Bloomberg Law’s® Bankruptcy Law News publishes case summaries of the most recent important bankruptcy law decisions, tracks major commercial bankruptcies, and reports on developments in bankruptcy...
By Diane Davis
A single mother with seven children, four of them disabled, got part of her student loan debt wiped out in bankruptcy, but she still must repay $222,000 of it, the U.S. Bankruptcy Court for the Western District of Washington held.
“Though $222,000 is a large amount, the Court’s partial discharge of her student loan obligation will hopefully provide the Plaintiff with some hope and ability to pay the student loans within her working life while still being able to care for her children,” Judge Mary Jo Heston wrote Dec. 6 in an unpublished decision.
The Bankruptcy Code prevents a debtor from discharging any qualified educational loan unless she can show that repayment would impose an undue hardship on her and her dependents.
While the Ninth Circuit has adopted the three-part Brunner v. New York State of Higher Educ. Servc., Corp. (In re Brunner) test for conducting the undue hardship analysis, the court recognized the “drastically different landscape” facing student loan debtors now compared to 30 years ago when it was decided.
This court’s approach to the undue hardship analysis may not be unique, but it shows a movement away from merely a formulaic analysis to a real-life analysis. Heather Ann Coplin, 45, is divorced with a law degree. She’s also bi-polar, and has attempted suicide several times.
She currently works 30 hours as a waitress at the Muckleshoot Casino because she can work nights and weekends and it provides medical benefits she needs to take care of her four disabled children. Her daughter, who is a triplet, will most likely never be able to take care of herself.
Coplin filed Chapter 13, and after completing her three-year plan, received a discharge. She then asked the court to wipe out her $415,000 student loan debt.
She paid the Educational Credit Management Corporation (ECMC) and other creditors $2,242, but hasn’t enrolled in an income-based repayment plan (IBR) because she was concerned about potential tax liability.
Coplin showed that she was unable to repay the total amount without an undue hardship, but she can repay a portion of it, the court said.
Although the court found her concern over the tax implications of an IBR plan speculative, it said she could pay the remaining debt under whatever terms agreed upon with ECMC.
Richard D. Granvold, Law Office of Richard D. Granvold PS, Federal Way, Wash., represented Coplin; Trustee Michael G. Malaier, Tacoma, Wash., represented himself; Pooja Faldu Dave, U.S. Attorney’s Office, Seattle, Wash., represented U.S Department of Education.
The case is Coplin v. Dep’t of Educ. (In re Coplin) , 2017 BL 438325, Bankr. W.D. Wash., No. 16-04122, 12/6/17 .
To contact the reporter on this story: Diane Davis in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Jay Horowitz at email@example.com
Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)