ELECTRONIC C ITATION: 2003 FED App. 0004P (6th C ir.) File Name: 03 b0004p.06

BA NKRUPTC Y A PPELLA TE PA NEL OF TH E SIXTH CIR CUIT

In re: MICHAEL J. OYLER, ) ) Debtor. )

_____________________________________ ) ) MICHAEL J. OYLER, ) ) Appellee, ) ) v. ) No. 03-8001 ) EDUCATIONAL CREDIT MANAGEMENT ) CORP., ) ) Appellant. )

_____________________________________ )

Appeal from the Unite d States Bankruptcy Court for the Norther n Distric t of Ohio, Eastern Divis ion at Canton

. No. 99-62796, Adv . P. No. 02-6090

. Argued : August 6, 2003
Decided and Fi led: October 23, 200 3 Before: AUG, LATTA, and RHO DES , Bankruptcy Appellate Panel Judges.

____________________ COUNSEL
ARGUED: Matthew

J. Thompson, NOBILE, NEEDLEMAN & THOMPSON, Columbu s, Ohio, for Appellant. Donald M. Miller, Canton, Ohio, for Appellee. ON BRIEF: Matthew J. Tho mpson, NOBILE, N EEDLEMAN & TH OMPSON, Col umbus, Ohio, for Appel lan t

. Donald M. M iller, C anton, Ohio, for Appel lee.-2- ____________________ OPINION

____________________ STEVEN W. RHODES, Chief Judge. Educational Cr edit Mana gementCorp. appeals the bankruptcy court’s order discharg ing Oyl er’s student loan debt pursuant to 11 U.S.C. § 523(a)(8). Educational Cr edit Man agement Corp. argues that the ba nkruptcy court erroneously gave too much weight to the fact that Oy ler’s stude ntloans wer e for an education in a low-pa ying field, the minis try, and th e fact that Oyl er’s cir cumstances are n ot likely to continue. U pon examining the totality of the facts and cir

cumstances of the case, the Panel holds t hat Oyler is entitled to a dischar ge based on undue ha rdship.

I. ISSUE ON APP EAL The issue before thepanel is whethe r the bankruptc y court erred in determi ning that the debt should be discha rged pursuant to 11 U.S.C. § 523(a)(8).

II. JURISDICT ION AND STANDA RD OF REVIEW The Bankruptcy Appellate Panel of the Sixth Circuit has jurisdiction to decide this appeal. The United States Distric t Court for the Northern Di strict of Ohi o has authoriz ed appeals to the BAP. Dolph v. Penn. Higher Educ. Assistance Agency (In re Dolph) , 215 B.R. 832, 834 (B.A.P. 6th Cir. 1998) . A final order of a bankruptcy court may b e appealed by ri ght under 28 U .S.C. § 158(a) (1). For purposes of appeal, a n order determi ning the discharge of a student loan under 11 U.S.C.§ 523( a)(8) is a final order. Id

. Adetermination t hat a student loan poses an undue hards hip an d is subject to dischar ge under 11 U. S.C. § 523(a) (8) is a mi xed questi on of law and fact. The conclusionsof law

are su bjec t to d e novo review. Cheesman v. Tenn. Student Assistan ce Corp

. ( In re Cheesm an ), 25 F.3d 356, 359 (6th Cir . 1994). De nov o mea ns that the review ing court is “deciding the issue as if it had not been heard befo re with no deference being given to the trial court’s conclusions of law.” In re Falvo, 227 B.R. 662, 664 (B.A.P. 6th Cir. 1998). Findings of fact are revi ewed under th e clearly erroneous sta ndard. F ED

. R. B ANKR

. P. 8013; F ED

. R. C IV

. P. 52. A finding of fact is clear ly err oneous when the revi ewing court-3-

is “left wi th the definite and fir m convicti on that a mistake has been comm itted.” Tenn. Stude nt Assis tance Corp

. v. Hornsby ( In re Hornsby) , 144 F.3d 433, 436 ( 6th Cir. 1998) (quoting United States v . United States

Gypsum Co. , 333 U.S. 364, 68 S. Ct. 525 (1948)).

