Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-04-00018/USCOURTS-ca10-04-00018-0/pdf.json

Parties Involved:
Educational Credit Management Corporation
Appellant
Patti Jan Mersmann
Appellee

Document Text:

UNITED STATES BANKRUPTCY APPELLATE PANEL

OF THE TENTH CIRCUIT

IN RE PATTI JAN MERSMANN,

Debtor.

BAP No. KS-04-018

EDUCATIONAL CREDIT

MANAGEMENT CORPORATION,

Appellant,

Bankr. No. 98-41940-13

 Chapter 13

v.

PATTI JAN MERSMANN,

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 AFFIRMED.

For the Panel:

Barbara A. Schermerhorn, Clerk of Court

By:

Deputy Clerk

BAP Appeal No. 04-18 Docket No. 58 Filed: 12/14/2004 Page: 1 of 14
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 PATTI JAN MERSMANN,

Debtor.

BAP No. KS-04-018

EDUCATIONAL CREDIT

MANAGEMENT CORPORATION,

Appellant,

Bankr. No. 98-41940-13

 Chapter 13

v. OPINION

PATTI JAN MERSMANN,

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 L.L.P., Denver, Colorado (N. Larry Bork of Goodell Stratton

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

Appellant.

John R. Hooge, Lawrence, Kansas, for the 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 debtor’s student loan debt remaining unpaid after

BAP Appeal No. 04-18 Docket No. 58 Filed: 12/14/2004 Page: 2 of 14
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 1-2, Appellant’s Appendix at 450-51.

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completion of her 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 AFFIRMED. 

I. Background

The debtor filed a Chapter 13 petition in June 1998. She scheduled

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

unsecured creditor, holding a claim for unpaid student loans.

The Chapter 13 Plan proposed by the debtor contained the following

relevant provisions:

GENERAL UNSECURED CREDITORS: Creditors with general

unsecured claims will be paid any funds NOT NECESSARY TO

SATISFY administrative expenses, priority, secured and special class

claims within the initial 36 months of this Plan. . . .

Note - - 10% of all general, unsecured creditors are to be paid

through plan. Upon completion of plan and payment of said 10% of

general, unsecured creditors, all remaining unsecured debts,

including school loans that are non-dischargeable in chapter 7 cases,

shall be discharged.3

The debtor served this Plan and the notice of confirmation hearing on ECMC. 

ECMC did not object to confirmation of the Plan despite the debtor’s proposal to

discharge a large portion of its otherwise nondischargeable student loan claim.

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

a general unsecured claim in the amount of $12,655.88.

On December 9, 1998, the bankruptcy court entered an Order confirming

the debtor’s Plan (Confirmation Order). ECMC, who was served with the

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

BAP Appeal No. 04-18 Docket No. 58 Filed: 12/14/2004 Page: 3 of 14
4 Amendment Motion at 2-3, Appellant’s Appendix at 460-61.

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In February 1999, several months after her Plan was confirmed, the debtor

filed a “Motion to Amend Plan” (Amendment Motion). The amendments she

requested that are relevant to this appeal are as follows:

SPECIAL CLASS CREDITORS: Two classes:

(1) School loans that are non-dischargeable in chapter 7 case - - to

be treated as general unsecured creditors and as follows: 10% of all

allowed general, unsecured creditors are to be paid through plan,

after payment of allowed secured creditors. Upon completion of plan

and payment of said 10% of allowed general, unsecured creditors, all

remaining unsecured debts, including school loans that are otherwise

non-dischargeable in chapter 7 cases, shall be discharged. Said

completion of the plan shall result in a finding that it would be an

undue hardship for the Debtor to have to pay any additional monies

to the special class of school loans not otherwise dischargeable. 

. . . .

GENERAL UNSECURED CREDITORS: . . . . 

(2) 10% of all allowed general, unsecured creditors are to be paid

through plan, after payment of allowed secured creditors. Upon

completion of plan and payment of said 10% of allowed general,

unsecured creditors, all remaining unsecured debts, including school

loans that are otherwise non-dischargeable in chapter 7 cases, shall

be discharged. Said completion of the plan shall result in a finding

that it would be an undue hardship for the Debtor to have to pay any

additional monies to the special class of school loans not otherwise

dischargeable. 

