Beaver v. Paige

IN THE UNITED STATES BANKRUPTCY COURT
FOR THE WESTERN DISTRICT OF MISSOURI
ST. JOSEPH DIVISION
In re: )
Lynne Ranae Beaver and )
Thomas Lee Beaver Debtors ) Case No. 04-50448
____________________________________)
)
Lynne Ranae Beaver Plaintiff )
)
Rod Paige, Secretary )
United States Department of )
Education Defendant ) Adv. No. 04-5013
____________________________________)
MEMORANDUM OPINION
This adversary proceeding comes before the Court on August 19, 2004, on a Complaint by
Lynne Ranae Beaver (“Lynne”) to discharge her consolidated student loan debts under 11 U.S.C. §
523(a)(8) on the basis that repayment of those debts would constitute an undue hardship. This is a
core proceeding of which this Court has jurisdiction under 28 U.S.C. § 1334(b) and which it may
hear and determine under 28 U.S.C. §§ 157(a), 157(b)(1) and 157(b)(2)(I). The following
constitutes my Findings of Fact and Conclusions of Law under Rule 52 of the Federal Rules of
Civil Procedure as made applicable to this proceeding by Rule 7502 of the Federal Rules of
Bankruptcy Procedure. For the reasons set forth below, I find that the Debtor has satisfied her
burden of proving that repayment of the debt owed to Defendant would impose an undue hardship
upon her and is therefore not excepted from discharge under § 523(a)(8).
I. FACTUAL AND PROCEDURAL BACKGROUND
Plaintiff, Lynne Ranae Beaver, applied for and received between July 12, 1991, and
September 1, 1992, various federally insured student loans, some of which were later
Case 04-05013-jwv Doc 11 Filed 09/13/04 Entered 09/13/04 10:19:50 Desc Main
Document Page 1 of 7

1 Defendant’s Ex. 1 and Defendant’s Ex. 2, Certificate of Indebtedness, U.S. Department of
Education, Jessica Liu, Loan Analyst, dated June 14, 2004.
2
consolidated, whose aggregate unpaid balance, as of June 14, 2004, was $22,233.861.
Plaintiff married her current husband, Thomas Lee Beaver on October 19, 2003. Mr.
Beaver was never liable for the student loan, and therefore has no debt to the Secretary to be
discharged.
Lynne and Thomas Beaver filed their petition for relief under Chapter 7 of the Bankruptcy
Code on or about April 8, 2004.
Schedule I of Debtors’ bankruptcy petition discloses that Lynne and Tom Beaver have a
combined monthly adjusted gross income of $1,467.68, and that on an annual basis they earn
$17,612.16.
Schedule I shows a family of six; husband and wife and four children, the oldest of which
is 18 years of age and now attending a college in Texas with minimal financial assistance from
Lynne and Tom.
HHS Poverty Guidelines for a family of five in 2004 is $22,030.00.
Tom Beaver has been working at the LaVerna Heights, a residence for the Sisters of St.
Francis, in Savannah, Missouri for two years in building maintenance.
Lynne Beaver has been working at LaVerna Village, a nursing home operated by the Sisters
of St. Francis, in Savannah, Missouri, for 18 months as a certified nurse’s aide, as a result of a one
month course provided by the employer that resulted in licensure as a certified nurse’s aide
(CNA).
Lynne and Tom have received a discharge of their dischargeable debts on July 15, 2004.
Lynne drives a decade-ole automobile owned by her grandmother. Tom’s driving
Case 04-05013-jwv Doc 11 Filed 09/13/04 Entered 09/13/04 10:19:50 Desc Main
Document Page 2 of 7

3
privilege has been revoked for 10 years by the Missouri Department of Revenue as a result of
previous alcohol-related traffic offenses.
Lynne obtained the student loan in 1990 or 1991, and the loan has been in repayment status
since 1992. Most payments have been in the form of federal income tax refund intercepts. The
balance of the loans have increased due to accrual interest from about $12,000 to about
$22,233.86.
Lynne is 40 years of age. Lynne’s education consists of: (a) one year course in travel and
tourism and ticketing/marketing, at Northwest Community College, a proprietary school that is no
longer in business; and (b) on the job training for certified nursing aide (CNA) licensing. The
student loan debt was incurred in connection with the course in travel and tourism and
ticketing/marketing. Lynne has never found employment in travel and tourism, such as
employment at a travel agency or as a ticket agent for a commercial air carrier.
Lynne’s work history includes:
(a) LaVerna Village nursing home, since January, 2001.
(b) A & G Steakhouse, Savannah, Missouri (waitress) 4 months in 2000.
(c) H & R Block, Savannah, Missouri (seasonal tax return preparer) 4 months in
2000.
(d) 36th Street Food & Drink, St. Joseph, Missouri (waitress) 2 years in 1999-
2000.
(e) Nick’s Restaurant, Tallahassee, Florida (waitress) 2-1/2 years 1997-1999.
(f) Market Square, a restaurant, in Tallahassee, Florida (waitress) 1-1/2 years
(1996-97).
(g) Nick’s Restaurant, Tallahassee, Florida (waitress) 2 years 1993-1995.
Case 04-05013-jwv Doc 11 Filed 09/13/04 Entered 09/13/04 10:19:50 Desc Main
Document Page 3 of 7