III. FACTS On September 9, 1999, O yler file d a chapter 13 bank ruptcy peti tion. On June 13, 2002, Oyler commenced an adversar y proceedi ng seeking to discharge his student lo ans pursuant to 11 U.S.C. § 523(a)(8). The student loans at issue consi st of fo ur separate loans obtained by

Oyler fro m December, 1991, to December, 1992, to fund his educatio n atFuller Theologic al Semi nary. Educational Credit Management Corpora tion (ECMC) assumed the student l oans from Great Lakes Higher E ducation Corpor ation. During the trial of thi s adversar y proceedi ng, four

witness es testified. The witness es
were Oyler, his wife, Eric Walch, a retired pa stor, and Lee Ander son, a minister

who recently began his ow n congreg ation. ECMC did not call any wi tnesses. Oyler, age 48, is a licensed pastor and current leade r of a Messianic Jew ish congregat ion that he began in June 1998 . He is married and hasthree children. For the past two years, the annual income of this family of five has been less than $1 0,000. The family lives in an apartment , which i s paid for by the congrega tion. Oyl er is supposed to
rece ive an allotted sal ary of $1,200 per month. However, the actual amount Oyler receives variesdepending on the amount of contr ibutions received by the congregation. The family does not have any health insurance. Oyler has e xperienced four retinal detachme nts. These occur from a medical condit ion known as scleral bu ckle. No te stimony or evidence
was admitted about the prognosis o f his conditi on. The only deb ts scheduled i n the chapter 13 plan are the s tudent loans to EC MC. At the t ime of trial, Oyler was current in his monthly

payments of $50 in to the chapter 13 plan. There were four ex hibits admitted into evid ence. Exhi bit A consis ts of copies of Oyler’s tax returns. Exhibit B is a statement from the office manag er of the congreg ation aboutOyler’ s salary . Exhibi t C is a l ist o f Oyle r’s i ncome and expenses. Exhibit 1 is an itemized statement of

the outstanding amount of the student lo ans. As of June 26, 2002, the student loans totaled $38,978.20. At the c oncl usi on of t he trial, thebankruptcy judge render

ed an oral decision concluding that Oyler

had e st ablished that r epayment of the student loans woul d create-4-

an undue hardship and the refore entered a judgme nt dischargin g the deb t. The bankruptcy court considered Oyler’s current financial sit uation, the likeli hood that the financial situation w

ould continue, w hether Oyl er exerc ised good faith, the abi lity of Oy ler
or his wife to obtain outside employ ment, Oyler’s lifesty le choice, and the use of the loans for education f or the ministry. ECMC filed a timely appeal.

IV. DISC USSION Section 523(a)(8) of the Ba nkruptcy Code provides:

Adischarg e under section 727, 1141, 1228(a) , or 1328(b) of this title does not dischar ge an indiv idual debtor from any debt . .

. f or an educational benefit overpay ment or loan made, insured, or gua rant eed by a governmental unit, or made under any pr

ogram f und ed in whole or in p art b y a governmental unit or nonpr ofit instituti on, or for an obl ig ation to repay funds r

eceived asan educational benefit , scholarshi p, or stipend, unles s exceptin g such debt from d ischarge under this paragraph will impose an undue hardship on the debtor and the debtor’s depe ndents.
“Congress has not defined ‘un due hardship,’ leavin g the task to the courts. ” Hornsby , 144 F.3d at 437. The United States Court o f A ppeals for the Six th Circui t has adopted a “multiple factor” approach to applying § 523(a)(8) . In Chees man , the court started with, then expanded on, the three-pr ong analys is announced by the Second Circuit in its Brunner

case:
One test requi res the deb tor to demonstrate “( 1) that the debtor cann ot m aintain, based on current income and expenses, a ‘minim al’ stan dard of living f or herself and her dependents if forced to repay the loa ns; (2) that addi tional circumstances

exist i ndicating t hat this state of affairs is likely to persist for a sign ificant portion of the repayment pe riod ...; and (3) that the debtor

has made good faith efforts to repay the loans.”

