464 F.

3d 878 Page 1
464 F.3d 878, 213 Ed. Law Rep. 106, Bankr. L. Rep. P 80,726, 06 Cal. Daily Op. Serv. 9158, 2006 Daily Journal
D.A.R. 13,142
(Cite as: 464 F.3d 878)

Bankruptcy 51 3786
Briefs and Other Related Documents
In re MasonC.A.9,2006. 51 Bankruptcy
United States Court of Appeals,Ninth Circuit. 51XIX Review
In re Keith MASON, Debtor, 51XIX(B) Review of Bankruptcy Court
Educational Credit Management Corporation, Appel- 51k3785 Findings of Fact
lant, 51k3786 k. Clear Error. Most Cited
v. Cases
Keith Mason, Appellee. Because Court of Appeals is in as good a position as
Nos. 04-35988 BAP, 04-01075 BMAP, 04-01077 Bankruptcy Appellate Panel (BAP) to review bank-
BMAP. ruptcy court rulings, Court of Appeals independently
examines bankruptcy court's decision, reviewing
Argued and Submitted June 9, 2006. bankruptcy court's interpretation of Bankruptcy Code
Memorandum Filed June 29, 2006. de novo and its factual findings for clear error.
Memorandum Withdrawn and Opinion Filed Sept.
28, 2006. [2] Bankruptcy 51 3371(1)

Background: Chapter 7 debtor brought adversary 51 Bankruptcy

proceeding for determination that her was entitled to 51X Discharge
“undue hardship” discharge of his approximately 51X(C) Debts and Liabilities Discharged
$100,000 in student loan debt. The United States 51X(C)3 Educational Loans
Bankruptcy Court for the District of Idaho, Jim D. 51k3371 Hardship
Pappas, Chief Judge, granted debtor a partial “undue 51k3371(1) k. In General. Most Cited
hardship” discharge, and student loan creditor ap- Cases
pealed. The Bankruptcy Appellate Panel, Brandt, J., To determine if excepting student debt from dis-
315 B.R. 554, affirmed. Lender appealed. charge will impose undue hardship, Court of Appeals
applies three-part test, under which debtor must
Holding: The Court of Appeals held that debtor prove that (1) he cannot maintain, based on current
failed to make “good faith effort” to repay his student income and expenses, a minimal standard of living
loan debt, and thus, debt did not fall within undue for himself and his dependents if forced to repay the
hardship exception to discharge. loans; (2) additional circumstances exist indicating
that this state of affairs is likely to persist for signific-
ant portion of repayment period; and (3) debtor has
Reversed and remanded.
made good faith efforts to repay the loans. 11
U.S.C.A. § 523(a)(8).
Opinion, 2006 WL 1876890, withdrawn and super-
seded. [3] Bankruptcy 51 3784
West Headnotes
51 Bankruptcy
[1] Bankruptcy 51 3782
51XIX Review
51 Bankruptcy 51XIX(B) Review of Bankruptcy Court
51XIX Review 51k3784 k. Discretion. Most Cited Cases
51XIX(B) Review of Bankruptcy Court Method for calculating a debtor's average monthly
51k3782 k. Conclusions of Law; De Novo expenses is a matter properly left to the discretion of
Review. Most Cited Cases the bankruptcy court.

[4] Bankruptcy 51 3371(1)

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464 F.3d 878 Page 2
464 F.3d 878, 213 Ed. Law Rep. 106, Bankr. L. Rep. P 80,726, 06 Cal. Daily Op. Serv. 9158, 2006 Daily Journal
D.A.R. 13,142
(Cite as: 464 F.3d 878)

