In re Woyame
| Decision Date | 29 September 1993 |
| Docket Number | Bankruptcy No. 93-3038. (Related Case: 93-30051-7). |
| Citation | 161 BR 198 |
| Court | U.S. Bankruptcy Court — Northern District of Ohio |
| Parties | In re Joseph A. WOYAME, Debtor. Joseph A. WOYAME, Plaintiff, v. CAREER EDUCATION & MANAGEMENT, et al., Defendant. |
Jay M. Patterson, Columbus, OH, for Ohio Student Loan Com'n.
Lloyd J. Blaney, Madison, WI, for Great Lakes Higher Educ. Corp.
This case comes before the Court after Trial on Plaintiff's Complaint to Determine the Dischargeability of a Debt Under 11 U.S.C. Section 523(a)(8)(B) and Great Lakes Higher Education's (hereafter "Great Lakes") Answer and Counterclaim. At Trial, the parties were afforded the opportunity to present evidence, stipulations, briefs and arguments they wished the Court to consider in reaching its decision. This Court has reviewed the entire record in the case. Based upon that review, and for the following reasons, this Court has determined that Eight Thousand Eight Hundred Seventy-two and 73/100 Dollars ($8,872.73) of Plaintiff's consolidated debt should be Nondischargeable; and that the remainder of Plaintiff's loan, including interest, should be Discharged.
Plaintiff is twenty-four (24) years old, unmarried, has no children, and is in relatively good health. At present, Plaintiff is employed as a truck driver and does occasional farm work. Excluding farm earnings, Plaintiff's net salary totals approximately Nine Hundred Twenty and 00/100 Dollars ($920.00) per month. Plaintiff has, in the past, earned as much as Twenty Thousand Seventy-eight and 43/100 Dollars ($20,078.43) annually.
From 1987 through 1991, Plaintiff incurred educational debts in the amount of Twelve Thousand Seven Hundred Ninety-two and 66/100 Dollars ($12,792.66). The parties stipulated that in August of 1991, he received a consolidated loan which consists of the present existing obligations totalling approximately Eleven Thousand One Hundred Fifty-seven and 73/100 Dollars ($11,157.73). Great Lakes is the holder of the promissory note on this loan. It is the disposition of this consolidation loan which is currently at issue.
The original loans were taken out for various educational purposes. In 1987, Plaintiff enrolled in a program at the University of Toledo (hereafter "UT") for purposes of pursuing a career in heating and air conditioning repair and maintenance. The amount of educational assistance he received was approximately Two Thousand Two Hundred Eighty-five and 00/100 Dollars ($2,285.00). After one (1) year in this program, Plaintiff concluded that despite the alleged assurances of the school administration, the program would not equip him with the skills necessary to engage in the heating and air conditioning repair business. Plaintiff withdrew from UT and twelve (12) months later enrolled in the RETS Institute of Technology (hereafter "RETS"). It was at RETS that Plaintiff pursued and eventually received his certificate in heating and air conditioning repair. In the course of doing so, Plaintiff incurred further loan obligations in the amount of Five Thousand Three Hundred Eighty-three and 66/100 Dollars ($5,383.66).
Plaintiff met with no success in finding employment in the heating/air conditioning field. Having need of a job, Plaintiff enrolled in truck driving school, incurring further obligations of Five Thousand One Hundred Twenty-five and 00/100 Dollars ($5,125.00). Shortly after graduating from truck driving school, Plaintiff obtained employment driving a tractor-trailer some distance from his home. In order to be with his former fiancee, Plaintiff found another truck driving job based in his hometown. The new job paid approximately One and 50/100 Dollars ($1.50) per hour less than the former job.
On January 8, 1993, Plaintiff filed a Petition pursuant to Chapter 7 of the Bankruptcy Code. On February 3, 1993, Plaintiff initiated this cause of action, naming the following Defendants: Career Education & Management; Great Lakes; Ohio Student Loan Commission fka Ohio Student Aid Commission (hereafter "OSAC"); and RETS. OSAC filed an Answer. Great Lakes responded by filing an Answer and Counterclaim alleging that repayment of the student loans will not constitute an undue hardship to Plaintiff. OSAC and Plaintiff entered into an agreement whereby judgment was rendered in favor of OSAC against Plaintiff in the amount of Three Thousand One Hundred Ninety Three and 38/100 Dollars ($3,193.38) Default judgments were subsequently rendered against Career Education & Management and RETS for their failure to respond to the Complaint or otherwise defend this cause of action.
