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UNITED STATES BANKRUPTCY APPELLATE PANEL

OF THE TENTH CIRCUIT

IN RE TIMOTHY JAMES NELSON

and SHANNON DEANNE NELSON,

Debtor.

BAP No. KS-04-017

EDUCATIONAL CREDIT

MANAGEMENT CORPORATION,

Plaintiff – Appellant,

Bankr. No. 98-41327-13

Adv. No. 03-7025

 Chapter 13

v.

TIMOTHY JAMES NELSON,

Defendant – Appellee.

JUDGMENT

Filed December 14, 2004

Before CORNISH, MICHAEL, and THURMAN, Bankruptcy Judges.

This case originated in the United States Bankruptcy Court for the District

of Kansas at Topeka.

The judgment of that court is REVERSED.

For the Panel:

Barbara A. Schermerhorn, Clerk of Court

By:

Deputy Clerk

BAP Appeal No. 04-17 Docket No. 59 Filed: 12/14/2004 Page: 1 of 9
FILED

U.S. Bankruptcy Appellate Panel

of the Tenth Circuit

December 14, 2004

Barbara A. Schermerhorn

Clerk PUBLISH

UNITED STATES BANKRUPTCY APPELLATE PANEL

OF THE TENTH CIRCUIT

IN RE TIMOTHY JAMES NELSON

and SHANNON DEANNE NELSON,

Debtor.

BAP No. KS-04-017

EDUCATIONAL CREDIT

MANAGEMENT CORPORATION,

Plaintiff – Appellant,

Bankr. No. 98-41327-13

Adv. No. 03-7025

 Chapter 13

v. OPINION

TIMOTHY JAMES NELSON,

Defendant – Appellee.

Appeal from the United States Bankruptcy Court

for the District of Kansas

Craig R. Welling (Scott M. Browning with him on the brief) of Rothgerber

Johnson & Lyons LLP, Denver, Colorado (N. Larry Bork of Goodell Stratton

Edmonds & Palmer, L.L.P., Topeka, Kansas, with them on the brief), for the

Plaintiff – Appellant.

John R. Hooge, Lawrence, Kansas, for the Defendant – Appellee.

Before CORNISH, MICHAEL, and THURMAN, Bankruptcy Judges.

THURMAN, Bankruptcy Judge.

Educational Credit Management Corporation (ECMC) timely appeals a

final Judgment entered by the United States Bankruptcy Court for the District of

Kansas discharging the debtors’ student loan debt remaining unpaid after

BAP Appeal No. 04-17 Docket No. 59 Filed: 12/14/2004 Page: 2 of 9
1 28 U.S.C. § 158(a)(1); Fed. R. Bankr. P. 8002(a).

2 28 U.S.C. § 158(b)-(c); Fed. R. Bankr. P. 8001(e).

3 Chapter 13 Plan at 2-3, Appellant’s Appendix at 298-99.

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completion of their confirmed Chapter 13 Plan.1 The parties have consented to

this Court’s jurisdiction because they have not elected to have the appeal heard by

the United States District Court for the District of Kansas.2

 For the reasons stated

below, the bankruptcy court’s Judgment is REVERSED.

I. Background

The debtors filed a Chapter 13 petition on May 5, 1998. They scheduled

ECMC’s predecessor in interest (who will be referred to as “ECMC”) as a

creditor, holding a general unsecured claim against both of them for unpaid

student loans. 

The Chapter 13 Plan originally proposed by the debtors stated, in relevant

part, that: 

SPECIAL CLASS CREDITORS: Three classes:

. . . . 

(3) School loans that are non-dischargeable in chapter 7 case. To

be paid 10% of debt, along with all other unsecured creditors

(see “General Unsecured Creditors.[)] Such payment, upon

completion of plan, will result in discharge of all school loans,

including any accrued interest and collection costs. School

loans composed of: . . . $19,429 approx.

. . . .

SPECIAL NOTES: 

If there is a special class for which 100% payment is not proposed, it

is the intention and understanding of the debtor(s) that any remaining

balance for any claim in this class remains, upon completion of the

plan, a non-dischargeable obligation of the debtor(s).3

Prior to confirmation of this proposed Plan, the debtors amended it to delete the

“Special Notes” provision, stating that it “contradicts other language of the Plan

BAP Appeal No. 04-17 Docket No. 59 Filed: 12/14/2004 Page: 3 of 9
4 Amendment of Plan, Appellant’s Appendix at 308.