51 Bankruptcy disability made it difficult for him to hold positions

51X Discharge requiring particular attention to detail or concentra-
51X(C) Debts and Liabilities Discharged tion, diminished his prospects of succeeding in any
51X(C)3 Educational Loans professional career, and placed him at a relative dis-
51k3371 Hardship advantage compared to other job applicants. 11
51k3371(1) k. In General. Most Cited U.S.C.A. § 523(a)(8).
Cases
Debtor was not required to show that he had maxim- [7] Bankruptcy 51 3371(1)
ized his income in order to receive discharge of his
51 Bankruptcy
student loan debt on ground of undue hardship. 11
51X Discharge
U.S.C.A. § 523(a)(8).
51X(C) Debts and Liabilities Discharged
[5] Bankruptcy 51 3405(4) 51X(C)3 Educational Loans
51k3371 Hardship
51 Bankruptcy 51k3371(1) k. In General. Most Cited
51X Discharge Cases
51X(D) Determination of Dischargeability Learning disability that predated debtor's decision to
51k3401 Evidence take out student loans could be additional circum-
51k3405 Weight and Sufficiency stance that debtor could rely on in showing that his
51k3405(4) k. Educational Loans. inability to repay the loans was likely to persist for a
Most Cited Cases significant portion of the repayment period, in de-
Evidence was sufficient to support bankruptcy court's termining whether debtor was entitled to discharge of
finding that debtor, who sought discharge of his stu- his student loan debt on ground of undue hardship. 11
dent loan debt on ground of undue hardship, suffered U.S.C.A. § 523(a)(8).
from a learning disability; lender's vocational expert
acknowledged that debtor had a learning disability [8] Bankruptcy 51 3371(1)
that could affect his performance, and debtor's testi-
51 Bankruptcy
mony regarding his learning disability and the impact
51X Discharge
it had on his ability to succeed was corroborated by
51X(C) Debts and Liabilities Discharged
his mother's testimony and the special accommoda-
51X(C)3 Educational Loans
tions he received in law school. 11 U.S.C.A. §
51k3371 Hardship
523(a)(8).
51k3371(1) k. In General. Most Cited
[6] Bankruptcy 51 3405(4) Cases
To determine if student loan debt falls within excep-
51 Bankruptcy tion to discharge for undue hardship by looking at
51X Discharge whether debtor has made good faith efforts to repay
51X(D) Determination of Dischargeability the loans, “good faith” is measured by debtor's efforts
51k3401 Evidence to obtain employment, maximize income, and minim-
51k3405 Weight and Sufficiency ize expenses. 11 U.S.C.A. § 523(a)(8).
51k3405(4) k. Educational Loans.
Most Cited Cases [9] Bankruptcy 51 3371(3)
Evidence was sufficient to support bankruptcy court's
51 Bankruptcy
determination that debtor's learning disability im-
51X Discharge
paired his ability to earn a sufficient income either
51X(C) Debts and Liabilities Discharged
currently or in the future, in determining whether
51X(C)3 Educational Loans
debtor was entitled to discharge of his student loan
51k3371 Hardship
debt on ground of undue hardship; debtor's learning
51k3371(3) k. Hardship Not Found.

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464 F.3d 878 Page 3
464 F.3d 878, 213 Ed. Law Rep. 106, Bankr. L. Rep. P 80,726, 06 Cal. Daily Op. Serv. 9158, 2006 Daily Journal
D.A.R. 13,142
(Cite as: 464 F.3d 878)

