In re Walker

Decision Date18 June 2009
Docket NumberBankruptcy No. 04-32012.,Adversary No. 07-3164.
Citation406 B.R. 840
PartiesIn re Michele D. WALKER, Debtor. Michele D. Walker, Plaintiff, v. Sallie Mae Servicing Corp., SLM Education Credit Finance Corporation, Zwicker & Associates P.C., and Kohn Law Firm, S.C., Educational Credit Management Corporation, Defendants.
CourtU.S. Bankruptcy Court — District of Minnesota

Joseph A. Skokan, Piletich & Skokan, P.A., Stillwater, MN, for Plaintiff.

Linda J. Jungers, Stewart Zlimen & Jungers Ltd., Roseville, MN, Henry T Wang, Gary Plant Mooty Mooty & Bennett PA, Minneapolis, MN, for Defendants.

MEMORANDUM DECISION AND ORDER

GREGORY F. KISHEL, Bankruptcy Judge.

This adversary proceeding for determination of dischargeability of debt came on before the Court for trial. The Plaintiff appeared personally and by her attorney, Joseph A. Skokan, Piletich & Skokan, P.A. Defendant Sallie Mae Servicing Corporation ("Sallie Mae") appeared by its attorney, Linda J. Jungers, Stewart Zlimen & Jungers, Ltd. Defendant Educational Credit Management Corporation ("ECMC") appeared by its attorneys, A.L. Brown, Educational Credit Management Corporation, and Henry T. Wang, Gray Plant Mooty Mooty & Bennett, PA. The following decision is based on the evidence received at trial and the arguments of counsel.

NATURE OF ADVERSARY PROCEEDING

The Debtor filed a voluntary petition for relief under Chapter 7 on April 2, 2004. On July 12, 2004, she received a discharge in bankruptcy in the resulting case.

On August 15, 2007, the Debtor filed the complaint that commenced this adversary proceeding. The Defendants are creditors scheduled in her bankruptcy case. As of May 19, 2008, ECMC held a claim against the Debtor with a balance of $283,354.50 in principal, interest, and related fees; Sallie Mae held a claim against the Debtor with a balance of $29,253.75 in principal, interest, and related fees.1

The Debtor's debts to ECMC and Sallie Mae arose from educational loans made to her.2 Those loans funded the study through which the Debtor obtained an undergraduate (bachelor's) degree, plus her attendance at the first half of a medical school curriculum. These debts were excepted from discharge in the Debtor's bankruptcy case. The Debtor seeks to override that exception through the sole means provided under the statute, and to obtain a determination that the debts were discharged in her bankruptcy case. To do so, she had to prove that "excepting such debt from discharge ... would impose an undue hardship on [her] and [her] dependents ..." 11 U.S.C. § 523(a)(8).3 The Debtor bears the burdens of production and persuasion on the issue of undue hardship. In re Cumberworth, 347 B.R. 652, 657 (8th BAP Cir. 2006); In re Ford, 269 B.R. 673, 675 (8th Cir. BAP 2001).

BASIC FACTS: THE DEBTOR'S VOCATIONAL AND FAMILIAL PROFILE4

The Debtor is a woman now 42 years of age, of African-American descent.5 She grew up in inner-city Chicago. From the time she was seven or eight years old, the Debtor wanted to be a physician. Toward this goal, she concentrated on courses in math and science while in high school in the late 1970s and early 1980s. She also took four years of Latin coursework, on her belief that this would better her understanding of medical terminology.

In her freshman year of high school, the Debtor was accepted into CHAMPS, a program hosted by the Illinois Institute of Technology at Chicago. CHAMPS was aimed at inner-city youth, and was designed to prepare them for careers in medical fields. The Debtor participated in CHAMPS throughout high school. She continued it after her graduation in 1983 and her enrollment that year at the University of Illinois at Urbana. The program gave her an orientation to the medical field; later it required her to serve as a preceptor (tutor and mentor) in science for younger participants. Her involvement in CHAMPS required her to give up much of the free time that teenagers and young adults normally relish.

The Debtor attended the University of Illinois on a full-time basis for "about five years," majoring in biology and taking the pre-med curriculum. She financed her attendance through educational loans — the subject of this adversary proceeding includes the remaining debt on them — and work-study programs.6 She found the study "challenging"; she remembers that "essentially [her] life" was spent on her coursework during those years. She maintained an undergraduate grade-point average of "B."

