Matter of Diaz, Bankruptcy No. 79-24103

Decision Date17 July 1980
Docket NumberBankruptcy No. 79-24103,80-2020A.
Citation5 BR 253
PartiesIn the Matter of Carol A. DIAZ, Debtor. Carol A. DIAZ, Plaintiff, v. NEW YORK STATE HIGHER EDUCATION SERVICES CORPORATION and Lincoln First Bank, N.A., Defendants.
CourtU.S. Bankruptcy Court — Western District of New York

Lacy, Katzen, Jones & Ryen by David D. MacKnight, Rochester, N.Y., for plaintiff.

Michael Roulan, Geneva, N.Y., for defendant.


EDWARD D. HAYES, Bankruptcy Judge.

The debtor filed under Chapter 7 of the Bankruptcy Code and commenced an action to have her student loan discharged under § 523(a)(8) of the Bankruptcy Code. New York State Higher Education Services Corporation paid off Lincoln First Bank, N.A. on the loan and Lincoln First Bank, N.A. was dropped during the pretrial procedure. All matters have been stipulated except the undue hardship issue and this remains the only issue to be resolved in this lawsuit.

The section involved is § 523(a)(8) of the new Bankruptcy Code and it provides as follows:

(a) A discharge under section 727, 1141, or 1328(b) of this title does not discharge an individual debtor from any debt—
(8) 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; . . . *

Mrs. Diaz is divorced and her former husband is confined to a mental clinic. She has four children and her age is 45. There are two children living at home; a son 18 and a daughter 16. She finished the ninth grade of school and got a high school equivalency diploma. She went to Monroe Community College part of 1975, 1976, 1977 and 1978. She received no degree because each semester that she went to school she was absent because of illness for one to two months.

Mrs. Diaz has had a series of illnesses. She has been confined to R-wing, the psychiatric wing, in Strong Memorial Hospital in Rochester, New York. She had a number of different surgeries. In 1979, she suffered a heart attack. She needs surgery in the future for female problems and her work day is limited by the trouble she has with her legs and feet.

When Mrs. Diaz is employed, she works for the Monroe County Development Center as a dietary supervisor. When working, she brings home $279.00 every two weeks, net pay. Because of her physical problems, she works only half a day. The 16 year old daughter, who lives at home, receives a $177.10 a month in social security payments from the former spouse. Mrs. Diaz's total take home pay when working amounts to $592.88 per month. Mrs. Diaz owns the home she lives in. It was bought in 1978 for $11,500 and there presently is a mortgage of some $10,800. She drives a 1978 Chevrolet car which has a lien on it for about $8,000. She is not currently paying for the car. She uses the car for transportation for her and her family.

Mrs. Diaz's expenditures follow. Her mortgage payments are $166 per month. Utilities payments average $152 per month and her phone bill is $17 per month. She pays $150 for food for herself and the children each month. Her insurance on the house amounts to $21.25 per month. She allows in her...

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