Most Cited Cases sured student loans held by Debtor-Appellee Keith

Chapter 7 debtor with bachelor's degree in philo- Mason (“Mason”). See Educ. Credit Mgmt. Corp. v.
sophy and law degree failed to make “good faith ef- Mason (In re Mason), 315 B.R. 554 (9th Cir. BAP
fort” to repay his student loan debt, and thus, debt did 2004). The bankruptcy court held that full repay-
not fall within discharge exception for undue hard- ment of the loans would cause Mason an undue
ship; debtor had not made adequate efforts to obtain hardship within the meaning of 11 U.S.C. §
full-time employment, worked only part-time as 523(a)(8). It therefore discharged all amounts that
FN1
home siding installer, had made only one attempt to Mason owed to ECMC in excess of $32,400.
pass bar exam without requesting special testing ac- The bankruptcy court had jurisdiction under 28
commodations for his learning disability, did not in- U.S.C. § 157(b). The BAP had jurisdiction under §
tend to take bar exam a second time, and failed to 158(c). We have jurisdiction under § 158(d), and we
make adequate efforts to negotiate repayment of his reverse.
debt pursing options such as the Income Contingent
Repayment Plan (ICRP). 11 U.S.C.A. § 523(a)(8). FN1. Mason owed ECMC approximately
$100,000.
*880 Scott A. Tschirgi, Jones, Gledhill, Hess, An-
drews, Fuhrman, Bradbury & Eiden, PA, Daniel S. BACKGROUND
Fisher, ECMC Group, St. Paul, MN, for the appel-
At the time of the bankruptcy adversary proceeding,
lant.
Mason was 33 years old, single, in good physical
Joseph M. Meier, Cosho Humphrey, LLP, Boise, ID,
health, and had no dependents. Mason is well-
for the appellee.
educated, having earned an undergraduate degree in
Appeal from the Ninth Circuit Bankruptcy Appellate philosophy from Boise State University in 1995, and
Panel, Perris, Marlar, and Brandt, Bankruptcy Judges, a law degree from Gonzaga University in 1999. Ma-
Presiding. son financed his education by acquiring federally-in-
sured student loans from various lenders totaling ap-
Before DAVID R. THOMPSON, A. WALLACE proximately $193,000 in principal and accrued in-
TASHIMA, and CONSUELO M. CALLAHAN, Cir- terest. At issue in this proceeding is approximately
cuit Judges. $100,000 owed to ECMC in its capacity as successor-
in-interest to Northwest Education Loan
ORDER AND OPINION Association.FN2
TASHIMA, Circuit Judge.
FN2. The record indicates that Mason has
ORDER entered into a repayment plan with another
lender, Help Services Group, Inc., in order
Appellant's unopposed request for publication is
to repay a separate $65,000 student loan
granted. The mandate issued on July 26, 2006, is re-
obligation.
called and the memorandum disposition filed on June
29, 2006, 2006 WL 1876890, is withdrawn, and re- Despite his education, Mason has had difficulty put-
placed by the authored opinion filed concurrently ting his education to use because of a learning disab-
with this order. No further petitions for rehearing ility that has affected his ability to concentrate, focus
may be filed. on details, read, and write. Mason's mother testified
that he was diagnosed with the learning disability in
OPINION
the third grade, and that she initially thought that he
Educational Credit Management Corporation would be unable to complete high school. Mason
(“ECMC”) appeals from the decision of the Bank- did, however, finish high school, and then served in
ruptcy Appellate Panel (“BAP”), which affirmed the the Army and National Guard for eight years. Fol-
bankruptcy court's partial discharge of government-in- lowing his service, Mason enrolled at Boise State,

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464 F.3d 878 Page 4
464 F.3d 878, 213 Ed. Law Rep. 106, Bankr. L. Rep. P 80,726, 06 Cal. Daily Op. Serv. 9158, 2006 Daily Journal
D.A.R. 13,142
(Cite as: 464 F.3d 878)

