Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-almb-3_12-ap-08021/USCOURTS-almb-3_12-ap-08021-0/pdf.json

Parties Involved:
Valerie Amoroso Al-Riyami
Plaintiff
United States Department of Education
Defendant

Document Text:

UNITED STATES BANKRUPTCY COURT

MIDDLE DISTRICT OF ALABAMA

In re: Case No. 12-80935 

Chapter 7

VALERIE AMOROSO AL-RIYAMI,

Debtor.

____________________________

VALERIE AMOROSO AL-RIYAMI,

Plaintiff,

v. Adv. Proc. 12-08021

UNITED STATES DEPARTMENT 

OF EDUCATION,

Defendant.

MEMORANDUM OPINION

Before the court is Valerie Amoroso Al-Riyami’s (“Al-Riyami”) 

complaint to determine the dischargeability of her student loan debts to the 

United States Department of Education (“USDE”). Trial was held in 

Opelika, Alabama on August 16, 2013. At trial, Al-Riyami was represented 

by her attorney, Charles M. Ingrum, Jr., and USDE was represented by its 

counsel, DeAnne M. Calhoon. For the following reasons, judgment will 

enter in favor of Al-Riyami holding these debts are dischargeable under 11 

U.S.C. § 523(a)(8). 

Jurisdiction

The court’s jurisdiction in this matter is derived from 28 U.S.C. § 1334 

and from an order of The United States District Court for this district 

wherein that court’s jurisdiction in title 11 matters was referred to the 

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bankruptcy court. See General Order of Reference [of] Bankruptcy Matters 

(M.D. Ala. April 25, 1985). Further, because this adversary proceeding 

involves the dischargeability of a particular debt, this is a core proceeding 

under 28 U.S.C. § 157(b)(2)(I), thereby extending this court’s jurisdiction to 

the entry of a final order of judgment. 

Findings of Fact

Al-Riyami attended college at Auburn University at Montgomery and 

at the University of Alaska. Her education at these two institutions was 

financed, in part, by loans from USDE. She graduated in 1999 majoring in 

sociology. As of the trial date, Al-Riyami’s consolidated debt for these 

student loans was approximately $82,160.19; comprised of $66,704.47 

principal and $15,455.72 interest. Interest currently accrues on that loan at 

the rate of 7%. 

 

In April of 2000, Al-Riyami was employed by the Army and Air Force 

Exchange Service (AAFES) earning approximately $33,000 per year. She 

worked with AAFES for approximately 10 years. During a part of her 

tenure with AAFES, Al-Riyami worked abroad. 

In 2001, Al-Riyami consolidated her student loans. She made 

sporadic payments on the student loan throughout the time of her AAFES 

employment. While she was employed with AAFES, Al-Riyami paid 

approximately $8,500.00 on her student loan debt. However, during that 

same period, she was regularly in a forbearance status with respect to the 

loans and during those times, made no payments. 

In February 2011, Al-Riyami’s student loan debt officially was placed 

in default status. 

Al-Riyami was unemployed for a year after she left AAFES. Then, in 

June 2011, she was employed by University Day Care in Auburn, Alabama. 

There, she earned $8.50 per hour. While working in the day care center, 

Al-Riyami sustained a knee injury that required her to miss time from work. 

Although she still experiences pain in her knee, that injury has healed and 

is not debilitating. 

In March 2013, Al-Riyami began work with Onin Staffing as a 

business development manager. There, she earns $10.50 per hour 

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working a 40 hour week. Currently, Al-Riyami’s net income totals 

approximately $1,950.00 per month from her Onin Staffing earnings and 

from food stamps. 

Al-Riyami’s household expenses include $725.00 month rent, 

$125.00 month electric service, $75.00 month water, $20.00 month 

garbage, $500.00 month food, $50.00 month clothing, $220.00 month 

transportation, and $780.00 month child care.1 These expenses total 

$2495.00 and result in a monthly household deficit of about $545.00. That 

deficit is currently made up by assistance from her parents and money she 

occasionally receives from her estranged husband. 