In this cause of action, Plaintiff seeks to have his obligation to Great Lakes declared dischargeable as imposing an undue hardship under 11 U.S.C. § 523(a)(8)(b). Defendant seeks to have the same obligations declared nondischargeable.
11 U.S.C. Section 523 provides:
This case concerns the determination of the dischargeability of a debt, and thus constitutes a core proceeding pursuant to 28 U.S.C. 157(b)(2)(I).
Plaintiff's educational loan became due less than seven (7) years prior to the filing of his Petition and therefore the only mechanism for discharge is under 11 U.S.C. § 523(a)(8)(B). Under this Section, Plaintiff's educational benefits are excepted from discharge only if payment would impose an undue hardship. In the past, this Court has used a tripartite analysis to gauge undue hardship. Silliman v. Nebraska Higher Education Loan Program (In re Silliman), 144 B.R. 748 (Bankr.N.D.Ohio 1992); Bakkum v. Great Lakes Higher Education Corporation (In re Bakkum), 139 B.R. 680 (Bankr. N.D.Ohio 1992); and In re Hawkins, 139 B.R. 651 (Bankr.N.D.Ohio 1991). This analysis assesses undue hardship based upon three (3) tests: a mechanical test, a good faith test and a policy test. In re Johnson, 5 B.C.D. 532, 539-45 (Bankr.E.D.Pa.1979), aff'd 831 F.2d 395 (2d Cir.1987).
This Court will examine this case using all three (3) tests in determining the dischargeability of Plaintiff's loan obligation. Under the mechanical test, the Court considers the Plaintiff's current employment and income situations; future employment and income prospects; current and future expenses; education levels; work skills; health; family support obligations; and the marketability of the Plaintiff's work skills. North Dakota State Board of Higher Education v. Frech (In re Frech), 62 B.R. 235, 240 (Bankr.D.Minn.1986); and State of Ohio Student Loan Commission v. Kammerud (In re Kammerud), 15 B.R. 1 (Bankr.S.D.Ohio 1980). It is the Plaintiff who bears the burden of showing that his income will not be sufficient to maintain a menial or "poverty level" style of living for the foreseeable future if the loan is not discharged. In re Silliman, at 751.
Plaintiff does not meet the burden of proof with respect to the mechanical test. Plaintiff has been employed as a truck driver for some time, and is provided with enough work to fill a forty (40) hour work week. He testified that soon he will have the requisite experience to allow him to move into a higher paying trucking job. Plaintiff's only physical problem is a minor back ailment, which requires treatment by a chiropractor four (4) times a year, at a cost of Fifty Dollars ($50.00) per visit. This back problem does not prevent him from engaging in, or seriously impair his ability to engage in, his chosen occupation. Further, Plaintiff is trained in the field of heating and air conditioning maintenance and repair, and may be able to find additional employment in this area. Plaintiff has no wife or children, and thus has no family support obligations.
In addition, testimony was presented that Plaintiff's income is approximately Six and 50/100 Dollars ($6.50) per hour, which extrapolates to Twelve Thousand Nine Hundred Sixty and 00/100 Dollars ($12,960.00) per year. This figure does not include any income from the extra farm work in which Plaintiff occasionally engages. His stipulated income for 1992 was Twenty Thousand Seventy-eight and 43/00 Dollars ($20,078.43). As both of these figures far exceed the poverty level guideline for a one (1) person family unit — Six Thousand Nine Hundred Seventy and 00/100 Dollars ($6,970.00), 58 Fed.Reg. 8287 (1993), and because of the reasons cited above, Plaintiff fails to pass the mechanical test.
The second test focuses on the good faith of the Plaintiff. Specifically the Court will examine the efforts which Plaintiff has made to minimize his current living expenses while maximizing his earning potential. The Court will also look at whether or not Plaintiff has made a bona fide effort to repay the loans. In re Silliman, at 751.
In the case at bar, Plaintiff fails the good faith test. Plaintiff has made only minimal efforts to pare his living expenses. He moved back into his parents' home, paying them...
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