and earned a philosophy degree in 1995. After col- agement Corp. (In re Saxman), 325 F.3d 1168,
lege, Mason took the Law School Admission*881 1174-75 (9th Cir.2003), the bankruptcy court par-
Test and applied to law school. Despite his low test tially discharged Mason's debt owed to ECMC, to the
scores and GPA, Mason was accepted at Gonzaga extent it exceeded $32,400. The BAP affirmed, and
University Law School. Although Mason initially ECMC now appeals.
struggled in law school, the University provided for
special testing accommodations, and Mason earned STANDARD OF REVIEW
his law degree in 1999.
[1] “Because we are in as good a position as the BAP
In December 1999, Mason began working for Mi- to review bankruptcy court rulings, we independently
cronPC in Boise as a “process analyst” earning examine the bankruptcy court's decision, reviewing
$26,000 per year. Mason took the position with the the bankruptcy court's interpretation of the Bank-
hope of ultimately joining Micron-PC's legal depart- ruptcy Code de novo and its factual findings for clear
ment. In 2000, Mason took the Idaho bar examina- error.” Miller v. Cardinale (In re DeVille), 361 F.3d
tion, but failed. In May 2001, Mason became a 539, 547 (9th Cir.2004) (citation and internal quota-
“government contracts technician” at MicronPC, tion marks omitted). We have held that whether re-
earning $14.00 per hour, but was laid off in January payment of a student loan debt would impose an un-
2002. After receiving unemployment benefits for a due hardship requires a determination of the “legal
few months, Mason began working as an independ- effect of the bankruptcy court's findings” regarding
ent contractor in April 2002, installing home siding the student's circumstances, a question of law which
for Diamond Construction. we review de novo. Rifino v. United States (In re
Rifino), 245 F.3d 1083, 1087 n. 2 (9th Cir.2001).
The bankruptcy court found that Mason is currently
earning between $1,000 and $1,200 per month as a DISCUSSION
part-time contractor for Diamond Construction, and
[2] An educational loan is dischargeable in bank-
that his monthly expenses average between $1,300
ruptcy if “excepting such debt from discharge ...
and $1,340. Mason has no fixed schedule and works
would impose an undue hardship on the debtor and
on an “as needed basis,” which allows Mason to ap-
the debtor's dependents.” 11 U.S.C. § 523(a)(8). To
ply for other jobs and attend interviews. Mason has
determine if excepting student debt from discharge
worked with an employment service counselor, and
will impose an undue hardship, we apply the three-
considered a variety of jobs, but has had poor results.
part test first enunciated in In re Brunner, 831 F.2d at
Based on his experience, Mason has testified that he
396. See *882United Student Aid Funds, Inc. v. Pena
does not expect his law degree will improve his
(In re Pena), 155 F.3d 1108, 1112 (9th Cir.1998)
chances of securing employment.
(adopting the Brunner test). Under the Brunner test,
While Mason has a commercial truck driver's li- the debtor must prove that: (1) he cannot maintain,
cense, he has been unable, or unwilling, to work as a based on current income and expenses, a “minimal”
truck driver. standard of living for himself and his dependents if
required to repay the loans; (2) additional circum-
Mason filed a petition for relief under Chapter 7 of stances exist indicating that this state of affairs is
the Bankruptcy Code on January 16, 2003. Mason likely to persist for a significant portion of the repay-
owed a total of $209,070.91 in unsecured, nonpriority ment period; and (3) the debtor has made good faith
claims, the majority of which were for student loan efforts to repay the loans. Id. at 1111; Brunner, 831
debts. Mason sought discharge of his student loan F.2d at 396. “[T]he burden of proving undue hardship
obligations pursuant to 11 U.S.C. § 523(a)(8). Apply- is on the debtor, and the debtor must prove all three
ing Brunner v. New York State Higher Education Ser- elements before discharge can be granted.” In re
vices Corp. (In re Brunner), 831 F.2d 395, 396 (2d Rifino, 245 F.3d at 1087-88 (citation omitted).
Cir.1987), and Saxman v. Educational Credit Man-

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464 F.3d 878 Page 5
464 F.3d 878, 213 Ed. Law Rep. 106, Bankr. L. Rep. P 80,726, 06 Cal. Daily Op. Serv. 9158, 2006 Daily Journal
D.A.R. 13,142
(Cite as: 464 F.3d 878)

