed, this Court considers the motion ripe for decision.
II.
Under Rule 56(c) of the Federal Rules of Civil Procedure, summary judgment is proper if there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. In evaluating a motion for summary judgment the Court must look beyond the pleadings and assess the proof to determine whether there is a genuine need for trial. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). If Plaintiff carries its burden of showing there is an absence of evidence to support a claim or defense on which Defendant bears the burden of proof, then Defendant must demonstrate by affidavits, depositions, answers to interrogatories, and admissions on file, that there is a genuine issue of material fact for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 324-25 (1986).
III.
Student loans financed by the Department of Education are not dischargeable in bankruptcy absent a judicial determination of undue hardship. See 11 U.S.C. § 523(a)(8). This statutory section has been amended since its enactment in 1978. 1983, when Defendant filed her Chapter 7 bankruptcy case, student loans were not dischargeable unless (1) the petition for bankruptcy was filed at least five years after the first loan payment was due or (2), if less than five years had passed, a judicial determination of "undue hardship" was made. 11 U.S.C. § 523, Historical and Statutory Notes. Because Defendant took out her loan only months before her bankruptcy, she cannot rely on the automatic five year discharge provision. Instead, the dischargeability of Defendant's loan depends upon application of the "undue hardship" rule.
The Bankruptcy Code contains the following provision:
(a) A discharge under section 727 . . . of this title does not discharge an individual debtor from any debt
(8) for an educational benefit overpayment or loan made, insured or guaranteed by a governmental unit, or made under any program funded in whole or in part by a governmental unit or nonprofit institution, or for an obligation to repay funds received as an educational benefit, scholarship or stipend, unless excepting such debt from discharge under this paragraph will impose an undue hardship on the debtor and the debtor's dependents;11 U.S.C. § 523(a)(8).
Student loan debts are presumptively nondischargeable, and the burden of challenging that presumption is on the debtor. Buford v. Higher Educ. Assistance Foundation, 85 B.R. 579, 582 (D.Kan. 1988). To obtain a ruling of dischargeability based on undue hardship a debtor is required to bring an adversary proceeding pursuant to Bankruptcy Rule 7001(6). See In re Janc, 251 B.R. 525, 529 (Bankr.W.D.Mo. 2000); In re Mammel, 221 B.R. 238, 241 (Bankr.N.D.Iowa 1998); U.S. v. Davis, 142 B.R. 293 (S.D.Ind. 1992). The debtor seeking to discharge the student loan carries the burden of proving undue hardship. In re Taylor, 191 B.R. 760, 765 (Bankr. N.D. 111. 1996); In re Hill, 184 B.R. 750, 753 (Bankr. N.D. Ill. 1995). In re Maulin, 190 B.R. 153, 156 (Bankr.W.D.N.Y. 1995).
Defendant has not claimed, nor is there any evidence in the record to indicate, that she ever filed an adversary proceeding or that she ever requested or was granted a judicial determination that the repayment of her student loan would constitute undue hardship such that it should be discharged in bankruptcy. Even if Defendant could raise the undue hardship defense for the first time in this Court, Defendant presented no evidence to show that payment of the debt would in fact create an undue hardship.
Because the Defendant has not controverted the essential allegations set forth in the complaint, and because there is no evidence to support her assertion that her obligations under the loan were discharged in bankruptcy, or that they would create an undue hardship, the government's motion for summary judgment will be granted.
An order and judgment consistent with this opinion will be entered.