Ester v. Pa. Higher Educ. Assistance Agency (In re Ester)

657 B.R. 655

IN RE: Christopher Ryan ESTER, Debtor.

Christopher Ryan Ester, Plaintiff, v. Pennsylvania Higher Education Assistance Agency d/b/a American Education Services, Defendant,andNavient Solutions, LLC, Defendant,

and

National Collegiate Student Loan Trust 2007-1, Defendant,

and

Educational Credit Management Corporation, Intervenor-Defendant.

Case No. 21-10379-M

Adversary No. 22-01003-M

United States Bankruptcy Court, N.D. Oklahoma

Signed March 26, 2024

Ron D. Brown, Brown Law Firm PC, Tulsa, OK, for Plaintiff.

Michael Alltmont, Sessions, Israel & Shartle, LLC, Metairie, LA, for Kerry Ray Lewis, Rhodes Hieronymus Jones Tucker & Gable, Tulsa, OK, Defendant National Collegiate Student Loan Trust 07-00001.

Anthony Hendricks, Crowe & Dunlevy, Oklahoma City, OK, for Defendant Pennsylvania Higher Education Assistance Agency dba American Education Services.

Lyle R. Nelson, Elias, Books, Brown & Nelson, P.C., Defendant Oklahoma City, OK, for Navient.

Mac D. Finlayson, Eller & Detrich, P.C., Tulsa, OK, for Intervenor-Defendant.

MEMORANDUM OPINION

TERRENCE L. MICHAEL, CHIEF JUDGE

The burden of a debt which can never realistically be repaid constitutes an undue hardship. The debtor must be able, at least over the long haul, to slay the beast, not merely keep it at bay.¹

Simple words, written by this judge almost 27 years ago, at the beginning of a judicial career. Yet they ring as true now as then. While the United States Bankruptcy Code and the cases interpreting its provisions regarding the discharge of student loans impose a heavy burden upon debtors, that standard is not, and should not ever be, impossible to satisfy.

The facts of this case are unique. The holder of a student loan has reduced its claim to judgment. The original repayment terms of the loan are nothing more than a memory, replaced by the garnishment laws of the State of Oklahoma. Those laws allow our creditor to exact a very large pound of flesh from our debtor, which it has done. After suffering under this burden for a time, the debtor sought the protection of this Court and now seeks a finding that further labor under the weight of this garnishment would be an undue hardship. Our creditor acknowledges the onerous nature of the garnishment, but suggests the debtor alter his meager lifestyle in order to bear it, or that this Court fashion a less burdensome alternative. On the facts of this case, neither option is palatable. The following findings of fact and conclusions of law are made pursuant to Federal Rule of Bankruptcy Procedure 7052.

Jurisdiction

The Court has jurisdiction over this adversary proceeding pursuant to 28 U.S.C. § 1334(b).² Venue is proper pursuant to 28 U.S.C. § 1409. Reference to the Court of this adversary proceeding is made pursuant to 28 U.S.C. § 157(a). The decision whether a particular debt is dischargeable is a core proceeding as defined by 28 U.S.C. § 157(b)(2)(I).

Dismissal of Certain Defendants

As a preliminary matter, Defendants Pennsylvania Higher Education Assistance Agency, d/b/a American Education Services, and Navient Solutions, LLC have been dismissed from this adversary proceeding by stipulation³ or order.⁴ The debtor's claim for relief against Educational Credit Management Corporation ("ECMC") has been resolved through stipulated partial judgment.⁵ Only the claim against National Collegiate Student Loan Trust 2007-1 ("NCSLT") remains.

Findings of Fact

The Loan

In 2007, Christopher Ryan Ester ("Ester" or "Plaintiff") received a student loan from Bank of America, NA (the "Loan"), in the amount of $33,519.55.⁶ The Loan was contemporaneously sold to NCSLT, the remaining defendant in this case. After an original deferment period, payment on the Loan was first due on January 5, 2011, with an expected repayment period of 240 months, or 20 years.⁷ Ester made payments totalling $395.79 on the Loan through its servicer, American Education Services ("AES"), until at least September 3, 2012.⁸ Around that date, AES stopped servicing the Loan. Sometime thereafter, the Loan fell into default.

On April 5, 2013, Ester filed his first voluntary petition under chapter 7 of the Bankruptcy Code.⁹ He did not seek discharge of any student loans during his first bankruptcy case. This case was unremarkable. A discharge was entered on July 9, 2013, and the case was closed in due course.¹⁰ The debt to NCSLT was unaffected.

