F I L E D

United States Court of Appeals

Tenth Circuit

SEP 7 2004

PATRICK FISHER

Clerk

PUBLISH

UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

In re: CHERYL ANN POLAND,

Debtor.

______________________________

CHERYL ANN POLAND,

Plaintiff-Appellee,

v.

EDUCATIONAL CREDIT

MANAGEMENT CORPORATION, 

Defendant-Appellant,

and

EQUIFAX ACCOUNTS

RECEIVABLE; and TGA, Inc.

Defendants.

No. 02-3020

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF KANSAS

(D.C. No. 01-CV-1154-WEB)

Submitted on the briefs:

N. Larry Bork of Goodell, Stratton, Edmonds & Palmer, L.L.P., Topeka, Kansas,

for Defendant-Appellant.
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Garry L. Howard of Slape & Howard, Chartered, Wichita, Kansas, for

Plaintiff-Appellee.

Before KELLY and BALDOCK , Circuit Judges, and BRORBY , Senior Circuit

Judge.

BRORBY , Circuit Judge.

Generally speaking, a Chapter 13 bankruptcy debtor is relieved of her debts

following completion of the bankruptcy plan; in other words, the debts are

discharged. 11 U.S.C. § 1328(a). There are, however, exceptions to discharge,

including a student-loan debt. Id. §§ 1328(a)(2); 523(a)(8). But there is also an

exception to this exception: if excepting a student loan debt from discharge

would impose an undue hardship on the debtor and the debtor’s dependents, the

debt will be discharged. Id. § 523(a)(8). In Andersen v. UNIPAC-NEBHELP

(In re Andersen) , 179 F.3d 1253 (10th Cir. 1999), we held that, where the

debtor’s plan contained an express finding of undue hardship, the creditor’s

failure to object to confirmation barred its attempt to collect the debt because the

plan with its finding of undue hardship was res judicata. Unlike the factual

scenario in Andersen , it was not established in this bankruptcy that excepting the

student-loan debt from discharge would impose undue hardship on the debtor. 
1 After examining the briefs and appellate record, this panel has determined

unanimously that oral argument would not materially assist the determination of

this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is

therefore ordered submitted without oral argument.

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As a result, the debt was not discharged, and, consequently, we reverse the

district court’s order upholding discharge of the debt. 1

Background

Ms. Poland filed for Chapter 13 bankruptcy relief in 1993. Her bankruptcy

plan stated that she disputed the validity and amount of her student-loan debt and

that if a proof of claim was filed on the debt, the debtor would object. It also

stated that if no timely proof of claim was filed, “the claim shall be deemed

discharged in its entirety upon completion of the Plan.” Aplt. App. at 5. The

plan was confirmed. A claim on the student-loan debt was filed one day after the

proof-of-claim filing deadline, and the untimely claim was disallowed by the

bankruptcy court. Thereafter, the bankruptcy court entered an order of discharge

and final decree in January 1999. There was no appeal from the discharge order.

Some time after the discharge order, Educational Credit Management

Corporation (ECMC), assignee of the student loan debt, attempted to collect

payment on the debt. Ms. Poland then reopened the bankruptcy and filed an

adversary proceeding to determine whether the student loan debt had been

discharged. The bankruptcy court cited our decision in Andersen as controlling
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and held that because the unchallenged plan and discharge order stated that the

student-loan debt was discharged, the issue of discharge was res judicata. The

district court affirmed the bankruptcy court’s decision, also relying on Andersen . 

ECMC timely appealed.

Applicability of In Re Andersen

On appeal, ECMC argues that Andersen is distinguishable and should not

control the outcome in this case because here, unlike in Andersen, there is no

language in the plan or discharge order establishing a finding of undue hardship. 

In Andersen, the debtor included the following language in her Chapter 13 plan:

Pursuant to 11 U.S.C. § 532(a)(8), excepting the aforementioned

education loans from discharge will impose an undue hardship on the

debtor and the debtor’s dependents. Confirmation of debtor’s plan

shall constitute a finding to that effect and that said debt is

dischargeable. 

179 F.3d at 1254. The plan was confirmed without timely objection and the

creditor did not appeal the confirmation order. The debtor completed all

payments under the plan and was granted a discharge. Shortly thereafter, the

creditor began requesting payment of the student loan debt and the debtor

reopened her bankruptcy proceeding to determine the dischargeability of the debt.

The bankruptcy court in Andersen determined that the student loans were

not dischargeable because there was no judicial determination of undue hardship. 