Id. , 25 F.3d at 359 ( quoting, Brunner v. N ew York State H

ig her Educ. Serv

s. Corp. , 831 F.2d 395 (2d Cir . 1987)). Oth er factors that may be consid ered include “ ‘the amou nt of-5-

the debt ... as well as the r ate at whic h interest i s accruing and the debt ors’ claim e d expenses and c urre nt st and ard o f livi ng , with a v iew toward ascertai ning whe ther the debtor has attempted tominimize t he expenses of himself an d his dependents.’” In re Hornsby , 144 F.3d at 437 (quoting Rice v. Un ited States ( In re Rice ), 78 F.3d 1144, 1149 (6th Cir. 1996)). In the present cas e, the bankruptcy court consi dered the f actors identified in Cheesman

and concluded that Oyler had me t all three factors. ECMC contends that t h e evidence does not support the bankruptcy court’s determination that Oyler met the three factor

s of the Brunner-Chees man test and that

the court incorrect ly appli ed the test by placing a great deal of w eight on the fact that the l oans
were for an education in the min istry. In par ticular, ECMC takes issue with the court’s determination that the facts demonstrate that Oyler’s circumstances are like ly to cont inue. Itis clear that the bankruptc y court’ s decision to discharg e the debt was strongly influenced by the fact that the student loans were obtained to finance D ebtor’s educati on to become a minist er. In d iscussing the factors in favor of discharg ing the loa ns, the bankruptcy court stated:

[W]hat seem s th e mos t co mpel lin g is the f a ct that t he loans were for the mini st ry. And so if we’re going to make guaranteed loans for the mini stry, i t’s ha rd to belie ve tha t we can’t anticipate that

people are g oing to wind up i n low-pay ing situationsor

going tobe employed i n calling s that aren’t going to be wel l-pa id. If the l oan s had been for a law s choo l or fo r something else I think it might be a different questio n. I don’t know how that q uestion woul d come out. But itseems a much simp ler qu esti on give n tha t the loan s were f or th e min istry.
(Trans. of 12/16/2002 H rg. at 78.) ECMC argues that this languag e indicatesthat the bankruptcy court did not properly applythe second prong of the Brunner/Cheesm an test. ECMC argues that Oyler di d not establish that his ci rcumstances w ould continue to persist for th e foreseea ble future because the bankr uptcy cour t refused to consi der that Oy ler could have simply ob tained a higher pay ing job ei ther wit h a different congr egation or i n another field.1U nlike the b ankr uptc y cour t, we co nclu de th at th e fa ct th at th e low- payin g

profession in th is ap pea l is in t he m inist ry sho uld h ave no bearing o n our decision. Rather we foc us on ”whet her [ Oyler] has a ttem pted to ma xi mize h is income by seeking or obtaining stable employ ment commensurate with hi s education back ground and abiliti es.” Rice , 78 F.3d at 1149- 50.

-6- Upon review

of the entire record, th e Panel concludes that the bankruptcy court properlycons ider ed th e tot alit y of t he ci rcum stan ces, as req uire d by Cheesman . Contrary to ECMC’s assertion, Cheesman did not adopt the Brunner tes t . Rather, Cheesman indicates that the Brunner test is oneof several t hat can be used to determineif an undue hardship exists. Furt hermore, Ch eesmanmake s it cl ear t hat a debt or’s c hoic e to wo rk in a lowpaying field is not by

itself an indication ofbad faith, nor should it be used ag ainst a debtor in an evaluation of undue hardship. I n Cheesman , the court noted that the debtors “chose to work i n worthw hile albeit low-pay ing professi ons.” 1 Id. , 25 F.3d a t 360. The d ebtors’ incomewas sli ghtly hi gher than poverty level and they m aintained a frug al lifesty le. Despite the fact that the debto r-hu sba nd testified that hehoped for a promotion and the debtor-wi fe testified that she was actively seeking employment as a te acher’s aide, the court of appeals fou nd that “there [was] no i ndication that [their] financial situ ation [woul d] improve in the foreseeable future.” Id

. In the present case, Oyler’s income is w

ell below poverty level

. Oyler’ s fa mily o f fi ve livesa very frugal lifestyle. They live in an apartment, drive used, high-mileage vehicles, and wear dona ted clot hing. They rarely eat out and budget

$400-450 per month for food expense. Moreover , Oyler testified that he w as completely

committed to hiscalling as a minister in his Mes sianic Jew ish congr egation and that his ci rcumstanceswould be likely to continue for the fore seeable fut ure. Add itionally , two pastor s testified that Oyler w

as committed to his calling and that his ci rcumstances ar e unlikely

to change. The bankruptcy court held that in the total ity of the circumstances, Oyler was entit led to discharg e his student l oan debt. The bankruptcy court properly noted:

