Opinion ID: 223512
Heading Depth: 2
Heading Rank: 1

Heading: Temporal Scope of Undue Hardship Analysis

Text: ECMC maintains that the bankruptcy court committed clear error in looking beyond 2004 when calculating Walker's expenses and income. It contends that the factual question is whether there is an undue hardship at the time of discharge, not whether there is an undue hardship at the time that a § 523(a)(8) proceeding is commenced. Bender v. Educ. Credit Mgmt. Corp., 368 F.3d 846, 848 (8th Cir. 2004). But this precept arose from, and is to be applied in, a factual context much different than that which exists here. Bender involved a Chapter 13 debtor who sought an undue hardship determination before she completed her Chapter 13 plan. At issue was whether the debtor's § 523(a)(8) petition was ripe for adjudication when filed three and a half years before discharge could occur. We observed that the prospective evaluation of a Chapter 13 debtor's future capacity to repay student loan debt would require some degree of judicial prescience, the exercise of which was both impractical and unnecessary. Id. We reasoned that such proceedings should take place relatively close to [the discharge] date so that the court can make its determination in light of the debtor's actual circumstances at the relevant time, held that the petition was not ripe, and affirmed its dismissal. Id. The operative rule in Bender has no application here. Neither the bankruptcy court nor the BAP was speculating about Walker's prospective financial condition; both courts were assessing her financial activity from the preceding four years. The risks associated with the exercise of judicial prescience are thus absent here. It would make little sense to require that the court ignore what actually occurred after Walker's Chapter 7 discharge in order to comply with a rule that was crafted to assure that a court can make its determination in light of the debtor's actual circumstances at the relevant time, i.e., the time of the undue hardship determination. Id. Indeed, to ask the court to ignore what occurred in Walker's life after 2004 would be inconsistent with the first prong of the totality-of-circumstances test, which instructs a fact-finding court to consider the debtor's past, present, and reasonably reliable future circumstances. In re Long, 322 F.3d at 554. ECMC's invocation of In re Woodcock, 326 B.R. 441 (B.A.P. 8th Cir.2005) lends no support to its argument. Woodcock involved a Chapter 7 debtor who sought reconsideration of an order denying a discharge on the basis of undue hardship. As the BAP noted, the debtor sought relief via a Rule 60(b) motion on the grounds that the passage of time showed that his circumstances had not improved, which purportedly indicated that the bankruptcy court erred in denying discharge. Id. at 447. The holding  that the judgment of nondischargeability was a final judgment not subject to collateral attack based on a claim that debtor's circumstances had failed to improve  does not support ECMC's argument for a limited temporal scope of undue hardship review. Accordingly, we hold that it was not clear error to consider Walker's financial condition from 2004 through 2007 in the undue hardship analysis.