Rachel Duncanson v. Bank of North Dakota
- Summarized by Jonathan Batiste , Rensselaer Polytechnic Institute
- 6 months 1 week ago
- Case Type:
- Consumer
- Case Status:
- Affirmed
- Citation:
- No. 25-6001 (8th Circuit, Aug 12,2025) Published
- Tag(s):
-
- Ruling:
- The bankruptcy appellate panel affirmed the bankruptcy court’s decision that found Creditor’s claim to be dischargeable. The bankruptcy court did not err by finding the debt dischargeable after evaluating the facts against the factors of the circuit’s totality-of-the-circumstances test for determining undue hardship under 11 U.S.C. § 523(a)(8). Debtor’s unconventional work history, age, negligible retirement savings, and limited prospects of receiving an inheritance supported the finding. Debtor made good faith payments to Creditor, yet Creditor would not offer income-based repayment plans.
- Procedural context:
- Debtor filed for chapter 7 bankruptcy and then filed an adversary proceeding to discharge student loan debt. The bankruptcy court found Creditor’s claim to be dischargeable, and Creditor appealed the finding to the bankruptcy appellate panel.
- Facts:
- Debtor filed for chapter 7 bankruptcy in 2020. Debtor had student loan debt owed to the Department of Education (“DOE”) and Creditor. She filed an adversary proceeding seeking to discharge the debt two months later. The bankruptcy court found that the debt imposed undue hardship on Debtor. The court determined that the debt owed to the DOE was not dischargeable under 11 U.S.C. § 523(a)(8); however, the court found the debt owed to Creditor was dischargeable. Creditor appealed to the bankruptcy appellate panel. Debtor owed the DOE $108,073.54 and owed Creditor $96,074.39 as of October 2020. The court found that Debtor had $995 in discretionary monthly income and only $2,500 in retirement savings. Debtor was 50 years old and had questionable future financial resources. She had mental health concerns, and the court did not err by evaluating her testimony on the subject. The Eighth Circuit “all or nothing” rule required the court to fully discharge one of the loans. The court found that the debt to Creditor was dischargeable since Debtor made consistent payments and Creditor did not offer income-based repayment plans. The debt to the DOE was not dischargeable as Debtor had not made significant payments towards it, and because the DOE offered various income-based repayment plans to Debtor.
- Judge(s):
- Hastings, Surratt-States, and Jones
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