In re Belcher
| Citation | 287 B.R. 839 |
| Decision Date | 23 January 2001 |
| Docket Number | Adversary No. 99-6566.,Bankruptcy No. A-99-72764-SWC. |
| Parties | In re Beatrice L. BELCHER, Debtor. Beatrice L. Belcher, Plaintiff, v. Columbia University; AFSA Data Corp.; Society National Bank; Ameritrust Company National Ass'n; Massachusetts Higher Education Assistance Corp. d/b/a American Student Assistance; Elsi/Law Access; Graduate Loan Center; The Educational Resources Institute; and the United States Department of Education, Defendants. |
| Court | United States Bankruptcy Courts. Eleventh Circuit. U.S. Bankruptcy Court — Northern District of Georgia |
Beatrice Belcher, Atlanta, GA, pro se.
Paul J. Morochnik, Ron C. Bingham, II, Thompson, O'Brien, Kemp & Nasuti PC, Norcross, GA, for The Educational Resources Institute.
Thomas W. Joyce, Jones, Cork & Miller, Macon, GA, for Educational Credit Management Corp.
Shayna M. Steinfeld, Steinfeld & Steinfeld, Atlanta, GA, for Pennsylvania Higher Education Assistance.
On November 15, 2000, a trial was held on Plaintiff's complaint to determine whether her student loans were dischargeable based upon an undue hardship. 11 U.S.C. § 523(a)(8). Present were the pro se Plaintiff Beatrice Belcher ("Belcher"), who is the Debtor in this case and a member of the State Bar of New York, counsel for creditor Educational Credit Management Corporation ("ECMC"), and counsel for creditor The Educational Resources Institute ("TERI"). This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(I). Upon consideration of the evidence and arguments of counsel, the court's finding of facts and conclusions are set forth hereinafter.
Plaintiff filed her Chapter 7 bankruptcy case on August 31, 1999. Her Statement of Affairs shows that she earned in excess of $32,000 in 1997, $38,000 in 1998, and $10,000 from January 1, 1999 to August 29, 1999. She scheduled in excess of $81,000 in student loans and in excess of $23,000 in credit card debt. Her monthly student loan payments were $1,100 and monthly credit card payments were in excess of $500 per month. At the time of filing her petition, she listed herself as unemployed, with no monthly wages, and exemptions of $3,105, including a retirement account of $1,750.
Originally, Plaintiff named nine Defendants in her complaint. Defendants Society National Bank and Ameritrust Company National Association had previously assigned their loans in question to ECMC. Defendant Massachusetts Higher Education transferred its interest to ECMC on January 2, 2000. On January 31, 2000, Plaintiff and Defendant United States Department of Education entered into a stipulation to dismiss this defendant without prejudice. On November 1, 2000, Plaintiff and Defendant Graduate Loan Center/Pennsylvania Higher Education Assistance Agency entered into a joint dismissal, based on there being no debt owed to this Defendant.
There were three defendants that did not answer or otherwise respond: Defendants AFSA Data Corporation, ELSI/Law Access, and Columbia University. Both AFSA Data Corporation and ELSI/Law Access are listed on Plaintiff's schedules as loan servicers. Plaintiff testified at trial that she has student loans with Columbia University which include Perkins loans that she believes are still held by Columbia University (Trial Transcript 11/13/00, hereinafter "Trial Trans," at 4). She noted that Columbia had not answered her complaint. (Trial Trans, at 21). Plaintiff's Exhibits 4,5,8, and 9 which evidence Statements of Accounts from Columbia and Exhibits 6, 7, 10, and 41-74 which are canceled checks from Plaintiff to Columbia U-Crown Loan and Columbia U-NDSL/Perkins were admitted into evidence without dispute. No other evidence of the remaining outstanding balance was presented with regard to the Columbia University student loans.
With respect to Defendant ECMC, the parties stipulated in the pre-trial order that there was an outstanding balance of $49,734.25 as of May 3, 2000. With respect to Defendant TERI, the parties stipulated in the pre-trial order that Debtor had executed a Consolidation Loan Promissory Note for $14,017.04, payable to Key Bank USA, N.A., which was subsequently assigned to TERI, and as of August 22, 2000 the total balance, with interest, was $15,417.78.
