In re Hafner
| Decision Date | 24 December 2003 |
| Docket Number | Adversary No. 01-2382.,Bankruptcy No. 01-58300. |
| Citation | 303 B.R. 351 |
| Parties | In re William Frederick HAFNER, II, Debtor. William Frederick Hafner, II, Plaintiff, v. Sallie Mae Servicing Corporation, et al., Defendants. |
| Court | U.S. District Court — Southern District of Ohio |
Todd G. Finneran, Columbus, OH, Former Attorney for the Plaintiff.
Matthew J. Thompson, Nobile, Needleman & Thompson LLC, Columbus, OH, for Defendant.
Alexander G. Barkan, Columbus, OH, Assistant U.S. Trustee.
William Frederick Hafner, II ("Plaintiff") seeks a discharge of student loans based upon the "undue hardship" provision of section 523(a)(8) of the United States Bankruptcy Code. ("Code"). The remaining loans are owed to the assignee, Educational Credit Management Corporation ("Defendant"). The current balance is approximately $78,215.02. The Court concludes that the Plaintiff has established entitlement to a partial discharge. A summary of the facts will illustrate the bases for this decision.
The Plaintiff is a 57-year-old, unmarried man with no dependants. In 1970, he earned a Bachelor's Degree in History from The Ohio State University. Then in 1971 the Plaintiff received a Master's Degree in History from the University of Illinois, and in 1974 he obtained a Master's Degree in Library Science from Case Western Reserve University. Upon completing his studies at Case Western, the Plaintiff became a librarian at the University of Missouri — Kansas City.
After the University of Missouri terminated the Plaintiff, he was hired as a humanities liaison librarian at Florida Atlantic University, where he worked from 1977 to 1981. In this position, the Plaintiff's duties included teaching classes, providing reference service and selecting books. From 1981 to 1983, the Plaintiff worked as an acquisition librarian at Lake Superior State University in Michigan. In 1983, he was hired as the acquisition librarian at the University of West Florida. The Plaintiff, however, returned to Lake Superior State University in 1984 and provided library instruction. The Plaintiff held this position until 1989, when Lake Superior State declined to award tenure. He ended his career there as a cataloguer.
Next, the Plaintiff was hired as the coordinator of the collection development at Western Carolina University. His duties included managing a staff of two. Western Carolina University declined to reappoint the Plaintiff in 1992. The Plaintiff then obtained two part-time jobs, one as a security guard at Western Carolina University and the other as a grill cook at Wendy's. He held these positions until about August 1995.
In 1995, at the age of 49, the Plaintiff was admitted to the Capital University School of Law. The Plaintiff financed his legal education with approximately $86,494.00 in student loans and funds from a retirement account. The Defendant guaranteed $55,500.00 of the Plaintiff's student loans, and the remaining $30,996.00 was guaranteed by HEMAR Insurance Corporation of America ("HEMAR"). The Plaintiff graduated in 1998, and ranked 101st out of a class of 212. The Plaintiff testified that he planned to become a bankruptcy attorney.
The Plaintiff applied to take the July 1998 Ohio bar examination. According to the Plaintiff, the bar application was withdrawn after being informed that he needed open-heart surgery to repair a leak in the mitral valve. Testimony received from the Plaintiff's clinical psychologist, however, suggests that the heart surgery was a procedure that could have been postponed, but the Plaintiff elected to undergo the procedure instead of taking the exam.
In an effort to defray expenses, the Plaintiff testified that in 1998, he withdrew approximately $20,575.00 from his CREF retirement accounts. In November 1998, the Plaintiff's student loans were placed into forbearance. He then applied to take the February 1999 Ohio bar exam, but withdrew the application one week prior to the test, due to poor performance on the practice exams. In February 1999, the Plaintiff moved to Coshocton, Ohio to live with his parents.
The Plaintiff testified that in 1999, he paid expenses with credit cards and $5,000.00 withdrawn from the CREF accounts. The next year, the Plaintiff withdrew approximately $28,833.27 from the CREF accounts. Those funds were used to pay for an apartment the Plaintiff maintained in Columbus, Ohio, for living expenses and toward the student loans. Between June 2000 and February 2001, the Plaintiff paid approximately $6,638.21 on the student loans.