5 Unless otherwise stated, all statutory references in the text are to title 11 of

the United States Code.

6 Federal Rule of Civil Procedure 60(b) is made applicable in bankruptcy

cases by Federal Rule of Bankruptcy Procedure 9024.

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and [is] incorrect” (Amended Plan).4 The Amended Plan, therefore, clarified the

debtors’ intent to discharge the unpaid balance of their student loan debt under

the Amended Plan. This Amended Plan and a notice of confirmation hearing were

served on ECMC, but ECMC did not object to confirmation of the Amended Plan. 

During this same period of time, however, ECMC filed a proof of claim, asserting

a general unsecured claim in the amount of $20,200.14. 

On October 12, 1998, the bankruptcy court entered an Order confirming the

debtors’ Amended Plan (Confirmation Order). ECMC, who was served with the

Confirmation Order, did not appeal it, or timely request that it be revoked.

The debtors completed payments required under their Amended Plan in

2002. ECMC was paid approximately $2,020.01 through the Amended Plan. On

September 27, 2002, the bankruptcy court entered a “Discharge Order,” granting

the debtors a discharge pursuant to 11 U.S.C. § 1328(a).5

 Contrary to the

Amended Plan, the Discharge Order states, in accordance with § 1328(a), that the

debtors’ unpaid student loan debt was exempt from discharge.

In March 2003, several years after the bankruptcy court entered its

Confirmation Order and several months after entry of the Discharge Order, ECMC

filed a motion to amend the Confirmation Order pursuant to Federal Rule of Civil

Procedure 60(b) to omit the provisions discharging the debtors’ unpaid student

loan debt (ECMC Rule 60(b) Motion).6

 The debtors objected to the ECMC Rule

60(b) Motion, and moved to amend the Discharge Order pursuant to Federal Rule

of Civil Procedure 60(a) to recognize the discharge of their unpaid student loans

BAP Appeal No. 04-17 Docket No. 59 Filed: 12/14/2004 Page: 4 of 9
7 Federal Rule of Civil Procedure 60(a) is made applicable in bankruptcy

cases by Federal Rule of Bankruptcy Procedure 9024.

8 The debtor-husband is the only named defendant in ECMC’s adversary

proceeding, despite the fact that the debtors scheduled student loan debt to ECMC

as a joint debt. The bankruptcy court’s Judgment, which disposes of the ECMC

Rule 60(b) Motion and the Debtor Rule 60(a) Motion, is in favor of both debtors. 

While this Court cannot presume jurisdiction over a non-party below, we assume

that the debtor-wife was a party below by way of her participation in the Debtor

Rule 60(a) Motion, and objection to the ECMC Rule 60(b) Motion.

9 Judgment on Decision at 1, Appellant’s Appendix at 419. 

10 Educ. Credit Mgmt. Corp. v. Boyer (In re Boyer), 305 B.R. 42 (Bankr. D.

Kan. 2004). This Memorandum and Order contains findings of fact and

conclusions of law related to the Judgment entered in the debtor’s case, captioned

above, as well the Judgments entered in three other Chapter 13 cases involving

similar facts and issues. Educ. Credit Mgmt. Corp. v. Boyer (In re Boyer), Bankr.

No. 96-42993-13, Adv. No. 02-7141 (Bankr. D. Kan.); In re Seiwert, Bankr. No.

96-43032-13 (Bankr. D. Kan.); In re Mersmann, Bankr. No. 98-41940-13 (Bankr.

D. Kan.) [hereinafter referred to collectively as the “Related Debtor Cases”]. 

11 179 F.3d 1253 (10th Cir. 1999).

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authorized in the Confirmation Order (Debtor Rule 60(a) Motion).7 ECMC

objected to the Debtor Rule 60(a) Motion.

ECMC also commenced an adversary proceeding against the debtorhusband, seeking a declaration as to the dischargeability of the student loan debt,

incorporating the arguments made in conjunction with the ECMC Rule 60(b)

Motion.8

 The debtor-husband answered ECMC’s Complaint, asserting in a

“Counter-Complaint” that the Confirmation Order discharged the unpaid student

loans. Ultimately, the parties filed Stipulations of Fact to govern the disposition

of the adversary proceeding, and briefs were filed. 

