- Case Type:
- Case Status:
- 18-8003 (6th Circuit, Jul 05,2018) Published
- The Bankruptcy Appellate Panel for the Sixth Circuit affirmed the bankruptcy court's (E.D. Ky.) dismissal of the debtor’s undue hardship student loan complaint because the debtor failed to state sufficient facts to support his claim. The BAP concluded that the debtor’s parolee status did not by itself create an “undue hardship” without additional facts to support that his criminal history would make it unlikely for him to find additional employment. The BAP also held because the debtor caused his status, the debtor’s condition did not qualify as the “additional circumstances" under Brunner.
- Procedural context:
- The debtor commenced an adversary proceeding seeking discharge of his student loans. The defendant sought to dismiss for failure to state a claim under Rule 12(b)(6). The bankruptcy court dismissed for failure to state a claim, and the debtor appealed to the BAP for the 6th Circuit.
- The debtor filed a chapter 7 bankruptcy case and later filed an adversary proceeding seeking to obtain a discharge of his student loan debt as an “undue hardship” pursuant to 11 U.S.C. § 523(a)(8). The debtor obtained an architectural drafting certification with funds obtained from the Department of Education. The defendant sought to dismiss the adversary proceeding. In opposition to the motion to dismiss, the debtor argued that his status as a parolee demonstrated that the second prong of the Brunner test for undue hardship—that additional circumstances exist indicating that his state of affairs was likely to persist for a significant portion of his repayment period. The bankruptcy court granted the defendant’s motion, finding that the debtor’s parolee status alone was insufficient to state a cause of action under the second prong and the debtor had made only conclusory allegations as to his inability to pay. The bankruptcy court also found that the debtor’s status was not “beyond his control” as required by the third prong of the Brunner test. On appeal, the BAP agreed with the bankruptcy court’s analysis. In order to survive dismissal under Rule 12(b)(6), the debtor was required to plead his discharge cause of action with sufficient facts to lead the court to conclude he could be entitled to relief. The debtor failed to detail any additional circumstances that might satisfy the second prong of the Brunner test other than that his parole term will last the entire repayment period, such as his current income, job search activity, or likelihood of future success. Secondly, the debtor’s status as a parolee existed solely because of his own conduct and resulting consequences and thus could not satisfy the Brunner test as circumstances beyond the debtor’s control.
- Buchanan, Dales (author), Opperman
Yerian v. Webber (In re: Verian)
Summarizing by Kathleen DiSanto
Student Loan Borrowers Who Say They Were Defrauded Sue Education Secretary Betsy DeVos for Failing to Cancel Their Debt
2925 in the system
18 Being Processed