I. Minimal Standard of Living has maximized his income, Nascimento ap-

pears to impose no such requirement. See In
The first prong of the Brunner test requires that Ma- re Nascimento, 241 B.R. at 444-45. In any
son prove that he cannot maintain a minimal standard event, even if Nascimento could be read to
of living if he were required to repay the loans. See In require a debtor to prove that he maximized
re Saxman, 325 F.3d at 1173; In re Rifino, 245 F.3d his income to meet the first prong of the
at 1088. The bankruptcy court found that Mason's av- Brunner test, we have not specifically im-
erage monthly income generally fluctuated between posed such a requirement. See In re Rifino,
$1,000 and $1,200 per month, and that in some 245 F.3d at 1088 (requiring only that debtor
months it was below that amount. The bankruptcy prove she could not maintain a minimal
court also found that Mason's necessary average standard of living based on her current in-
monthly expenses, excluding his loan payments, were come and expenses); In re Pena, 155 F.3d at
between $1,300 and $1,340 per month. Based on 1112-13 (determining whether first prong of
these findings, the bankruptcy court concluded that Brunner test was met by subtracting debtor's
Mason satisfied the first prong of the Brunner test be- average monthly expenses from their net
cause he would not be able to maintain a minimal monthly income). Accordingly, ECMC's
standard of living if required to repay the loans. contention fails.

[3][4] “The method for calculating a debtor's average II. Additional Circumstances
monthly expenses is a matter properly left to the dis-
cretion of the bankruptcy court.” In re Pena, 155 The second prong of the Brunner test requires a debt-
F.3d at 1112. Because ECMC does not dispute the or to prove that “additional circumstances exist indic-
bankruptcy court's findings regarding Mason's ating that this state of affairs is likely to persist for a
monthly income and expenses, we will not disturb significant portion of the repayment period of the stu-
them. See id.; Pa. Higher Educ. Assistance Agency v. dent loans.” In re Brunner, 831 F.2d at 396. We re-
Birrane (In re Birrane), 287 B.R. 490, 496 (B.A.P. cently clarified that a “debtor does not have a separ-
FN3
9th Cir.2002). ate burden to prove ‘additional circumstances,’ bey-
ond the inability to pay presently or in the future.”
FN3. ECMC argues that the bankruptcy Educ. Credit Mgmt. Corp. v. Nys *883 (In re Nys),
court erred because Mason failed to estab- 446 F.3d 938, 945 (9th Cir.2006) (holding that that
lish that he maximized his income. As a pre- bankruptcy court erred in requiring debtor to show
liminary matter, ECMC did not raise this ar- exceptional circumstances beyond the inability to pay
gument before the bankruptcy court or the in the present and a likely inability to pay in the fu-
BAP, and therefore has waived it on appeal. ture).
See Burnett v. Resurgent Capital Servs. (In
re Burnett), 435 F.3d 971, 975-77 (9th Here, the bankruptcy court found that Mason's learn-
Cir.2006) (“[A]n issue is waived if not ing disability, and his inability to put his law degree
presented to the BAP, unless exceptional to use, were additional circumstances indicating that
circumstances exist to justify consideration Mason's financial circumstances would not improve
of the issue.”). Even if we were to reach the for a significant period of time. ECMC argues that
argument, however, ECMC's contention that the bankruptcy court erred because: (1) Mason
Mason must establish that he maximized his presented legally insufficient evidence of any disabil-
income in order to meet the first prong of ity; (2) Mason should not be permitted to rely on a
Brunner does not find support in the case preexisting circumstance (i.e., a disability that pred-
law. Although ECMC claims that United ated his decision to take out the loans); and (3) des-
Student Aid Funds, Inc. v. Nascimento (In re pite Mason's learning disability, there is every indica-
Nascimento), 241 B.R. 440 (B.A.P. 9th tion that Mason's situation will improve.
Cir.1999), requires that Mason prove that he

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464 F.3d 878 Page 6
464 F.3d 878, 213 Ed. Law Rep. 106, Bankr. L. Rep. P 80,726, 06 Cal. Daily Op. Serv. 9158, 2006 Daily Journal
D.A.R. 13,142
(Cite as: 464 F.3d 878)

