Lepre v. U.S. Department of Education (In re Lepre)
- Summarized by Stephen Falanga , Walsh Pizzi O'Reilly Falanga LLP
- 11 years 6 months ago
- Citation:
- Lepre v. U.S. Department of Education (In re Lepre)
- Tag(s):
-
- Ruling:
- In a non-precedential opinion, the Third Circuit AFFIRMED the decision of the the district court below affirming the bankruptcy court's decision denying the debtor's demand for a student loan hardship discharge pursuant to 11U.S.C. § 523(a)(8). Recognizing that the Third Circuit follows the standard for undue hardship outlined in Brunner v. New York Higher Education Services Corp., 831 F.2d 395 (2d Cir. 1987), as adopted by the Third Circuit in Pennsylvania Higher Education Assistance Agency v. Faish (In re Faish), 72 F.3d 298 (3d Cir. 1995)), the Third Circuit concluded that the debtor had failed to establish each of the elements for a hardship discharge of his educational loans.
- Procedural context:
- Gerald S. Lepre, Jr., appealed pro se from an order of the United States District
Court for the Western District of Pennsylvania, which affirmed the United States
Bankruptcy Court’s order denying the debtor's request for a student loan discharge under 11 U.S.C. § 523(a)(8). The Third Circuit summarily affirmed the District Court’s order.
- Facts:
- The debtor, Gerald Lepre, filed for relief under chapter 7 of the Bankruptcy Code and thereafter filed an adversary proceeding against, inter alia, the Pennsylvania Higher Education Assistance Agency d/b/a American Education Services (“AES”) and Sallie Mae, Inc., in order to obtain a discharge of his educational loans. The debtor contended that his student loans should be discharged pursuant to 11 U.S.C. § 523(a)(8), by contending that he faced an undue burden in repaying them.
Under the Brunner test, the debtor must establish that: (1) he 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. Brunner, 831 F.2d at 396.
The bankruptcy court found that the debtor had failed to provide an accurate accounting of his income and expenses and, as a result, had failed to establish by a preponderance of the evidence that he could not maintain a “minimal” standard of living if forced to repay his student loans. There were substantial issues with the debtor's schedules suggesting that the debtor had a negative net monthly income, rendering the figures unreliable in the court's view. It also appeared from evidence at trial the debtor underestimated both his earnings and the total amount of funds he possessed as of his bankruptcy filing. Because the Third Circuit concluded the debtor failed to meet the first prong of the Brunner test, it did not reach any conclusion regarding the bankruptcy court's findings that that the second and third prongs were also not met. The request for hardship discharge of the debtor's educational loans was denied.
- Judge(s):
- FUENTES, FISHER and VANASKIE
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