The poverty level f

or a family of fiv e is twent y-one thousan d one hundred and eighty dollars ( $21,180). And they ’re a long way from that. So the questi on isn’t w hat their cur rent circumstances

are, I think

the question is the likelihood of this-7- situation to continue – tha t this situa tion i s l ikely tocontinue. And even if it w

as to im prove substantially, I don’t think it would change much. Because even if there was substantial improvement, the amo unt ofthings that the family would need and/or be viewed as being legally entitled to would be so large thatit would require a massive improvement before we would say there woul d be any income av ailable for

the repayment of this debt.
(Tr. 12/16/2002 Hrg . at 76-77.) Based on our rev iew of the record, the P anel agrees that Oyler carried hisburden of provi ng that he is entitled to a dischar ge of his student loans. Simplystated, Oyler’s financial circumstances make it an undue hardship for him to repay this student loan of almos t $40,000, and the record sug gests no re ason to believe that these circums tances are li kely to c hange.

V. CONCLUSI ON The bankruptcy court’s factual find ings regarding Oyler’s circumstances are supported by the reco rd and are not c learly erroneous. F urther, the bank ruptcy co urt’ s conclusion that under these circumstances , repayment of the debtwould be an undue hardship is not erron eou s. Acc ordi ngly, t he ba nkru ptcy court order holdi ng the debt dischargeable pursuant to 11 U.S.C. § 523(a)(8) is AF FIRMED

.-8-

JENNIE D. L ATTA , Bankru ptcy Judge , dissen ting. Because I believethat the majority fails to apprec iate the development i n the legal standard for determining the presence of an undue hardship t hat has occurr ed since the deci sion in Cheesman , and because I do n ot conclude that the facts of th is cas e demonstrate an undue har dship, I resp ectfully di ssent. The majority

of the Panel placesgreat weight upon the fact that the Cheesman court found no eviden ce that the deb tors had acted in bad fa ith in see king to discha rge their student loans even though they had chos en low-pay ing professions. Cheesman , 25 F.3d at360. The majority

asserts that Cheesman prohibits consideration ofa debtor’s choice of employment in determining the presence of unduehardship. I find no such prohi bition in C heesman. To the contrary , in Rice , the court announced that one of the rel evant factors to be consider

ed is “w hether the debtor has attempted to maximiz e his income by seeking employment commensu rate wit h his educationa l backgro und and abiliti es. Rice
v. United States (In re Ric e) , 78 F.3d 1144, 1149 (6th Cir. 1996). In Hornsby , t he court included the factors articu lated in Ri ce among those that ar e relevant in evaluati ng dischar ge of ordinary

student loans ev

en though Rice invo lv ed the more stri ngent unconscionabil ity

standard appli ed in dischar ge of Health Education Assistan ce L oans. See Hornsby

, 114 F.3d. 433, 437n.7. While I do not disagree with the majority’s conclusion that O yl er has acted i n good faith, I bel ieve that th e majority has failed to properlyconsider Oy ler’s employ mentchoices in evaluating his entitle ment to a discharge of his student

loans

. Specifically , I find that Oy ler failed to pr ove that he has attempted to maxim ize his income and fai led to prove t hat “additional circumstances” make his c urrent state of affairs likely to cont inue. The record refle cts that the Oyl ers have v oluntarily undertaken a very simpl e and frugal lifestylein pursua nce of Mr. Oy ler’s mini stry. While it istrue that Oy ler’s actua l salaryis wel l below feder al poverty

guidelines , the basic needs of the family ar

e met by the provision of she lter, clo thing, and food by Oy ler’s cong regation. It is sig nificant that after graduating from Fuller Theol ogical Semi nary, but bef ore u nde rtak ing hi s pre sent mini stry, Oyler was employ

ed as a furniture salesman, a posi tion that enabled him to repay $2,000- $3,000 of his student loan deb t over a one-year peri od. The r ecord also i ndicates that Oyler has a musical back

ground, has w

orked as an audi o engineer, a nd at one time, owned his own business. Oy ler has multiple job skills and a masters degree f rom a well--9-

recogniz ed theolo gica l semi nary . He ha s no si gnifi cant he alth pr oblemsthatprevent him from workin g; indeed, heclaims to be a ble to wor k sixty to seventy

hours per w

eek. Oyle r offered no proof

that he had been una ble to find better paying employmen t, either within his chosen field or outside of it. Oy ler offered no proof that his arrangement with his current employer pr