On February 1, 2016, NCSLT brought a collection action against Ester in the Tulsa County District Court, Case No. CJ 2016-417.¹¹ A judgment was entered against Ester in the amount of $69,266.06.¹² After nearly three years of litigation, the judgment was made final. NCSLT proceeded to garnish Ester's wages at the rate of more than $900 per month from January 2020 until April 2021.¹³ In total, NCSLT has collected at least $13,408.76 from Ester through garnishments.¹⁴ The burden of the garnishments led Ester to file the present voluntary chapter 7 bankruptcy petition, his second, on April 9, 2021 (the "Petition Date").

As of July 14, 2023, NCSLT's judgment had a balance of $56,324.96,¹⁵ and it continues to accrue post-judgment interest pursuant to Oklahoma law, at the rate of 9.5 percent throughout 2023, and a rate of 10.5 percent in 2024.¹⁶ With accumulated interest, the amount currently owed to NCSLT is approximately $60,000.¹⁷

Ester's Educational and Employment History

Ester is 45 years old. He has no dependents, only pets (a dog and two cats). Following his discharge from the United States Army in 1999, Ester worked a variety of low-wage jobs before deciding to invest in himself and his future. To this end, Ester enrolled in the Flight Instructor Certification Course (the "Course") at Spartan College of Aeronautics and Technology.¹⁸ The Course required both classroom and actual flight hours, with estimated completion in forty-eight months. Ester attended the program part time from 2004 to 2010 and received 350 flight hours. By 2010, Ester was struggling to pay the student loans he had already incurred and felt he could not continue in the Course without further burdening himself with additional student loan debt. Ester dropped out and did not complete the Course or receive a degree or other certification from which he could benefit in an economically remunerative way.

Like many students, Ester financed his education through federal, state, and private student loans. Two private loans were obtained from Bank of America—one of which is the NCSLT Loan at issue in this case. As his loans became due, Ester made a single payment to AES each month, which was then allocated among his private and federal student loan creditors, including NCSLT and ECMC. To date, Ester has paid off one of his private Bank of America loans and his state loan. The federal student loan owed to ECMC was not in default as of the Petition Date.¹⁹ As part of this proceeding, ECMC has agreed to settle the remaining balance of his federal student loan under the term that Ester will pay ECMC $300 per month for 60 months.²⁰ A similar arrangement could not be reached with NCSLT.

Ester has been steadily employed since leaving the Army. He began working full-time with United States Aviation Co. ("Aviation") while attending the Course. A degree was not required for his employment. Ester worked for Aviation for seventeen years, working his way up to Line Operations Manager.²¹ From 2017 to 2021, Ester's annual adjusted gross income, as reported to the Internal Revenue Service, averaged $52,576.²² His income slightly exceeded $60,000 in 2020 because he was working seven days a week including many overnight shifts. In July 2022, he was let go from Aviation following a pay dispute that arose after he requested higher wages. Ester sought an increased salary so he could meet the pressures of paying his student loan obligations. After leaving Aviation, Ester found employment with Wachob Oil & Gas LLC ("Wachob") as an aircraft detailer. His position with Wachob also does not require a degree. He now earns $25 per hour but is not consistently offered 40 hours of work each week.²³ Ester works all shifts offered to him, including overtime when available.

Ester's Current Financial Circumstances

At trial, Ester submitted a budget showing his current net monthly income, after taxes and health insurance, to be $3,856.75.²⁴ His current monthly expenses are $3,852.16, leaving a disposable income of $4.59.²⁵ Ester testified that this calculation should be amended to include an additional $165 from his recently obtained Veterans Affairs ("VA") disability benefits. Despite stipulating in the Pre-Trial Order that he does not suffer from any mental or physical disability,²⁶ Ester is now seeking treatment from the VA for injuries stemming from his service in the Army, including knee, hip, and neck pain and a partially-amputated thumb. Ester testified that any pain or difficulties are manageable, but, given these conditions, he does not believe his body can sustain many more years of overtime work.

When not working, Ester maintains a frugal lifestyle. His expenses include payments on a ten-year-old Ford Taurus, which has over 133,000 miles.²⁷ The Taurus is currently operable, but no car (including a Ford Taurus) lasts forever. Ester lives in a modest home and makes a monthly mortgage payment of $955.16.²⁸ The home suffers from foundation issues that render at least one room unusable. Ester currently lives alone, but previously lived with a roommate who was a close friend. This was not a positive experience for him, nor is it one he wishes to repeat, in part because his home was damaged by the roommate's dog. Ester's budget includes necessary expenses for items such as utilities, pet expenses, transportation, and a nondischargeable tax liability. The only nominal "luxuries" in Ester's budget are a satellite television bill, modest charitable contributions, and contributions to an IRA, all of which he intends to cancel to make his payments to ECMC.

To the extent the "Conclusions of Law" contain...