Opinion ID: 2745697
Heading Depth: 3
Heading Rank: 3

Heading: Income limitations, future employment and

Text: Income Contingent Repayment Plan The bankruptcy court properly found and considered in its analysis that while some limitations were out of her control, on balance the restrictions on the Debtor’s ability to seek and obtain employment were largely self-imposed. Similarly, the prospect of her employment in the future should not be foreclosed. See Jesperson, 571 F.3d at 782 (“A debtor is not entitled to an undue hardship discharge of student loan debts when his current income is the result of self-imposed limitations, rather than the lack of job skills, and he has not made payments on his student loan debt despite the ability to do so.”) (citation omitted); Sederlund v. Educ. Credit Mgmt. Corp. (In re Sederlund), 440 B.R. 168, 175 (B.A.P. 8th Cir. 2010) (student loans not discharged where limits on income were self-imposed). The bankruptcy court reasonably observed the Debtor’s young age, her lack of substantiated physical or mental impairments to prevent her from working and her number of marketable degrees. The record supports the court’s determination that “based on [the Debtor’s] education, and current age, it is unrealistic to conclude that the [Debtor’s] employment prospects will never improve.” According to the Debtor, it was improper for the bankruptcy court to consider the availability of and the Debtor’s failure to enroll in, an Income Contingent Repayment Plan (“ICRP”) that would require no monthly payment under her circumstances. We disagree. The bankruptcy court appropriately considered the ICRP as a factor in its totality-of-the-circumstances analysis, consistent with the law in the Eighth Circuit: 11 [U]ndue hardship under § 523(a)(8) continues to require separate analysis under which, in this Circuit, the ICRP is “a factor” to consider in evaluating the totality of the Debtor’s circumstances. However, a student loan should not be discharged when the debtor has “the ability to earn sufficient income to make student loan payments under the various special opportunities made available through the student loan program.” Jesperson, 571 F.3d at 781(citations omitted).6 And the Debtor could participate in the zero monthly payment ICRP without compromising her minimal standard of living. Moreover, in light of the Debtor’s situation and prospects for the future, as appropriately assessed by the bankruptcy court, the record supports the bankruptcy court’s decision that the Debtor’s unwillingness to participate in an ICRP that would require no monthly payment under her current circumstances, constituted an attempt by the Debtor to avoid responsibility for her student loan debt if her situation improved. The Debtor maintains that the bankruptcy court should not have considered the ICRP in its analysis because of potential tax consequences to her once the loans are ultimately discharged at the end of the ICRP term. As the bankruptcy court stated, no one can predict what the Debtor’s tax liability would be from forgiveness of the debt at the end of the 25-year repayment period. We agree with the bankruptcy court that “[t]he mere possibility of tax consequences at the expiration of the 25-year 6 “Although some question remains as to the weight to be given to the ability to make an ICRP payment following Jesperson, the Eighth Circuit made clear that the ability to do so is, at a minimum, an important factor in the analysis.” Walker v. Sallie Mae Servicing Corp. (In re Walker), 427 B.R. 471, 486-487 (B.A.P. 8th Cir. 2010) (citing concurring and dissenting opinions in Jesperson, 571 F.3d at 784, 786), aff’d 650 F.3d 1227 (8th Cir. 2011). 12 repayment period is not dispositive of the issue of whether the ICRP represents a viable avenue for repayment of student loan debt.” See also Sederlund, 440 B.R. at 175 (relying on Jesperson, 571 F.3d at 782, to reject the debtor’s position that she had not applied for repayment plans due to possible tax consequences); Nielsen, 473 B.R. at 761-762, aff’d 502 Fed. Appx. 634 (8th Cir. 2013) (rejecting the same argument in the Debtor’s husband’s case).