Al-Riyami is 40 years old. She has two dependent children, ages 8 

and 4 years. As earlier noted, she is separated from her husband. AlRiyami desires a divorce from her husband, but she cannot afford the 

required legal fees to obtain one. She owns no automobile but does have 

the loan of a car from her parents. 

Al-Riyami has regularly searched for higher paying employment but 

without success. Returning to work at AAFES, where she earned 

substantially more but where she was deployed overseas, is impractical 

due to the care requirements of her minor children. 

The USDE has offered to reduce Al-Riyami’s debt to $45,000.00 and 

lower the interest rate on that debt to 3% if she will agree to participate in 

an income based repayment program. Under that program, payment on 

the debt would be contingent upon Al-Riyami’s income, and any amount of 

the debt that remained unpaid would be forgiven after 25 years. Based 

upon Al-Riyami’s current income, she would not be required under the 

program to make any payment on the loan. 

Conclusions of Law

Ordinarily, student loan debts are not dischargeable in bankruptcy. 

An exception to this rule exists when the repayment of the student loan 

 

1Al-Riyami’s expense itemization does not include costs for a vehicle and insurance, 

telephone, haircuts, recreation, or for unanticipated emergencies. 

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would result in an undue hardship for the debtor and the debtor’s 

dependents if the loan repayment was required.2

The phrase “undue hardship” is not defined by the Bankruptcy Code. 

The court of appeals for this circuit in Hemar Insurance Corporation of 

America v. Cox (In re Cox), 338 F.3d 1238 (11th Cir. 2003), however, has 

adopted the three-part test for determining undue hardship originally 

announced by the Second Circuit in Brunner v. New York State Higher 

Education Services Corp., 831 F.2d 395 (2nd Cir. 1987). The so-called 

Brunner test for “undue hardship” requires the debtor to show:

(1) that the debtor cannot maintain, based on current income 

and expenses, a “minimal” standard of living for herself and her 

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. 

Cox, 338 F.3d at 1241 (quoting Brunner, 831 F.2d at 396). 

Brunner Test’s First Prong: Minimal Living Standard

The first prong of the Brunner test requires the court to consider the 

debtor’s current income and expenses to determine whether she can 

maintain a minimal standard of living if required to repay the student loans. 

While there is no precise definition of the phrase “minimal standard of 

living,” that standard does not condemn the debtor to a life of abject 

poverty. Pennsylvania Higher Educ. Assistance Agency v. Faish (In re 

Faish), 72 F.3d 298, 305 (3rd Cir. 1995). On the other hand, the mere fact 

that repayment of the student loans would be difficult for the debtor is not 

enough to result in the discharge of the debts. Faish, 72 F.3d at 306-07; 

 

2

The statute provdes:

(a) A discharge under 727, 1141, 1228(a), 1228(b), or 1328(b) of this title does not 

discharge an individual debtor from any debt–...

 (8) for an educational benefit overpayment or loan made, insured, or guaranteed by 

a governmental unit or nonprofit institution, or for an obligation to repay funds received 

as an educational benefit, scholarship, or stipend, unless excepting such debt from 

discharge under this paragraph will impose an undue hardship on the debtor and the 

debtor’s dependents. 

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United Student Aid Funds, Inc. V. Nascimento (In re Nascimento), 241 B.R. 

440, 445 (9th Cir. BAP 1999). In short, the hardship of repayment must be 

undue. Therefore, a minimal standard of living lies somewhere between 

poverty and mere difficult. In order to make this determination the court 

must examine the debtor’s income and reasonable expenses in light of her 

particular circumstances to determine whether repayment would impose an 

undue hardship. Ivory v. United States (In re Ivory), 269 B.R. 890 (Bankr. 

N.D. Ala. 2001).

In this case, Al-Riyami’s reasonable expenses exceed her income, 

which includes some public assistance, by over $500.00 per month. 