After exhausting the CREF accounts, the Plaintiff ceased making payments on the student loans. The Plaintiff, however, failed to apply for consolidation of the loans. He also did not apply for forgiveness due to permanent disability. In 2001, the Plaintiff interviewed for a produce stocking position with Wal-Mart. The Plaintiff also attended a truck driving school for four weeks in 2001. He was, however, unable to pass the commercial driver's license test. The Plaintiff has not been employed full-time since 1995.
On July 16, 2001, the Plaintiff filed bankruptcy under chapter 7 of the Code. At the time of filing, he had approximately $207,759.00 in general unsecured debt that included $120,635.00 in student loans, $86,776.00 in credit card debt and $348.00 for rent. At the time of filing, the Plaintiff had no income, and his monthly expenses totaled $350.00, primarily comprised of medical and transportation expenditures. To discharge his student loans, the Plaintiff filed this adversary proceeding on November 13, 2001.
Approximately three months later in February 2002, the Plaintiff's father died leaving him a stock portfolio worth approximately $111,469.94. The Plaintiff testified that to date, he has withdrawn approximately $28,750.00 from the inheritance to pay for living expenses and the following goods and services: $11,200.00 for the purchase of a 1998 Honda Accord; $1,050.00 for a psychiatric evaluation, and $3,000.00 for medical testing related to his prostate. Most notably, the Plaintiff used $13,500.00 of those funds to pay HEMAR as a settlement on the student loans it guaranteed.
The Plaintiff's current assets and income include approximately $90,826.50 in the stock portfolio, $219.37 received each month in interest and dividends from the stock portfolio, approximately $52,068.00 held in a TIAA account, and $100.00 received each month from his elderly mother. In October 2005 the Plaintiff will be eligible to withdraw approximately $594.41 per month from the TIAA account.
In addition to these resources, in 2008, at the age of 62, the Plaintiff will be eligible to receive social security in the approximate amount of $744.00 per month. According to the Plaintiff's projections, in 2008, his monthly income will include $744.00 from social security, $594.41 from the TIAA account, and $182.47 in interest and dividend payments from the stock portfolio. By the end of 2015, the Plaintiff's TIAA income would cease, leaving him with the interest and dividend payments from the stock portfolio and his social security. Finally, the Plaintiff testified that at some time in the future he will inherit approximately $175,000.00 from his 84-year-old mother, before taxes and administrative expenses are deducted.
Though the Plaintiff's petition reveals that at the time of filing bankruptcy his monthly expenses totaled only $350.00, he now indicates that his current monthly expenses average approximately $770.77. These expenses include: $561.42 for medical and dental expenses; $5.66 for mailbox rental; $29.61 for transportation; $65.03 for automobile insurance; $66.59 for clothing; $38.71 for federal, state and local income taxes, and $3.75 for charitable contributions. The Plaintiff also testified that his physicians are currently providing him with free medication worth approximately $180.00 per month.
In an effort to provide evidence concerning his future expenses, the Plaintiff projected that monthly expenses in 2008 would total approximately $1,520.16. These expenses would include: $575.00 for rent; $203.66 for utilities; $130.00 for food; $60.00 for clothing and laundry; $210.00 for medical expenses; $175.00 for transportation; $10.00 for charitable contributions; $109.50 for insurance, and $47.00 for federal, state and local income taxes.
The Plaintiff testified that he currently suffers from high blood pressure, and a hernia. He also testified that he may require surgery for an enlarged prostate. According to the Plaintiff, the surgery would cost approximately $16,000.00. A letter submitted from Jack Parren of Agents Brokerage Parren Associates, indicated that based upon the Plaintiff's age and condition, health insurance would cost approximately $744.03 per month.
The only corroborating medical evidence supplied was from Dr. Jolie S. Brams ("Dr. Brams"), a clinical psychologist, who testified and prepared a report. In performing her clinical analysis, Dr. Brams considered the Plaintiff's developmental, work-related and psychiatric history. In addition, Dr. Brams allowed the Plaintiff to take the Minnesota Multiphasic Personality Inventory 2 exam ("MMPI-2"). According to Dr. Brams, the Plaintiff suffers from Asperger's syndrome, a variant on the autistic continuum that was added to the Diagnostic and Statistical Manual in 1993. Dr. Brams testified that the lower end of the autistic continuum includes people who are mentally retarded, compared to those who suffer from Asperger's syndrome. These individuals function at a higher level. According to Dr. Brams, Asperger's syndrome is a neurological disorder that is not treatable.
In the Report Dr. Brams indicates that individuals with Asperger's syndrome have significant interpersonal and psychological problems. These difficulties include...
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