At trial, Plaintiff was the only witness called to testify. She stated that she had graduated with a business major from Ohio State University, that she scored in the 96th percentile on the LSAT, that she received numerous acceptances to prestigious law schools, and chose Columbia University. She passed the New York Bar exam in 1995 after graduating and continues to maintain her New York license to practice law in active status. In 1998, she left her first job with South Brooklyn Legal Services for a position with PRAD Area Community Counsel, which was a non-profit company, at an annual salary of $45,000. While working for PRAD, she met the Robinson family. She was first interested in them because of their diet of raw fruits, vegetables, seeds, nuts and grains. As she learned more, she was attracted to their concept of community. She found she shared with them a whole value and belief system, including diet, the use of natural products, clothes, medication, forms of recreation, and rearing and educating children. Plaintiff voluntarily left her PRAD job of only four months and moved to Atlanta with the Robinsons.
Plaintiff first began to look for work in Atlanta as an attorney in the private sector, with the hope that she would bring in more money to help support the Robinson family and herself. When she didn't get any offers there, she began to target government and public service employers. She testified, however, that the process of interviewing became more uncomfortable for her as she realized that she did not want to spend so much of her time with people who did not share her value system.
In addition, she had become pregnant and realized that she would have only a few months to work before quitting when her child was born. After her child was born, Plaintiff received an offer from the City of Atlanta Solicitor's office, in February or March 2000, for a law clerk position for an annual salary in excess of $30,000. She rejected the offer because she does not desire to work at all outside of the community. She did find paralegal, secretarial, and data entry work, all on a temporary basis, until the day her daughter was born. The many letters Plaintiff wrote or received with respect to her attempts to find work were admitted into evidence.
Plaintiff also testified that she was one of the founders of the community, and in June, 2000, she incorporated the community as the Kwatamani Family Community, a non-profit corporation. She also filed an application for tax exempt status for the Kwatamani Family Community which is pending. The Certificate of Incorporation of the Kwatamani Family Community and its ByLaws were admitted into evidence. (Plaintiff's Exhibits 166 and 167). She explained that an individual who enters the community gives up all property to the community as individual ownership is not permitted, and, upon leaving the community, an individual would not be entitled to any assets. The community provides food, clothing, shelter, and other necessities for its members. Plaintiff stated that she did not have much to give the community in the way of possessions, other than the exemptions listed in her bankruptcy case and her debts. She also testified that she devoted all her energies to working for the community, that the community travels throughout the country promoting their raw food diet and messages of holistic living through CDs, books, and seminars. Plaintiff intends to permanently remain a member of the community and has no independent income to pay her student loans.
Plaintiff testified that she was required to begin repaying her student loans to Columbia immediately after graduation. The other loans she was able to defer paying until she began working. During the almost one and a half years it took to find an attorney position, she worked as a temp doing mostly paralegal work so that she could make monthly loan payments. She has paid some $36,000 on her student loans. Her bankruptcy case was filed because she was being harassed by creditors calling her at all hours, and not to get out of paying her student loans.
Additionally, Plaintiff testified that both she and her daughter are in good health; that she has never attempted to procure child support from the father of her child since as a member of the community the child's needs are taken care of; that her drastic lifestyle change was purely voluntary; that she has no plans for taking a job outside of the community; that formerly one of the adults living in the community worked outside of the community as a media specialist and librarian; that Mr. Robinson had worked for Emory University in 1999 with youth who had behavioral problems; that she has not applied to take the Georgia Bar exam as the community did not approve the decision or the expense to take it; that she had received tax refunds for 1999 of approximately $4,467; and, that she has discharged all her credit card debt.
Plaintiff seeks to discharge her student loans under the hardship provision in 11 U.S.C. § 523(a)(8).1 Debtor contends that she devotes all her time and energy to the Kwatamani Family Community, Inc., a non-profit corporation and apostolic community, but receives no income for the work she does. Debtor contends that her situation meets the Brunner test, which has established the standard for an "undue hardship" discharge. Brunner v. New York State Higher Education Services Corp., 46 B.R. 752 (S.D.N.Y.1985), aff'd, 831 F.2d 395 (2nd Cir.1987); In re Roberson, 999 F.2d 1132 (7th Cir.1993)(adopting the Brunner test); Pennsylvania Higher Education Assistance Agency v. Faish, 72 F.3d 298 (3rd Cir.1995)(adopting the Brunner test), cert. denied, 518 U.S. 1009, 116 S.Ct. 2532, ...
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