The bankruptcy court entered a Judgment in the adversary proceeding in

favor of the debtors, stating “that the student loan debt owed to ECMC has been

discharged.”9

 In a separate Memorandum and Order, the court granted the Debtor

Rule 60(a) Motion and denied the ECMC Rule 60(b) Motion.10 Applying

Andersen v. UNIPAC-NEBHELP (In re Andersen),

11 the bankruptcy court held

that ECMC could not collaterally attack the final Confirmation Order, which

BAP Appeal No. 04-17 Docket No. 59 Filed: 12/14/2004 Page: 5 of 9
12 ECMC also appealed the Judgment entered by the bankruptcy court in each

of the Related Debtor Cases. The bankruptcy court’s Judgment in two of the

Related Debtor Cases is reversed for the same reasons stated in this Opinion. 

Educ. Credit Mgmt. Corp. v. Boyer (In re Boyer), BAP No. KS-04-015 (10th Cir.

BAP filed Dec. 14, 2004); In re Seiwert, BAP No. KS-04-016 (10th Cir. BAP

filed Dec. 14, 2004). In the third Related Debtor Case, In re Mersmann, we have

entered concurrently herewith an Opinion affirming the bankruptcy court’s

Judgment. __ B.R. __, BAP No. KS-04-018 (10th Cir. BAP filed Dec. 14, 2004). 

Unlike this debtor’s case or the other two Related Debtor Cases, the discharge

clause in the confirmed plan in Mersmann contained a “finding of undue

hardship” and, therefore, under Andersen, 179 F.3d at 1256, that finding was

binding on ECMC. See Poland v. Educ. Credit Mgmt. Corp. (In re Poland), 382

F.3d 1185, 1189 (10th Cir. 2004) & discussion infra.

13 11 U.S.C. § 523(a)(8); see id § 1328(a)(2) (discharge under § 1328(a)

applies to debts except those of the kind specified in § 523(a)(8).)

14 Tenn. Student Assistance Corp. v. Hood, 124 S. Ct. 1905, 1912 (2004).

15 Fed. R. Bankr. P. 4007(a)-(b) (debtor entitled to file a complaint to

determine dischargeability of a debt at any time) & 7001(6) (dischargeability of

debt determined in adversary proceeding); Poland, 382 F.3d at 1189 (adversary

proceeding required, and debtor has burden to prove “undue hardship”);

Andersen, 179 F.3d at 1256 (same); Mersmann, __ B.R. __, BAP No. KS-04-018,

Slip. Op. at 5-6; see generally Educ. Credit Mgmt. Corp. v. Polleys (In re

Polleys), 356 F.3d 1302 (10th Cir. 2004) (discussing elements of “undue

hardship”); In re Woodcock, 45 F.3d 363 (10th Cir. 1995) (debtor has burden to

prove “undue hardship”); Alderete v. Educ. Credit Mgmt. Corp. (In re Alderete),

(continued...)

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authorized the discharge of the debtors’ student loan debt as set forth in their

Amended Plan. It also corrected the Discharge Order to reflect the discharge of

the unpaid student loan debt. This appeal followed.12

II. Discussion

Section 523(a)(8) states that student loan debts are nondischargeable,

unless excepting them from discharge “will impose an undue hardship on the

debtor and the debtor’s dependents.”13 This provision is expressly “selfexecuting” and, therefore, “[u]nless the debtor affirmatively secures a[n undue]

hardship determination,” the student loan debt is excepted from discharge.14 To

obtain an “undue hardship” determination under § 523(a)(8), the debtor must file

a complaint against the holder of the student loan debt, and prove “undue

hardship” by a preponderance of the evidence.15

BAP Appeal No. 04-17 Docket No. 59 Filed: 12/14/2004 Page: 6 of 9
15 (...continued)

308 B.R. 495 (10th Cir. BAP 2004) (discussing elements of “undue hardship,”

and debtor has burden of showing by preponderance of the evidence).

16 See, e.g., Andersen, 179 F.3d at 1256 (“a debtor must normally prove undue

hardship by bringing an adversary proceeding directed to that issue”), quoted in

Poland, 382 F.3d at 1187; see generally supra n.15 (citing controlling case law).