. . . .

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 is discharged upon completion of

the plan.4

Through these amendments, the debtor did not propose to alter the treatment of

ECMC’s claim. As in her confirmed Plan, she proposed to pay 10% of ECMC’s

allowed claim through the Plan and then discharge any amount unpaid at the end

of the Plan’s term. The difference in the requested amendments was to create “a

BAP Appeal No. 04-18 Docket No. 58 Filed: 12/14/2004 Page: 4 of 14
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.

7 Federal Rule of Civil Procedure 60(a) is made applicable in bankruptcy

cases by Federal Rule of Bankruptcy Procedure 9024.

-4-

finding” of “undue hardship” under § 523(a)(8) upon completion of the Plan.5 

The Amendment Motion and notice of that Motion were served on ECMC. 

Despite the debtor’s express statements regarding the dischargeability of her

unpaid student loans, ECMC did not object to the Amendment Motion. In fact, no

responses to the Amendment Motion were filed, and on May 25, 1999, the

bankruptcy court entered an Order Granting Motion to Amend Plan (Amendment

Order). 

The debtor completed payments required under her Amended Plan in 2003. 

ECMC was paid approximately $2,219.00 through the Amended Plan. On June 2,

2003, the bankruptcy court entered a “Discharge Order,” granting the debtor a

discharge pursuant to § 1328(a). Contrary to the Amended Plan, the Discharge

Order states, in accordance with § 1328(a), that the debtor’s unpaid student loan

debt was exempt from discharge.

In September 2003, years after the bankruptcy court entered its

Confirmation Order and Amendment Order and several months after entry of the

Discharge Order, ECMC filed a motion to amend the Confirmation Order and the 

Amendment Order pursuant to Federal Rule of Civil Procedure 60(b) to omit the

provisions discharging the debtor’s unpaid student loan debt (ECMC Rule 60(b)

Motion).6

 The debtor 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 her unpaid student loans authorized in the

Confirmation Order and Amendment Order (Debtor Rule 60(a) Motion).7

 ECMC

BAP Appeal No. 04-18 Docket No. 58 Filed: 12/14/2004 Page: 5 of 14
8 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

the 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); Educ. Credit Mgmt. Corp. v. Nelson (In

re Nelson), Bankr. No. 98-41327-13, Adv. No. 03-7025 (Bankr. D. Kan.)

[hereinafter referred to collectively as the “Related Debtors Cases”]. 

9 ECMC also appealed the Judgment entered by the bankruptcy court in each

of the Related Debtor Cases. Those appeals are disposed of by separate Orders

and Judgments because they are factually distinct from the appeal in this debtor’s

case. See 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); Educ. Credit Mgmt. Corp. v. Nelson (In re

Nelson), __ B.R. __, BAP No. KS-04-017 (10th Cir. BAP filed Dec. 14, 2004).

10 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).)

11 Tennessee Student Assistance Corp. v. Hood, 124 S. Ct. 1905, 1912 (2004).

-5-

objected to the Debtor Rule 60(a) Motion. 

The bankruptcy court, denying the ECMC Rule 60(b) Motion and granting

the Debtor Rule 60(a) Motion, entered Judgment in favor of the debtor. In a

separate Memorandum and Order, it concluded that the portion of student loan

debt not paid to ECMC through the debtor’s Amended Plan was discharged.8

 This

appeal followed.9

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.”10 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.11 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

BAP Appeal No. 04-18 Docket No. 58 Filed: 12/14/2004 Page: 6 of 14
12 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 v. Educ. Credit Mgmt. Corp.

(In re Poland), 382 F.3d 1185, 1189 (10th Cir. 2004) (adversary proceeding

required, and debtor has burden to prove “undue hardship”); Andersen v.

UNIPAC-NEBHELP (In re Andersen), 179 F.3d 1253, 1256 (10th Cir. 1999)

(same); 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), 308 B.R. 495

(10th Cir. BAP 2004) (discussing elements of “undue hardship,” and debtor has

burden of showing by preponderance of the evidence).

13 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.12 (citing controlling case law).