Further, her estimate of expenses is a bare-boned one in which she omits 

expenses that almost certainly will arise. Taking these omitted expenses 

into account only increases the projected monthly deficit and makes it clear 

that Al-Riyami cannot maintain a reasonable standard of living if required to 

repay these student loan obligations. 

Brunner Test’s Second Prong: Persistent Circumstance

The second prong of the Brunner test requires the court to look into 

the foreseeable future and determine whether the debtor’s inability to repay 

the loans and maintain a minimal standard of living is likely to persist. The 

court concludes that it is.

That conclusion is bolstered by these facts. While USDE argues that 

Al-Riyami has had past employment for which she earned upwards of 

$30,000.00 a year, and that she has potential to earn that amount in the 

future, that argument, however, ignores that Al-Riyami’s higher paying job 

was one that she held overseas. Today and for the foreseeable future, 

that type employment, however, is impractical for her. Al-Riyami has two 

minor children who she is rearing as a single mother, and for that reason 

alone, high paying employment outside this country is out of the question

for Al-Riyami. 

Further, the evidence shows that Al-Riyami has diligently searched 

for higher paying jobs. In spite of these efforts, the only employment 

opportunities that she has found are those that pay in the area of minimum 

wage. Her degree in sociology is not highly marketable and does not offer 

a realistic hope of a higher paying job. 

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For these reasons, the court finds that Al-Riyami has proven the 

second prong of the Brunner test; that her current circumstances are likely 

to persist into the foreseeable future. 

Brunner Test’s Third Prong: Prior Good Faith Effort to Repay

Under this prong of the undue hardship test, the debtor must prove 

that she has made a good faith effort to repay her student loans. During 

the time that Al-Riyami was employed overseas, she made payments of 

about $8,500.00 on her student loan debt. During that same period, AlRiyami’s account was from time to time placed in a forbearance status. 

During the forbearance periods, she of course made no payments. In 

short, the evidence leads the court to conclude that Al-Riyami paid on her 

student loan debts when she could and when she was unable to do so, 

sought to have the loans placed in forbearance status. 

USDE contends that Al-Riyami’s good faith effort to repay the loans, 

or lack thereof, is demonstrated by her failure to participate in an Income 

Contingent Repayment Plan. If Al-Riyami participated in such a plan, her 

obligation to make payments on the loans would be contingent upon her 

level of income. Her current income would not require her to make a 

payment on the loans. In addition, any unpaid balance of the loan would 

be forgiven at the end of 25 years. 

The Eleventh Circuit has rejected a per se rule that a debtor cannot 

show good faith where he or she has not enrolled in the income contingent 

repayment program. Educational Credit Management Corp. v. Mosley (In 

re Mosley, 494 F.3d 1320, 1327 (11th Cir. 2007). “Even extremely low 

repayment amounts through the use of such programs do not necessarily 

require a debtor to enroll in order to establish good faith. In re McLaney, 

375 B.R. 666, 677 (M.D. Ala. 2007)(citing In re Durrani, 311 B.R. 496, 506 

(Bankr. N.D. Ill. 2004). 

In this case, the debtor has clearly demonstrated that she lacks the 

ability to repay these student loans. Those circumstances will almost 

certainly continue into the foreseeable future. Therefore, in the view of the 

court, it would be a fruitless exercise to shackle the debtor to a contingent 

repayment plan. See In re Bronsdon, 435 B.R. 791, 803 (1st Cir. BAP 

2010). To do so is not required under 11 U.S.C. § 523(a)(8). 

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Conclusion

For the foregoing reasons, the court finds that Al-Riyami’s student 

loan debts owed to USDE are dischargeable under 11 U.S.C. § 523(a)(8). 

Pursuant to Fed. R. Bankr. Proc. 9021, a separate order will enter holding 

the claims of USDE dischargeable. 

Done this the 6th day of January, 2014.

/s/ Dwight H. Williams, Jr.

United States Bankruptcy Judge

c: Charles M. Ingrum, Jr., Plaintiff’s Attorney

 DeAnne M. Calhoon, Defendant’s Attorney

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