Student Loan Discharge – Undue Hardship – Good Faith

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Bankruptcy

7^th Circuit Court of Appeals

Officials: FLAUM, MANION, and HAMILTON, Circuit Judges.

Student Loan Discharge – Undue Hardship – Good Faith

No. 14-3702 Mark W. Tetzlaff v. Educational Credit Management

Where student debt not discharged in bankruptcy action as appellant did not meet good faith requirement of “undue hardship” doctrine.

“Additionally, Tetzlaff’s argument conflicts with the very nature of the undue hardship analysis, which is an inquiry about the ability of a debtor to pay student loan debt subject to a discharge action. See 11 U.S.C. § 523(a)(8). The bankruptcy court was not required to consider Tetzlaff’s payments to Florida Coastal as evidence of a good faith effort to repay Educational Credit, as his Florida Coastal debt was not included in the discharge action. Furthermore, as the bankruptcy court noted, it seems that Tetzlaff repaid his debt to Florida Coastal largely because he needed the school’s cooperation in releasing his diploma and transcript. Thus, Tetzlaff was motivated by certain incentives to pay down his Florida Coastal debt that do not apply to the repayment of his debt held by Educational Credit. Therefore, we decline to hold that the bankruptcy court erred when it refused to consider the repayment of debt not included in the loan discharge proceeding before it in making a determination of good faith under the Brunner test. Further, we affirm the bankruptcy court’s conclusion that Tetzlaff has not made a good faith effort to pay down his student loan debt”

Affirmed.

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Attorney Derek A. Hawkins is the managing attorney at Hawkins Law Offices LLC, where he heads up the firm’s startup law practice. He specializes in business formation, corporate governance, intellectual property protection, private equity and venture capital funding and mergers & acquisitions. Check out the website at www.hawkins-lawoffices.com or contact them at 262-737-8825.