14 See supra n.8.

15 179 F.3d 1253 (10th Cir. 1999).

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hardship” by a preponderance of the evidence.12

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

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

debtors in the Related Debtors Cases, and numerous others)14 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 and advised by Andersen v. UNIPACNEBHELP (In re Andersen).15 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, it is not a tool for Chapter 13

debtors to surreptitiously obtain a hardship discharge by confirmation.

Andersen was a case of first impression that, while decided on preclusion

BAP Appeal No. 04-18 Docket No. 58 Filed: 12/14/2004 Page: 7 of 14
16 382 F.3d 1185, 1188 (10th Cir. 2004).

17 179 F.3d at 1260.

18 382 F.3d at 1189.

19 See e.g., 11 U.S.C. § 1330(a); Fed. R. Civ. P. 60(b)(3) & (b)(6); Fed. R.

Bankr. P. 9011; see also In re Green, 287 B.R. 827 (D. Kan. 2002)(sanctions for

inserting discharge provisions determined on a case by case basis); In re Gardner,

287 B.R. 822 (D. Kan. 2002) (same); In re Wright, 279 B.R. 886 (D. Kan. 2002)

(same); In re Lemons, 285 B.R. 327 (Bankr. W.D. Okla. 2002) (Rule 9011

sanctions imposed for inserting discharge provisions in plans); In re Hensley, 249

B.R. 318 (Bankr. W.D. Okla. 2000) (inserting discharge provisions in plans

violates counsel’s ethical obligations as officers of the court).

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principles, made very clear the court’s recognition of the mandate in § 523(a)(8)

severely limiting the discharge of student loan debt and of the need for debtors to

prove “undue hardship” after filing an adversary proceeding. As pointed out by

the Tenth Circuit in its more recent case, Poland v. Educational Credit

Management Corp. (In re Poland),

16 Andersen is expressly limited to “the

particular facts of [that] case.”17 Andersen can in no way be read to advise that its

limited holding be used by Chapter 13 debtors as a sword to obtain hardship

discharges through the plan confirmation process. Hardship discharge provisions

inserted in Chapter 13 plans after Andersen was issued find little support from

that case. Indeed, through Poland18 and the holding herein, Chapter 13 debtors

are considered warned that the insertion of “undue hardship” findings in a plan or

confirmation order, or any order amending the plan or confirmation order, is

never appropriate and may be grounds for setting such findings aside and/or

sanctions.19

That being said, we now turn to the merits of this case. In so doing, we

agree with the bankruptcy court that: “After a careful reading of Andersen, this

Court cannot fairly distinguish it from the facts of [the debtor’s case], and

therefore finds that ECMC is precluded from now attacking the confirmation

BAP Appeal No. 04-18 Docket No. 58 Filed: 12/14/2004 Page: 8 of 14
20 Boyer, 305 B.R. at 49. The debtor’s original Plan was confirmed and the

Amendment Motion was granted before Andersen was decided.

21 179 F.3d at 1256; compare Poland, 382 F.3d at 1185.

22 382 F.3d at 1185.

23 See, e.g. and compare Related Debtors Cases cited supra nn.8-9.

24 See Poland, 382 F.3d at 1185. The debtor’s original Plan was much like

the Chapter 13 plan in Poland – it declared that the otherwise nondischargeable

student loan debt would be discharged upon plan completion, but it did not make

a “finding” of “undue hardship.” Under Poland, therefore, the debtor’s original

Plan would not have served to discharge her unpaid student loans. 

25 11 U.S.C. § 1329(b)(2).

26 Id. § 1327(a).

27 See id. § 1329(a)-(b)(1).

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order[] . . . .”20 As in Andersen, the discharge provision in the debtor’s Amended

Plan is an express finding of “undue hardship” that, pursuant to the Amendment

Order, “constitutes a binding adjudication of hardship” upon completion of the

Plan.21 Accordingly, as ECMC acknowledges, Poland,

22 which states that

hardship discharge provisions in confirmed plans are not binding absent an

express “finding” of “undue hardship,” does not compel reversal of the

bankruptcy court’s Judgment in this debtor’s case.23 

The only factual distinction between this case and Andersen is that the

“finding” of “undue hardship,” so crucial under Poland, was made in a postconfirmation modification to the debtor’s confirmed Plan.24 This distinction,

however, is without a difference. 

