Wolfson v. DeVos (In re Wolfson)

In re: Ryan K. Wolfson, Debtor.

Ryan K. Wolfson, Plaintiff, v. Betsey DeVos on behalf of the Department of Education, Pennsylvania Higher Education Assistance Agency, d/b/a Fedloan Servicing, Navient Solutions, Inc. and American Education Services, Defendants.

No. 19-11618 (LSS)

Adv. No. 19-50717

United States Bankruptcy Court, D. Delaware

January 14, 2022

OPINION

Laurie Selber Silverstein, United States Bankruptcy Judge

I. INTRODUCTION ^[1]

In this adversary proceeding, Debtor Ryan K. Wolfson (" Wolfson") seeks a determination that his student loan debt, comprising numerous draws under two outstanding loans now totaling an estimated $95, 137.02, is dischargeable under 11 U.S, C. § 523(a)(8). Under § 523(a)(8), student loan debt is only dischargeable if repayment of the debt would impose an "undue hardship" on the debtor. The Third Circuit has adopted the Brunner test, which consists of three prongs that a debtor must prove by a preponderance of the evidence:

(1) that the debtor cannot maintain, based on current income and expenses, a "minimal" standard of living for [himself] 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 for student loans; and

(3) that the debtor has made good faith efforts to repay the loans.^[2]

Defendants argue that Wolfson fails to carry his burden on any of the three prongs, but I find otherwise. The evidence shows that despite considerable effort, Wolfson has been chronically un- or underemployed since graduating from college; that his sporadic full-time employment has consisted of low-paying gig work or jobs with little prospect of advancement; and that he has avoided living in abject poverty only through significant financial support from his father. The record further shows that Wolfson's career prospects are unlikely to materially improve over time, and thus, his inability to pay his student loan debt will persist. Wolfson has never made a payment on his student loans, but he has never been in a financial position to do so, and his continual search for gainful employment is enough to find good faith. Wolfson proved by a preponderance of the evidence that repayment of his student loans would result in undue hardship under § 523(a)(8), and accordingly, I conclude that the loans are dischargeable.

In surveying the relevant case law, I took note of the controversy generated by the Brunner test. Or rather, the wide-ranging interpretations that courts have historically produced in applying the test. Courts of late have challenged interpretations that, through a combination of a legislative change and "judicial gloss," result in a test that is far more onerous than the one first articulated in Brunner. This will be discussed in further detail below, but in short, I agree with the general premise that the most exacting interpretations of Brunner are unmoored from the original test and the plain language of "undue burden."

II. PROCEDURAL HISTORY

Wolfson filed a voluntary petition under chapter 7 on July 20, 2019 ("Petition Date").^[3] The chapter 7 trustee filed a report of no distribution on October 18, 2019^[4] and Wolfson was granted a chapter 7 discharge on October 22, 2019.^[5] The next day, Wolfson filed the instant action against Betsey DeVos in her capacity as Secretary of the Department of Education ("DOE"), Pennsylvania Higher Education Assistance Agency ("PHEAA"), d/b/a Fedloan Servicing, Navient Solutions, Inc. ("Navient") and American Education Services, seeking a determination that his student loans are dischargeable.^[6]

On November 26, 2019, Navient and Wolfson filed a stipulation of dismissal in which they agreed to the discharge of Navient's portion of Wolfson's student loan debt, which was approved.^[7] On December 5, 2019, Educational Credit Management Corporation ("ECMC") moved to intervene as a defendant, explaining that it now owns the interests in Wolfson's student loans formerly held by PHEAA.^[8] The motion was granted.

The parties engaged in discovery, and a trial was held on December 7, 2020. Wolfson was the only witness at trial. With an evidentiary record in hand, the matter is now ripe for decision.

