In re Bagley, Bankruptcy No. 80-0004.

Decision Date13 May 1980
Docket NumberBankruptcy No. 80-0004.
Citation4 BR 248
PartiesIn re Deborah A. BAGLEY, Debtor, CONNECTICUT STUDENT LOAN FOUNDATION, INC., Plaintiff, v. Deborah A. BAGLEY, Defendant.
CourtU.S. Bankruptcy Court — District of Arizona

Clague Van Slyke, Tucson, Ariz., for plaintiff.

Herbert E. Lahr, Tucson, Ariz., for defendant/debtor.

MEMORANDUM OPINION

WILLIAM A. SCANLAND, Bankruptcy Judge.

Plaintiff, Connecticut Student Loan Foundation, Inc., filed an action to determine the dischargeability of a debt due it from the defendant, Deborah A. Bagley, under Section 523(a)(8) of the Bankruptcy Reform Act (11 U.S.C. § 523). This matter came on for trial on April 29, 1980, at which both written and oral evidence were introduced. Plaintiff was represented by its attorney, Clague Van Slyke, and defendant was represented by her attorney, Herbert E. Lahr. The defendant testified that she was a non-working wife of Carson D. Bagley who is a private stationed at Ft. Huachuca, Arizona. She testified that his gross monthly income is $822.12, from which the United States Army deducts rent, $120.60; life insurance, $20.50; soldiers' group life insurance, $3.00; Old Soldiers' Home, $.50; taxes, social security, $113.52, for a total deduction of $258.12, leaving a net monthly income of $564.00. Plaintiff's exhibit 5 was admitted into evidence which set forth her monthly expenses totaling $619.67, including $100.00 monthly attorney's fees. She testified that she had terminated her previous employment sometime in May 1979 because of her pregnancy.

Subsequent to the filing of the petition in bankruptcy by both Mr. and Mrs. Bagley, a child was born with severe respiratory problems. She apparently was committed to the University of Arizona Health Center Hospital a week or so prior to the birth of the child and was released a few days thereafter, but the baby was kept in intensive care for a considerable period of time because of the respiratory problem. She stated that she had received billings from the University of Arizona Health Center Hospital of approximately $5,000.00 and anticipated receiving additional billings in the amount of $10,000.00. She based her testimony on the hospital expenses incurred in the treatment of a child previously born with the same type of respiratory ailment who subsequently died. She and her husband have a United States Health Insurance Policy which she stated would pay off about 70 per cent of the total indebtedness of $15,000.00, leaving a balance for which she and her husband would be liable of between $4,100.00 and $4,500.00.

The plaintiff's complaint asks that the discharge be denied as to its debt of $2,206.52 under Section 523(a)(8) of the Bankruptcy Code, effective October 1, 1979. While having no bearing on the determination of the dischargeability of this debt, it should be noted that this debt was a premarital debt incurred by defendant prior to her marriage to Carson D. Bagley. Section 523(a)(8), Exceptions to discharge, reads as follows: "to a governmental unit, or a nonprofit institution of higher education, for an educational loan, unless — (A) such loan first became due before five years before the date of the filing of the petition; or (B) excepting such debt from discharge under this paragraph will impose an undue hardship on the debtor and the debtor's dependents;".

Here the loan first became due within the five-year period before the date of the filing of the petition. The only issue before the Court is whether excepting the debt from discharge will impose an undue hardship on the debtor and the debtor's dependents. A review of the legislative history of this particular paragraph of the Bankruptcy Code does not answer the question as to what is "undue hardship." See 2 Appendix, Collier (15th ed.) pp. 132-162.

Counsel for plaintiff, in his pretrial Memorandum of Law (pp. 4-12), looks to the element of undue hardship as used under the former 20 U.S.C. § 1087-3 (Higher Education Act of 1965) where the test for a release from a student loan was whether "payment from future income or other wealth will impose an undue hardship on the Debtor or his dependents." A review of the cases cited by plaintiff in the Memorandum of Law is not determinative of the issue before the Court. Plaintiff cites State of Ohio v. Bruce Kirch, 18 Collier Bankruptcy Cases 577 (S.D.Ohio, 1978); and Pennsylvania Higher Education Assistance Agency v. Sylvester Townsend, 19 Collier Bankruptcy Cases 583 (E.D.Penn.1978). In each of these cases the bankrupt was employed and had no unusual or emergency liabilities such as defendant Bagley has in this situation. In each of these cases the court found that the bankrupt could make monthly payments and repay his school loan. In Townsend, supra, the bankrupt was making a church contribution of $75.00 to $100.00 per month and $35.00 a month to a student club. The court found he could cut down on these voluntary...

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3 cases
  • Lamka v. Dep't of Revenue
    • United States
    • Oregon Tax Court
    • December 11, 2019
    ...the Bankruptcy Laws of the United States, HR Doc No 93-137, 93d Cong, 1st Sess, Pt II at 140-41 (1973); see also In re Bagley, 4 BR 248, 6 BCD 404, 405 (D Ariz 1980). Based on this review of materials available to the Oregon Legislature in 1982 and 1985, the court concludes that the Oregon ......
  • Peterson v. Dep't of Revenue
    • United States
    • Oregon Tax Court
    • December 11, 2019
    ...on the Bankruptcy Laws of the United States, HR Doc No 93-137, 93 d Cong, 1st Sess, Pt II at 140-41 (1973); see also In re Bagley, 4 BR 248, 6 BCD 404, 405 (D Ariz 1980). Based on this review of materials available to the Oregon Legislature in 1982 and 1985, the court concludes that the Ore......
  • In re Trim-Lean Meat Products, Inc.
    • United States
    • U.S. Bankruptcy Court — District of Delaware
    • May 13, 1980
    ... ... No. 79-234. Adversary No. A-79-6 ... United States Bankruptcy Court, D. Delaware ... May 13, 1980.4 BR 244         Morris, James, Hitchens & Williams, ... ...

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