17 See supra n.10.

18 179 F.3d at 1256.

19 __ B.R. __, BAP No. KS-04-018, Slip Op. at 6-7. 

20 382 F.3d 1185 (10th Cir. 2004).

-6-

While these procedures for obtaining a § 523(a)(8) “hardship discharge” are

well-established,16 some Chapter 13 debtors (such as the debtor in this case, the

debtors in the Related Debtors Cases, and numerous others)17 have attempted to

circumvent them by obtaining confirmation of plans containing provisions

discharging student loans at confirmation or completion. These debtors contend

that such plan provisions are supported by Andersen.18 In Andersen, the Court of

Appeals for the Tenth Circuit applied principles of res judicata and policies

favoring finality of confirmation orders to uphold an uncontested plan provision

discharging a student loan debt as an “undue hardship,” even though the Chapter

13 debtor never established “undue hardship” in an adversary proceeding. 

Although Andersen prohibits holders of student loans from collaterally attacking

certain confirmed plans improperly discharging student loan debt, as we explain

in greater detail in In re Mersmann,19 it is not a tool for Chapter 13 debtors to

obtain a hardship discharge by confirmation.

We need not address the application of Andersen in this case. 

Significantly, after the bankruptcy court entered its Judgment, the Tenth Circuit

issued Poland v. Educational Credit Management Corp. (In re Poland),

20 which

severely limits the scope of Andersen and compels us to reverse the bankruptcy

court’s Judgment. 

BAP Appeal No. 04-17 Docket No. 59 Filed: 12/14/2004 Page: 7 of 9
21 Id. at 1187 (quoting the debtor’s confirmed plan).

22 The confirmed plan in Andersen stated: “Pursuant to 11 U.S.C.

§ 523(a)(8), excepting the aforementioned educational loans from discharge will

impose an undue hardship on the debtor and the debtor’s dependents. 

Confirmation of the debtor’s plan shall constitute a finding to that effect and that

said debt is dischargeable.” 179 F.3d at 1254 (emphasis added).

23 Poland, 382 F.3d at 1188.

24 Id. at 1188-89 (citations and footnote omitted).

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In Poland, the debtor’s confirmed plan stated that if ECMC failed to file a

proof of claim, “‘the claim shall be deemed discharged in its entirety upon

completion of the Plan.’”21 The Tenth Circuit held that this discharge provision

did not bind ECMC because, unlike the confirmed plan in Andersen,

22 it was not a

“finding of undue hardship.”23 Specifically, the court stated: 

ECMC argues that the district court in this case is expanding

Andersen “so that a plan would not even have to state a premise that,

if true, would otherwise allow discharge.” ECMC asserts that the

“plan language on its face doesn’t state a sufficient basis for

discharge [because it does not contain a finding of undue hardship]

and therefore the student loan debt should not be discharged.” We

agree. Andersen rests on the fact that confirmation of the plan, to

which there was no objection, amounted to a binding adjudication of

undue hardship thereby turning a nondischargeable debt into a

dischargeable debt.

. . . .

Because neither the plan nor the discharge order in this case contain

any type of finding of undue hardship, we hold that Andersen does

not apply and that the student loan debt is not discharged. We

continue to emphasize, as we did in Andersen, that the proper way to

discharge a student loan debt is through an adversary proceeding

where the debtor establishes undue hardship.24

Accordingly, under Poland, a confirmed plan stating that student loan debt is

discharged will not discharge such debt, unless the plan makes an express

“finding of undue hardship.”

Similar to the plan in Poland, the debtors’ confirmed Amended Plan makes

no finding of undue hardship and, therefore, it does not discharge the debtors’

BAP Appeal No. 04-17 Docket No. 59 Filed: 12/14/2004 Page: 8 of 9
25 The debtors, however, may file a complaint seeking to discharge their

student loans pursuant to § 523(a)(8) at any time. Fed. R. Bankr. P. 4007(a)-(b);

see id. 7001(6). 

-8-

unpaid student loan debt.25 Accordingly, the bankruptcy court’s Judgment,

discharging the debtors’ student loan debt pursuant to Andersen, must be

reversed.

III. Conclusion

The bankruptcy court’s Judgment is REVERSED.

BAP Appeal No. 04-17 Docket No. 59 Filed: 12/14/2004 Page: 9 of 9