The Bankruptcy Appellate Panel (BAP) reversed. Upon review by this court, we
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acknowledged that “a debtor must normally prove undue hardship by bringing an

adversary proceeding directed to that issue,” but we stated that “[t]he real issue

here is not whether [the debtor] properly met her burden of proving an undue

hardship, which she clearly did not, but whether confirmation of the plan

constitutes a binding adjudication of hardship.” Id. at 1256. Relying on earlier

Tenth Circuit precedent we stated: “‘[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.’” Id. at 1258-59

(quoting United States v. Richman (In re Talbot), 124 F.3d 1201, 1209 (10th Cir.

1997)). Based on that principle, and given the specific plan language, we

concluded that “the order of confirmation is res judicata as to the issue of

hardship.” Id. at 1259.

We went on to explain that, contrary to the creditor’s argument, giving

res judicata effect to the provision in the plan did not turn an expressly

nondischargeable debt into a dischargeable debt. Distinguishing two cases

involving discharge of a tax debt, DePaolo v. United States (In re DePaolo),

45 F.3d 373 (10th Cir. 1995), and Grynberg v. United States (In re Grynberg),

986 F.2d 367 (10th Cir. 1993), we explained that Andersen: 

does not represent an attempt to transform a debt which remained

nondischargeable throughout the plan period into a dischargeable
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debt at the conclusion of the period. Rather, unlike the tax cases, the

finding of undue hardship in the confirmed plan changed the nature

of the debt into a dischargeable debt. 

Id. at 1260 (emphasis added). Because the plan included language that

established a finding of undue hardship, the student loan debt had become a

dischargeable debt. We concluded by emphasizing that the Andersen holding did

not lessen the debtor’s burden of proof on the issue of undue hardship, and we

limited the holding to the particular facts of that case. See id. 

Though there are many similarities between this case now before us and

Andersen, there is one all-important difference: this confirmed plan made no

mention of undue hardship, let alone established its existence. Instead, in this

case, the plan stated only the fact, the amount and the disputed nature of the

student loan debt and that if no proof of claim was filed by the creditor, the

“claim shall be discharged in its entirety.” Aplt. App. at 5. In affirming the

bankruptcy court, the district court indicated that it did not matter what the plan

language or discharge order said, but instead that ECMC failed to timely object:

In sum, then, if a creditor fails to make a timely objection ‘it cannot

later complain about a certain provision contained in a confirmed

plan, even if such a provision is inconsistent with the Code.’

Andersen, 179 F.3d at 1258. The same reasoning applies with equal

force to the plan in the instant case, notwithstanding the absence of

any finding of undue hardship. The plan and discharge order

provided for the discharge of the student loans in question. 

Id. at 69-70.
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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.” Aplt. Br. at 8. ECMC asserts that the “plan language on its

face doesn’t state a sufficient basis for discharge and therefore the student loan

debt should not be discharged.” Id. 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. Andersen, 179 F.3d at 1260.

The district court also held that the res judicata holding of Andersen also

applied to the discharge order, which discharged all debts in the plan except for

student loans “in any case in which discharge is granted prior to October 1,

1996.” Aplt. App. at 11. Because Poland’s discharge was granted after

October 1, 1996, the district court held that her student loan was discharged under

the language of the order. On appeal, ECMC argues that this language was

mistakenly retained in the discharge order even though it was irrelevant and

archaic because the sunset provision to which it related was revoked in 1992. 

Relying on Andersen again, the district court found that because ECMC failed to

object to the order, it was now final and ECMC was bound by its provisions. 

The discharge order cannot, however, be the basis for discharging the

student loan debt for the same reasons that the plan language in this case does not
2 The panel is of the view that Andersen was wrongly decided and should be

reconsidered. The unfortunate result of Andersen is that astute attorneys

now insert student loan discharge language (after today, complete with a finding

of undue hardship) into Chapter 13 plans hoping to achieve preclusive effect,

notwithstanding: (1) Bankruptcy Code § 528(a)(8) explicitly precludes the

discharge of a debtor’s student loan absent a showing of undue hardship,

(2) Bankruptcy Rules specifically require a successful adversary proceeding,

complete with individualized service of process, to establish undue hardship and

discharge a student loan, and (3) lack of required notice under the Bankruptcy

Rules proscribes preclusive effect. See In re Banks, 299 F.3d 296,

300-303 (4th Cir. 2002) (Baldock, J., sitting by designation).

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establish discharge. 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.2 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. Accordingly, the judgment of the district court is REVERSED.