Thomas v. Department Of Education

931 F.3d 449 (5th Cir. 2019)

Purchase the Printed Copy at bsmsphd.com

Nature of the Case

To access this section all you need to do is click here and register.

Facts

P is over 60 years old and had to file a Chapter 7 bankruptcy case in 2017. P suffers from diabetic neuropathy, a degenerative condition that causes pain in her lower extremities. P is unemployed and subsists on a combination of public assistance and private charity. In February 2012, P worked for eight years at a call center in Southeastern Virginia and was earning $11.40 per hour with benefits. P decided to enroll at a local community college to improve her career prospects (she had a high school diploma, but no higher education credits). P obtained two $3,500 loans through the Department of Education. Her loans went into repayment in December 2013. In spring 2014, she made payments of $41.24 and $41.61 on the loans. P's health began to decline significantly in 2014. P frequently took unpaid leave from work at the call center to manage her symptoms and incurred significant medical expenses. Her employer fired her for violating company policies. Because she was terminated for cause, P was ineligible for unemployment benefits. P moved to Texas to live with her then-boyfriend. She obtained work with Perfumania, then Whataburger, and finally UPS. She could not maintain these positions because of her health. Since quitting UPS in 2017, P has not obtained employment that comports with her need for sedentary work. P filed Chapter 7 bankruptcy in Dallas and received a general discharge of her debts. P initiated an adversary complaint in bankruptcy court against the Department of Education. (D). P had to show 1) that she cannot maintain, based on current income and expenses, a 'minimal' standard of living for [herself] and [her] dependents if forced to repay the loans; (2) that additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period of the student loans; and (3) that the debtor has made good faith efforts to repay the loans. The bankruptcy court concluded that P had shown an inability to maintain a minimal standard of living if forced to repay the loan-because her monthly expenses ($640) exceeded her monthly income ($194). But P failed to show she was completely incapable of employment now or in the future;' she admitted that she could not establish that her present state of affairs would persist for a significant portion of the loans' repayment period. The bankruptcy court noted that the exceptionally demanding second prong requires more than a showing of dire financial straits because the debtor must show that circumstances out of her control have resulted in a 'total incapacity' to repay the debt now and in the future. Such situations are so rare that 'in fifteen years on the bench, the undersigned judge has never discharged a student loan over the objection of the lender.' The judge refused to discharge the student loan. P appealed.