Post-confirmation plan modifications are governed by § 1329, and under

§ 1329(b), “[t]he plan as modified becomes the plan . . . .”25 Thus, the provisions

of a modified plan have the impact of a confirmed plan: they “bind the debtor and

each creditor . . . .”26 Although bankruptcy courts have no authority to modify a

confirmed plan to include “undue hardship” findings,27 this fact has no bearing in

BAP Appeal No. 04-18 Docket No. 58 Filed: 12/14/2004 Page: 9 of 14
-9-

applying the Andersen preclusion analysis. This point is borne out by the

following passage in Andersen:

The essence of ECMC’s argument is that, despite the repeated

failures of HEAF to protect its interests, the Bankruptcy Court

exceeded its authority in confirming a plan that contained provisions

which were contrary to the Code. . . . Without a judicial finding of

such hardship at the close of an adversary proceeding, ECMC

contends that the student loans cannot be discharged. We disagree. 

While Andersen surely had the burden of proving undue hardship,

and while a discharge granted without such proof is inconsistent with

the Code,8

 it is critical that HEAF, as the party affected by this

determination, failed to properly challenge the language at issue, the

interim rulings of the bankruptcy court, or the confirmed plan. As

we discussed above, it is absolutely incumbent upon a creditor to

take an active role in protecting its interests, and a creditor which

fails to do so is in a poor position to later complain about an adverse

result. We echo the wisdom of the Third Circuit that, “[w]hile we do

not understate the importance of the obligation of the bankruptcy

court or the trustee to determine that a plan complies with the

appropriate sections of the Bankruptcy Code prior to confirmation of

the plan, we nonetheless recognize that the affirmative obligation to

object to the . . . plan rested with [HEAF], not with the bankruptcy

court or the trustee.” In re Szostek, 866 F.2d at 1414.

8 For the reasons stated below, a confirmed plan, or any

provision thereof, is not rendered void merely because a

certain provision of the plan may be inconsistent with,

or even contrary to, the Code. . . . .

While Andersen did not properly prove undue hardship pursuant to

the requirements of the Code, we agree with the Third Circuit that,

“after the plan is confirmed the policy favoring the finality of

confirmation is stronger than the bankruptcy court’s and the trustee’s

obligations to verify a plan’s compliance with the Code.” In re

Szostek, 886 F.2d at 1406. As the court recognized in In re Mammel, 221 B.R. 238, 240 (Bankr. N.D. Iowa 1998), “[r]eviewing courts

have been troubled by the tension created by inclusion of arguably

inappropriate plan provisions and the need for finality in confirmed

plan. . . . Most courts ultimately defer to the doctrine of res judicata

because of the compelling need for finality in confirmed plans. 

They, therefore, enforce offending plan provisions even though

acknowledging that a provision may be contrary to the Code. . . .

Moreover, we have recently said that, “[u]pon becoming final,

the order confirming a chapter 13 plan represents a binding

determination of the rights and liabilities of the parties as ordained

by the plan. Absent timely appeal, the confirmed plan is res judicata

and its terms are not subject to collateral attack.”9

9 The amicus [curiae] argues that “we are not faced with a

collateral attack on the confirmation order, but a direct

BAP Appeal No. 04-18 Docket No. 58 Filed: 12/14/2004 Page: 10 of 14
28 179 F.3d at 1257-58, and nn. 8& 9. 

29 See Poland, 382 F.3d at 1189 n.2 (acknowledging that due process

argument was decided in Andersen because it states that Andersen was “wrongly

decided” inasmuch as preclusion principles could not apply given the breach of

due process (citing Banks. v. Sallie Mae Serv. Corp. (In re Banks), 299 F.3d 296

(4th Cir. 2002)).

