Opinion ID: 32817
Heading Depth: 1
Heading Rank: 2

Heading: undue hardship test

Text: 5 This circuit has not explicitly articulated the appropriate test with which to evaluate the undue hardship determination. The Second Circuit in Brunner crafted the most widely-adopted test. See In re Cox, 338 F.3d 1238, 1241 (11th Cir. 2003); In re Ekenasi, 325 F.3d 541, 546 (4th Cir.2003); Rifino, 245 F.3d at 1087-88; Brightful, 267 F.3d at 327-28; Roberson, 999 F.2d at 1135-36. To justify discharging the debtor's student loans, the Brunner test requires a three-part showing: 6 (1) that the debtor cannot maintain, based on current income and expenses, a minimal standard of living for [himself] and [his] 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. Brunner, 831 F.2d at 396. 7 Because the Second Circuit presented a workable approach to evaluating the undue hardship determination, this court expressly adopts the Brunner test for purposes of evaluating a Section 523(a)(8) decision. 1
8 Under the first prong of the Brunner test, the bankruptcy court determined that Gerhardt could not maintain a minimal standard of living if forced to repay his student loans. Evidence was produced at trial that Gerhardt earned $1,680.47 per month as the principal cellist for the Louisiana Philharmonic Orchestra (LPO), including a small amount of supplemental income earned as a cello teacher for Tulane University. His monthly expenses, which included a health club membership and internet access, averaged $1,829.39. The bankruptcy court's factual findings are not clearly erroneous. Consequently, we agree with the bankruptcy court's conclusion of law, which we review de novo, that flows from these factual findings. Given that Gerhardt's monthly expenses exceed his monthly income, he has no ability at the present time to maintain a minimal standard of living if forced to repay his loans.
9 The second prong of the Brunner test asks if additional circumstances exist indicating that this state of affairs is likely to persist [for a significant period of time]. Brunner, 831 F.2d at 396. Additional circumstances encompass circumstances that impacted on the debtor's future earning potential but which [were] either not present when the debtor[] applied for the loans or [have] since been exacerbated. In re Roach, 288 B.R. 437, 445 (Bankr.E.D.La.2003). This second aspect of the test is meant to be a demanding requirement. Brightful, 267 F.3d at 328. Thus, proving that the debtor is currently in financial straits is not enough. Id. Instead, the debtor must specifically prove a total incapacity ... in the future to pay [his] debts for reasons not within [his] control. 2 In re Faish, 72 F.3d 298, 307 (3d Cir.1995) (quoting In re Rappaport, 16 B.R. 615, 617 (Bankr.D.N.J. 1981)). 10 Under the second prong of the test, the district court correctly concluded that Gerhardt has not established persistent undue hardship entitling him to discharge his student loans. Gerhardt holds a masters degree in music from the New England Conservatory of Music. He is about 43 years old, healthy, well-educated, and has no dependents, yet has repaid only $755 of his over $77,000 debt. 3 During the LPO's off-seasons, Gerhardt has collected unemployment, but he has somehow managed to attend the Colorado Music Festival. Although trial testimony tended to show that Gerhardt would likely not obtain a position at a higher-paying orchestra, he could obtain additional steady employment in a number of different arenas. For instance, he could attempt to teach full-time, obtain night-school teaching jobs, or even work as a music store clerk. 4 Thus, no reasons out Page 93-123 11 of Gerhardt's control exist that perpetuate his inability to repay his student loans. 12 In addition, nothing in the Bankruptcy Code suggests that a debtor may choose to work only in the field in which he was trained, obtain a low-paying job, and then claim that it would be an undue hardship to repay his student loans. See, e.g., In re Grigas, 252 B.R. 866, 875 (Bankr.D.N.H.) (concluding that a debtor could not satisfy the second Brunner prong when financial distress was self-imposed). Under the facts presented by Gerhardt, it is difficult to imagine a professional orchestra musician who would not qualify for an undue hardship discharge. Accordingly, Gerhardt has failed to demonstrate the type of exceptional circumstances that are necessary in order to meet [his] burden under the second prong of Brunner. Brightful, 267 F.3d at 330. Finding no error, the judgment of the district court is AFFIRMED.