DEBTOR CASE NO. 97-21914





VS. ADV. NO. 98-2016







This matter is before the Court for determination of the dischargeability of student loans pursuant to 11 U.S.C. §523(a)(8)(B), pursuant to an Order of Submission on the Record entered herein on August 14, 1998. This Court has jurisdiction of this matter pursuant to 28 U.S.C. §1334(b); it is a core proceeding pursuant to 28 U.S.C. §157(b)(2)(I).

The Joint Stipulation of Facts tendered by the parties sets out the following pertinent facts:

The plaintiff owes the defendant $19,449.72, plus costs and interest at the legal rate from December 31, 1996, pursuant to a Judgment entered in favor of the defendant in New Jersey based on the plaintiff’s default on six separate student loan promissory notes dating from 1990 to 1993. The plaintiff has never made a payment to the defendant. The plaintiff’s initial payments on the student loans were through "Sallie Mae Servicing" and he believes that he made approximately seven payments on these loans prior to their assignment to the defendant.

The plaintiff has not used the education he received in any of his employment. He is married and supports his wife and four children. He presently grosses approximately $776.07 per week for a 70 hour week as an independent driver/carrier. He must supply his own transportation for this job. He expends $409.26 per week for van payments, insurance and maintenance on the van, gas, and transportation. He must pay for rent, utilities, food, clothing and other necessities for himself and his family out of his net wages. He has no medical or life insurance for himself or his family. His wife and children, especially one child, are incurring ongoing medical expenses.

The plaintiff’s wife was mugged in December 1996, and suffered many serious injuries, including a back injury. She is currently unable to work. She takes strong pain medication, as well as medication for her nerves and depression. She has a claim pending for Social Security disability which could take two years or more to conclude, and whose outcome is speculative. If she is successful in her claim she should receive $400-$600 per month.

In addition to the Joint Stipulations, the plaintiff filed an Affidavit with his Motion for Summary Judgment on June 4, 1998, which states that his current take-home pay is $1,800.00 per month. From this amount he states that he currently pays monthly expenses of $364.00 for rent, $500.00 for food, $150.00 for clothing, $126.00 for gas and electric, $40.00 for water and sanitation, $70.00 for cable, $100.00 for medical expenses. $45.00 for telephone, $331.00 for van payment, and $40.00 for credit card indebtedness. He states that these expenses total $2,006.00 per month, an amount which exceeds his take-home pay. In fact, they total $1766.00, a difference of $230.00. There are other mathematical discrepancies in the record. The Affidavit contradicts the Joint Stipulation of Facts concerning the van payment. The figures provided in the Joint Stipulation indicate that out of his gross wages of $776.07 per week the plaintiff pays $409.26 in work-related expenses, including a van payment, while the Affidavit states that the van payment comes out of his net income. Further, after the deduction of work-related expenses, he has a weekly net pay average of $366.81. This weekly average does not support his stated monthly take-home pay of $1,800.00. Based only on his weekly pay average, his monthly net income would be slightly less than $1,600.00. If the plaintiff has some other source of income he has not stated what it is, although a copy of Schedule I - Current Income of Individual Debtor(s) shows that when the bankruptcy petition was filed in this case, his wife was receiving monthly payments of $280.00, apparently for child support.

The court in In re Cheesman, 25 F.3d 356 (6th Cir. 1994), set out the test for determining whether a debtor would experience an undue hardship if required to pay back student loans. The Cheesman court had approved the test set out in In re Brunner, 831 F.2d 395 (2nd Cir. 1987):

(1) that the debtor 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 ....; and (3) that the debtor has made good faith efforts to repay the loans.

At 396. This Court’s task is to determine how these elements apply in the within matter. However, the plaintiff’s financial situation has not been clearly presented. It is difficult for the Court to tell if he has some discretionary income from which he might make payments on his student loan debt, or if he is spending more on necessities than he nets in a month. It is therefore not clear how the elements of the test apply in this instance.

In addition, there is the issue of possible disability benefits to be awarded to the plaintiff’s wife. If she receives benefits, income to the family may increase by $400-$600 per month. Taking into account that the plaintiff’s financial circumstances are unclear, the Court believes that this matter should be placed in abeyance until a decision is rendered on the Social Security disability application.

The parties are therefore ordered to file a status report herein when this decision is rendered. The plaintiff is further directed to have prepared a clear and comprehensive presentation of his income and expenses ready for the Court’s consideration at the time the status report is filed. The Court will then schedule a status conference to determine if further hearing is necessary in this matter.



By the Court -



Chief Judge


Copies to:


Sally J. Herald, Esq.

James M. McDonough, Esq.