30 Andersen, 179 F.3d at 1256 n.6; see Hood, 124 S. Ct. at 1914 (suggesting

that, but for Federal Rule of Bankruptcy Procedure 7001(6), a debtor could bring

a request for an undue hardship determination under § 523(a)(8) by motion

“which would raise no constitutional concern.”); see generally Mullane v. Central

Hanover Bank & Trust Co., 339 U.S. 306, 314 (1950) (due process is afforded

with notice reasonably calculated, under all circumstances, to apprise interested

parties of the action and opportunity to object).

31 As pointed out supra in n.24, if the Amendment Motion had not been

granted, the discharge provision in the original Plan would not have been “a

binding adjudication of undue hardship” to discharge the debtor’s student loans. 

Poland, 382 F.3d at 1188; see supra nn.8-9 (Related Debtors Cases).

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attack on the confirmation order entered in a fashion

which exceeds the bankruptcy court’s authority.” We

disagree. HEAF failed to appeal the confirmation order

[and] . . . ECMC’s present attack is a collateral attack on

the confirmation order. . . .28

ECMC contends that the Confirmation Order and the Amendment Order are

void under Federal Rule of Civil Procedure 60(b)(4) because, by failing to be

served with a summons in an adversary proceeding, it was denied due process. 

This argument is without merit because, as correctly determined by the

bankruptcy court, it was rejected in Andersen.

29 Notice of the confirmation

proceedings and the Amendment Motion under Federal Rule of Bankruptcy

Procedure 2002 was sufficient to afford ECMC due process.30 ECMC’s due

process argument is especially hollow in this case because not only did it fail to

object to the offensive discharge provision in the original Plan, but it also failed

to object to the later Amendment Motion. Thus, ECMC was given two chances to

protect its rights, but failed to do so.31 For the very same reasons stated in

Andersen, ECMC cannot complain given its “complete failure to properly protect

BAP Appeal No. 04-18 Docket No. 58 Filed: 12/14/2004 Page: 11 of 14
32 Andersen, 179 F.3d at 1260.

33 124 S. Ct. at 1905.

34 124 S. Ct. at 1912. While we remain firm that the proper way for a debtor

to obtain a § 523(a)(8) hardship discharge is by filing an adversary proceeding

and proving “undue hardship” by a preponderance of the evidence, see discussion

supra at 5-6 and accompanying notes, we note that the Court in Hood suggested,

in a wholly different context, that § 523(a)(8) does not require the commencement

of an adversary proceeding. Id. at 1914 (“The text of § 523(a)(8) does not require

a summons, and absent Rule 7001(6) a debtor could proceed by motion . . . which

would raise no constitutional concern. . . . To conclude that the issuance of a

summons, which is required only by the Rules, precludes Hood from exercising

her statutory right to an undue hardship determination would give the Rules an

impermissible effect. 28 U.S.C. § 2075.”)

-11-

its interests during the course of the bankruptcy proceedings.”32

ECMC maintains that we should not follow Andersen because it has been

called into question by Tennessee Student Assistance Corp. v. Hood33 and in

Poland. This argument is without merit because Andersen has not been overruled

by Hood or Poland and, therefore, we must apply it as controlling law. 

Hood holds that a Chapter 7 debtor’s adversary proceeding against a State,

seeking a hardship discharge under § 523(a)(8), is not a “suit” against the State to

which Eleventh Amendment sovereign immunity applies. Andersen is not cited in

Hood, and Hood in no way deals with the issue raised in Andersen. By bringing

suit against the State, the debtor in Hood was following the established

procedures for obtaining a § 523(a)(8) hardship discharge and, being in Chapter 7,

obviously did not have a confirmed Chapter 13 plan discharging student loan debt

as an “undue hardship.” While, as we have acknowledged, Hood states that a

bankruptcy discharge does not include student loan debt “[u]nless the debtor

affirmatively secures a hardship determination”; this statement does not in any

way overrule Andersen.

34

Poland severely criticizes Andersen, stating that it was “wrongly decided

BAP Appeal No. 04-18 Docket No. 58 Filed: 12/14/2004 Page: 12 of 14
35 Poland, 382 F.3d at 1189 n.2. There is currently a split in the Circuits

regarding the ability to discharge student loans through plan confirmation.