The Debtor received her bachelor's degree from the University of Illinois in 1989. She was accepted to the University of Illinois College of Medicine in Chicago. After attending a medical school preparatory course at Creighton University in Omaha, she enrolled in the Chicago program in the fall, after her graduation from college. Her plan was to use her medical credential to become a psychiatrist.

The Debtor financed her attendance at medical school through educational loans; the currently-outstanding debt on them is the bulk of the subject of this adversary proceeding.7 She also held various sorts of employment to raise money for her living expenses. At turns, she worked as a dormitory resident assistant, a research assistant, and a pharmacy technician at Walgreen's.

The academic phase of medical school is the intensive coursework that normally takes the first two years. The Debtor found this regimen more challenging than her undergraduate studies had been. In response, she transferred from her medical school's four-year program to its five-year program. She ultimately completed the coursework.

In 1995, the Debtor took the first set of "the boards," the multi-part licensing and competency exams that are a prerequisite for licensing for physicians-in-training. This first segment is given after the completion of the classwork component of medical school. The Debtor failed this first round by one point. The authorities at the University of Illinois not only refused her leave to take these exams again; they recommended her dismissal from the medical school program. The Debtor appealed that determination, "as far as it could go" through the University's grievance procedures. She was unsuccessful. The reason cited for the ratification of her dismissal was "failure to progress in a timely fashion."

The Debtor was dismissed from medical school. She consulted an attorney as to the possibility of litigation against the University of Illinois. She could not afford the retainer quoted. She did not pursue legal relief.

After her years of effort, with the end of her long-time dream of being a doctor, the Debtor was left "very stunned, for a long while." Over the next year to two years, she worked as a pharmacy technician, making approximately $6.00 per hour, and then as a substitute teacher in the Chicago public schools.

While the Debtor was working as a pharmacy technician, she met Troy Walker, a police officer for the City of Chicago. They got married in 1996. For a period of time after the wedding, the Debtor "did not pursue anything" and did not work. Then, she concluded that a psychology credential could enable her to pursue something close to her older career aspiration and would allow her to use some of her past education. She applied to and was accepted into a master's degree program at Governors State University in University Park, Illinois in 1997. Recognizing that she already had large debts from educational loans, the Debtor avoided borrowing to finance this course of study. Her husband paid for part of the expenses; she worked as she was able in order to make up the balance. She finished her master's studies and received that degree in 2000.

The Debtor bore the first child of her marriage, a daughter, in 1998, while she was still a master's student. She had a first set of twin sons in May, 2000, and a second set in October, 2001. She has had no further children.

In 2002, the Debtor, her husband, and their children moved to Minnesota. Their reasons were several and varied: the excessively-high cost to house a family of their size in the city of Chicago, where Troy was required to live by the terms of his employment; the generally-higher cost of living in Chicago; their perception that the Twin Cities offered a safer environment to raise children, and one more welcoming to biracial children; Troy obtaining employment as an officer with the Minneapolis Police Department; and the Debtor then obtaining a full-time post-graduate internship as a school psychologist with the Minneapolis Public Schools.

The Debtor's internship was to pay her between $16,000.00 and $17,000.00 per year, on a full-time basis. However, once her family had established a new home in Minneapolis, she found she could not sustain full-time working hours; there were conflicts between Troy's variable, multi-shift work schedule and her own fixed schedule oriented around school hours, and the pressures of caring for five children of pre-school age. These things prompted her to get her internship reduced to a part-time schedule. She sustained the internship for two years to make up her commitment to one full year of service, and she completed it in the 2003-2004 school year. By that time the Minneapolis Public School District was operating under serious budgetary strictures. Current District employees were being laid off; there were no permanent openings for a school psychologist for which the Debtor could apply.

Around that time, the Debtor and her husband purchased a house in Hudson, Wisconsin, and moved their family there. She inquired about openings for school psychologists in the Hudson district, and was told there were none. The Debtor's investigation has revealed that she would have to take further educational courses and pass additional testing to get licensed as a school psychologist in Minnesota. The cognate requirements for Wisconsin licensure would be even greater, because the Debtor did not...

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