4
Lynne’s job skills are, therefore: bartender, waitress, seasonal individual income tax return
preparer and certified nurses’ aide.
Lynne currently earns monthly net income from her employment of $710.68, and receives
child support of $341 per month, or $1,051.68. Tom earns $826 per month, and after withholding
of $100 in payroll deductions and $300 in child support for his children who do not live in the
debtors’ home, brings home $416 per month. Household net income is $1,467.68 per month.
Lynne and Tom have joint, reasonably necessary living expenses of $1,405.00 per month.
They live in a $9,000 unencumbered house in a rural community and commute 30 miles each way
to their place of employment.
II. DISCUSSION
A. Applicable Legal Principles
Under § 523(a)(8), certain student loans are nondischargeable unless repayment of the loan
would impose an undue hardship on the debtor or her dependents. A determination of undue
hardship is a factual determination based on the particular circumstances of a debtor at the time the
debtor receives a discharge. Bender v. Education Credit Management Corp. (In re Bender), 368
F.3d 846, 848 (8th Cir. 2004) (stating that “‘[u]ndue hardship’ is an inherently discretionary
determination . . . bankruptcy courts must consider the “totality of the circumstances” by
synthesizing: “(1) the debtor’s past, present, and reasonably reliable future financial resources; (2)
a calculation of the debtor’s and her dependent’s reasonable necessary living expenses; and (3)
any other relevant facts and circumstances surrounding each particular bankruptcy case.” Long v.
Educational Credit Management Corp. (In re Long), 322 F.3d 549, 554 (8th Cir. 2003).
“Simply put, if the debtor’s reasonable future financial resources will sufficiently cover payment
of the student loan debt – while still allowing for a minimal standard of living – then the debt
Case 04-05013-jwv Doc 11 Filed 09/13/04 Entered 09/13/04 10:19:50 Desc Main
Document Page 4 of 7

5
should not be discharged.” Id. At 554-55. The burden is on the debtor to show undue hardship by
a preponderance of the evidence. Ford v. Student Loan Guarantee Foundation of Arkansas (In
re Ford), 269 B.R. 673, 675 (B.A.P. 8th Cir. 2001). When examining a debtor’s financial
prospects for repaying a student loan, courts have considered numerous factors, including:
(1) total present and future incapacity to pay debts for reasons not within the
control of the debtor; (2) whether the debtor has made a good faith effort to
negotiate a deferment or forbearance of payment; (3) whether the hardship will be
long-term; (4) whether the debtor has made payments on the student loan; (5)
whether there is permanent or long-term disability of the debtor; (6) the ability of
the debtor obtain gainful employment in the area of ... study; (7) whether the debtor
has made a good faith effort to maximize income and minimize expenses; (8)
whether the dominant purpose of the bankruptcy petition was to discharge the
student loan; and (9) the ratio of student loan debt to total indebtedness.
Fahrer v. Sallie Mae Servicing Corp. (In re Fahrer), 308 B.R. 27, 32 (Bankr. W. D. Mo. 2004).
B. Analysis of the Totality of the Circumstances
1. Debtor’s Past, Current and Future Financial Resources
Lynne has been consistently employed and has consistently received support from her
children’s father. She has been working at employment that is consistent with her education and
vocational training. Her opportunities for promotion or advancement in earnings at her present
employment are doubtful. The physical demands on a nurse’s aide, in light of previous physical
injuries sustained by Lynne prior to undertaking employment in the nursing home, suggest that she
may not be capable of continuing this employment until retirement. Lynne’s job skills obtained
almost 12 years ago for use in the travel and tourism industry have likely become obsolete so as to
have no value in the job market. Her current job skills are not likely to be transferable to other
types of employment.
2. Debtor’s Reasonable Necessary Living Expenses
At $1,400 per month for the debtors and the children living with them is minimal. That
Case 04-05013-jwv Doc 11 Filed 09/13/04 Entered 09/13/04 10:19:50 Desc Main
Document Page 5 of 7

6
sum, which does not include a mortgage payment or installment payment for an automobile,
includes continuing, non-dischargeable fines being paid by Tom to Harrison and Buchanan
Counties, Missouri. It is foreseeable that they will need to purchase an automobile in the future
to continue their employment.
3. Other Unique Circumstances
The ability of Lynne and Tom to obtain higher compensation at other employment is
complicated in part by their transportation dilemma resulting from Tom’s revocation of his driving
period for 10 years. This compels them to seek employment close to one another within a
reasonable distance from their home.
III. CONCLUSION AND ORDER
Nothing about Lynne’s income or employment suggests that her financial situation is
likely to materially improve, after considering (1) her past, present and reasonably reliable future
financial resources; (2) a calculation of her and her dependents’ reasonable necessary living
expenses; and (3) any other relevant facts and circumstances surrounding this case, including her
lack of usable job skills, and a large number of dependents, and her good faith attempts to pay the
debt in the repayment period to date.
Under the totality of the circumstances of this particular case, based on a preponderance of
the evidence adduced by affidavit and the record, the Plaintiff’s liability to the Defendant for the
educational loan should be found to be dischargeable, as the opposite result would result in undue
hardship. It is therefore
ORDERED that the Debtor is hereby granted a discharge of her indebtedness to the United
States Department of Education under 11 U.S.C. § 523(a)(8).
This memorandum opinion constitutes the Court’s findings of fact and conclusions of law.
Case 04-05013-jwv Doc 11 Filed 09/13/04 Entered 09/13/04 10:19:50 Desc Main
Document Page 6 of 7

7
A separate order will be entered pursuant to Fed. R. Bankr. P. 9021.
ENTERED this 13th day of September 2004.
at Kansas City, Missouri
/s/ Jerry W. Venters
Jerry W. Venters
United States Bankruptcy Judge
Parties to Receive Electronic Notice
Case 04-05013-jwv Doc 11 Filed 09/13/04 Entered 09/13/04 10:19:50 Desc Main
Document Page 7 of 7