III. FINDINGS OF FACT^[9]

Life Circumstances. Education and Work Experience

Wolfson was born on November 28, 1986 and was 34 years old at the time of trial.^[10]He is not married and does not have any children.^[11] Wolfson has treatable, non-debilitating epilepsy.^[12] He was diagnosed with epilepsy with petit mal seizures at age twelve.^[13]Wolfson's seizures were controlled with medication until about age 22.^[14] Since age 23, Wolfson has not taken medication for his seizures; his neurologist explained that he would have major liver disease if he continued the medication.^[15] Instead, he has been treating himself with cannabis for which he obtained a medical cannabis card pursuant to Delaware state law.^[16] At one point, Wolfson suffered grand mal seizures due to excessive drinking; he has largely abstained from drinking for the last ten years.^[17] Any current seizures are of the grand mal variety.^[18] He generally visits his doctor twice a year; his last doctor visit for his epilepsy was eight or nine months before trial.^[19]

Wolfson graduated from Penn State in 2010 earning a Bachelor of Science degree in Business with concentrations in management and marketing.^[20] During college, he had various part-time jobs at his apartment complex including as night security or taking tags at the pool in the summer.^[21] Immediately after graduating, Wolfson managed a hip-hop artist and co-owned a T.V. show with David Ivory, called David Ivory Presents.^[22] Wolfson was also in charge of marketing for the show.^[23] Neither venture turned a profit, and both failed by 2014.^[24] Since then, Wolfson has persistently sought work, but with little success. For example, from his graduation in 2010 through 2016, he had approximately 30 job interviews that yielded no offers.^[25] During those years, 80 percent of the jobs he applied for were within his degree and experience.^[26] His efforts involved job boards, career fairs, and multiple recruiters.^[27]

Starting around 2014, Wolfson cared for his grandmother full time for approximately two years.^[28] For roughly six months after he stopped taking care of his grandmother full time, he trimmed and packaged cannabis at a dispensary for minimum wage.^[29] Wolfson left this job voluntarily due to the low wages and issues with management.^[30] Starting in 2017, Wolfson worked for a home renovation company for about a year developing leads for the company's door-to-door salesmen.^[31] In the last few months of his employment at the home renovation company, Wolfson began working part time as a driver for rideshare and food delivery services.^[32] In 2018, Wolfson quit the home renovation company in order to work as a driver full time.^[33] He worked as a full time driver until he totaled his car in August 2019 after he suffered a seizure while driving.^[34] This was the first time that Wolfson suffered a seizure outside of the 6:30 a.m. to 9:30 a.m. timeframe^[35] Since totaling his car, Wolfson has been unemployed.^[36] Wolfson applied to approximately 200 jobs in the ten months after he totaled his car, with no success.^[37] As with the job searches for the last five years, he is applying to any job he can find.^[38] But, while Wolfson's epilepsy is not debilitating, it does limit his job search. He cannot take a job that starts before 9:30 a.m. due to the risk of seizure and he cannot take a job which requires drug testing because of his cannabis use.^[39] Further, he cannot take a job that requires him to work after 8:00 p.m. because he begins to use cannabis at that time and he must also maintain consistent quality sleep because of his epilepsy.^[40] Wolfson spends about one to two hours each day applying for jobs.^[41] He has not applied for unemployment insurance nor for any disability.^[42]

Also, in August 2019, Wolfson was forced to move back in with his parents (first his mother, then his father).^[43] His lease for an apartment in Wilmington expired in August, 2019, he was prohibited from driving for six months because of the seizure and he had no income.^[44] As of the time of trial, Wolfson was not working and had no income.^[45] Financial Circumstances. Income and Expenses

Wolfson has relied on financial support from his father for his entire adult life, even when he was working, ^[46] For example, as of the Petition Date, Wolfson's monthly income from his driver work was $1, 137.39 and he received assistance from his father of $1, 335 per month for a total monthly income of $2, 472.39.^[47] Matched against his-then expenses of $2, 475.00, ^[48] Wolfson was essentially breaking even, but only with his father's help. His main expenses were rent of $725, which was mostly paid by his father, electricity, food, car insurance and transportation.^[49]

As of the trial, Wolfson's expenses totaled approximately $1, 430 per month, consisting of:^[50]

• $140 for telephone, cell phone, internet, satellite, and cable services.

• $400 for food and housekeeping supplies.

• $85 for clothing, laundry, and dry cleaning.

• $25 for personal care products and services.

• $410 for medical and dental expenses.

• $300 for transportation.

• $ 10 for entertainment and recreation. • $60-75 for vehicle insurance, which Wolfson maintains for the purpose of borrowing other people's cars.

Wolfson's father has paid all Wolfson's expenses from the Petition Date to the trial.^[51]

As of the date of the trial, Wolfson's father was still giving plaintiff about $1000 per month.^[52] Prior to leaving his Wilmington apartment in 2019, Wolfson's...