ohibits him from s eeking suppl emental income from other sourc es, other than his unsupported statement that he simply

has no time to do so. Oyler very candidly explained that he is in essence star ting a new

business. He did notacce pt a p osit ion wit h an e xistin g cong regat ion o r min istry, but instead deci ded to return to Canton, Ohioto launch a new congre ga tion. It issignificant that he chose to locate hi s ministry

in a community

that is not famil iar wi th Messiani c Judaism. Al tho ug h Oyler is licens ed by the International Church of Foursquar e Gospel, he appar

ently receives
no denominational support for thi s new chur ch endeavor. One might say thatthe failure of this endeavor to prov ide adequate sup port for Oyl er and his family is the result of a poor business plan. W hile Oyler has no pr esent plans to aba ndon his minist ry, ther e is nothing to prevent him from doing s o. He has changed occupations in the past and could do so again. He has man y m arketab le skill s and no medical impairment. Fur ther, should he continue to pursue his ministry, it is hoped and expected that his long hours of workwil l eventuallyresult in the grow th of his congr

egation and cons equent incr ease in his i ncome. Throughout

his Chapter 13 case, Oyl er has remained curr entin his plan payments of $50 per month. He has no other deb ts than his student loans. There is nothing in the record to indicate that he cannot continue to make payments of at least $50 p e r month on his student loans in the futur

e, and nothing to indicate that his cu rren t abi lity to pay only $50 per month will persist over the remaini ng repayment period of his s tud ent loan s. “[T]he dischargeab ility

of student loans sh ould be based upon the certainty of hopelessness , not simplya present inability to fulfill finan cial commitment.” In the Matter of Roberson, 999 F.2d 1132,1136 (7th Cir. 1993) quote d with approval in Goulet v. Educational C redit Mgm t. Corp ., 284 F.3d 773, 778 (7th Cir. 2002) (emphasisadded in Goulet). “[F]undamental to the concept of undue hardship under 523(a)(8) i s the notion that
a debtor has done everyt hing i n his power to im prove his financial condition” and th at his “distress ed state of financia l affairs is the result of events th at are clearly out of the debto r’s control.” Berry v. ECMC (In re Berry), 266 B.R. 359, 365 ( Bankr. N.D. Ohio 2000)

. Events1 “Althou gh not binding [precedent], unpub lished decis ions of the Six th Circui t may be cited if pe rsua sive and no published decisions will serve as well.” Gibson v. Gi bson (In re Gibson) , 2 19 B.R. 195, 210, n.2 (B.A.P. 6th Cir. 1998). Unlike the debtor here , the debtor in Paolini

had been diagnos ed with obs essive- compulsive disorder, acircumstance beyond her control. Neverth eless, the Si xth Cir cuit determined that although he r condition currently impaired her

ability to sustain g ainful employment, there wasno showing that it would necessaril y impair her ability to work in the future and thus her student loans were not discharg ed.

-10- clearlyout of the debto r’s control generallyinvolve an unexpected illness, i njury or disabilit y of the debtor or h is dependents. Id. Signif ican tly, for purposes of thi s case, “har dships that
are both foreseeable and voluntarily assumed” as a r

esult of the “[i]nformed free ch oice of one’s chosen pursuits” do not qualify as “undue” ha rdships for purposes of student loan discharge. Fischer

v. State Uni

v. N.Y. ( In re Fisc

her ), 23 B.R. 432, 434 ( Bank r. W .D. K y. 1982) cited with ap prova l by In re Paolini , 124 F.3d 199, 1997 WL 4765 15, **5 (6th Cir. 1997). 1 According to the Fischer court, “voluntary s election of a cur riculum leadi ng to an
unre mun erat ive occupation does nothing to enhance a clai m of undue hardship.” 23 B.R. at434. Cons equently, di scharge of stud ent loans has been denied to musici ans, social workers , teachers, nut ritionists, psychi atrists w orking i n poverty

areas, and poets

. Id. I know of no other

case in w hich a court has agreed to supp ort a debtor’s entrepreneuri al efforts through di scharge of stud ent loans. The focus of enquiry under § 523(a)(8) should be upon the capacity of t he de btor to rep ay his or her student loans without undue hardshi p. Because I believe that Oyler clearly has that capacity, I would
reverse the decision of the bankruptcy court.