Compare Great Lakes Higher Educ. Corp. v. Pardee (In re Pardee), 193 F.3d

1083 (9th Cir. 1999) (discharging debt); Andersen, 179 F.3d at 1253 (same); with

Banks, 299 F.3d at 296 (refusing to discharge debt); see In re Repp, 307 B.R. 144

(9th Cir. BAP 2004) (questioning application of Pardee).

36 See, e.g., In re Smith, 10 F.3d 723, 724 (10th Cir. 1993); see also United

States v. Meyers, 200 F.3d 715, 720 (10th Cir. 2000).

37 See, e.g., Meyers, 200 F.3d at 722 n.3, quoted in Cannon v. Gibson, 259

F.3d 1253, 1266 (10th Cir. 2001); Murphy v. Klein Tools, Inc., 935 F.2d 1127,

1128 n.2 (10th Cir. 1991).

38 To a certain extent, we are sympathetic to ECMC’s argument that Fed. R.

Bankr. P. 7001(6) requires the filing of an adversary proceeding to obtain an

“undue hardship” determination under § 523(a)(8), notwithstanding the discharge

language “slipped in” by the debtor and arguments of res judicata. See Poland, 382 F.3d at 1189 n.2. We are compelled, however, to follow Andersen absent

additional direction from the Court of Appeals. See, e.g., Haynes v. Williams, 88

F.3d 898, 900 n.4 (10th Cir. 1996) (when faced with conflicting decisions, “a

panel should follow earlier, settled precedent over a subsequent deviation

therefrom.”) 

39 See, e.g., McNickle v. Bankers Life & Casualty Co., 888 F.2d 678, 682

(10th Cir. 1989) (reviewing Rule 60(a) order for abuse of discretion).

40 Boyer, 305 B.R. at 54.

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and should be reconsidered.”35 But, as implicitly recognized by the Panel in that

case, it is well-established that one Panel of the Tenth Circuit cannot overrule a

decision of another Panel.36 Until Andersen is expressly overruled by the United

States Supreme Court, withdrawn by the Tenth Circuit or reconsidered by the

Tenth Circuit en banc and overruled,37 it is the binding law of this Circuit, and we

must apply it, unless it can be distinguished.38 As discussed above, there is no

basis on which to distinguish Andersen from this case and, therefore, the

bankruptcy court’s Judgment must be affirmed. 

Finally, we conclude that the bankruptcy court did not abuse its discretion

in granting the Debtor Rule 60(a) Motion to conform the Discharge Order to the

Confirmation Order and the Amendment Order.39 The Discharge Order, a form

Order that was “automatically generated by the Clerk of the Bankruptcy Court,”40

BAP Appeal No. 04-18 Docket No. 58 Filed: 12/14/2004 Page: 13 of 14
41 Id. at 54 & n.33; see generally In re Craddock, 149 F.3d 1249, 1254 n.4

(10th Cir. 1998) (Rule 60(a) may be used to correct nondeliberate errors in orders

that do not reflect the intent of the court; the correction should not require

additional proof); McNickle, 888 F.2d at 682 (same). 

42 Moothart v. Bell, 21 F.3d 1499, 1504 (10th Cir. 1994) (citation and

quotation omitted).

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was clearly at odds with the Confirmation Order and the Amendment Order

(collectively referred to in this discussion as the “Confirmation Order”) – the

Confirmation Order discharges the debtor’s student loan debt, and the Discharge

Order excepts it from discharge. At the time that the Discharge Order was

entered, the debtor’s student loan debt had been discharged. The bankruptcy

court’s decision, refusing to make the already discharged debt nondischargeable

by the form Discharge Order, was not erroneous. The Discharge Order, one of

1,100 form orders automatically generated by the clerk of the bankruptcy court,

was not deliberately made, and it did not reflect the intent of the parties or the

bankruptcy court reflected in the more specific Confirmation Order.41

Accordingly, we do not have “a definite and firm conviction that the [bankruptcy]

court made a clear error of judgment or exceeded the bounds of permissible

choice” in granting the Debtor Rule 60(a) Motion.42 

III. Conclusion

The bankruptcy court’s Judgment is AFFIRMED.

BAP Appeal No. 04-18 Docket No. 58 Filed: 12/14/2004 Page: 14 of 14