[5] ECMC's first argument-that Mason presented leg- predated his decision to take out the loans, relying on
ally insufficient evidence of his disability-is being Thoms v. Educational Credit Management Corp (In
raised for the first time on appeal; heretofore, ECMC re Thoms), 257 B.R. 144, 149 (Bankr.S.D.N.Y.2001).
has never disputed the existence of Mason's learning We have never drawn such a distinction between pre-
disability. In fact, ECMC's own vocational expert ac- existing and later-arising “additional circumstances,”
knowledged that Mason had a learning disability that and ECMC cites no binding authority supporting its
might affect his performance. See In re Burnett, 435 position. As the BAP aptly noted:
F.3d at 975-77 (holding that an argument is generally [N]o circuit court has held that a circumstance or
considered waived if not presented to the BAP). In condition in existence at the *884 time the debtor ob-
addition, Mason testified regarding his learning dis- tained the educational loan in question must be ex-
ability and the impact it has had on his ability to suc- cluded from consideration in the persistence analysis,
ceed. Mason's testimony was also corroborated by his or that the debtor must show a worsening or exacer-
mother's testimony and the special accommodations bation to carry his burden on the second Brunner
he received in law school. Thus, sufficient evidence prong.
supports the bankruptcy court's finding that Mason
has a learning disability. 315 B.R. at 561. We agree with the BAP's reasoning
and, consequently, reject this argument. See also
[6] ECMC further argues that even if Mason has Educ. Credit Mgmt. Corp. v. Nys (In re Nys), 308
provided corroborating evidence of the existence of B.R. 436, 446 (9th Cir. BAP 2004) (explaining that
his learning disability, he failed to provide any evid- “[t]he ‘additional circumstances' test does not focus
ence of how his learning disability impaired his abil- on a debtor's past choices, but on currently existing
ity to work. While ECMC's position has some merit, circumstances and what those circumstances show
see Brightful v. Pa. Higher Educ. Assistance Agency with regard to the debtor's future financial situation”),
(In re Brightful), 267 F.3d 324, 330-31 (3d Cir.2001) aff'd, 446 F.3d 938 (9th Cir.2006).
(holding that the bankruptcy court cannot merely as-
sume that debtor's psychiatric problems precluded her Finally, ECMC argues that despite Mason's learning
from finding employment, and requiring some show- disability, there is every indication that Mason's situ-
ing of how disability affected debtor's ability to earn ation will improve. The bankruptcy court agreed,
income), the record establishes that Mason's learning concluding that Mason would, at some point, be able
disability has made it difficult for him to hold posi- to make loan payments, and thus granted Mason
tions that require particular attention to detail or con- only a partial discharge of his loan debt. Because
centration. Moreover, unlike in Brightful, the bank- ECMC does not argue that these findings are erro-
ruptcy court in this case did make specific findings neous, and the bankruptcy court held that Mason
that Mason's learning disability diminished his pro- had satisfied the second prong of the Brunner test
spects of succeeding in any professional career and only with respect to a portion of his student loans,
has placed him at a relative disadvantage compared see In re Saxman, 325 F.3d at 1174 (“A debtor who
to other job applicants. Cf. id. (“What is missing from wishes to obtain a discharge of his student loans
the Bankruptcy Court's analysis, however, is any dis- must therefore meet the requirements of § 523(a)(8)
cussion of the nature of Brightful's emotional and as to the portion of the debt to be discharged before
psychiatric problems, or how these problems prevent that portion of his or her debt can be discharged.”
her from being gainfully employed.”). We conclude (citation omitted) (emphasis added)), we reject this
that the bankruptcy court did not clearly err in finding claim.
that Mason suffered from a learning disability that
III. Good Faith
impaired his ability to earn a sufficient income now
or in the future. [8] The final prong of the Brunner test requires that
the debtor exhibit good faith in his efforts to repay
[7] ECMC next argues that Mason should not be per-
the student loans. See In re Pena, 155 F.3d at 1114.
mitted to rely on an “additional circumstance” that

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464 F.3d 878 Page 7
464 F.3d 878, 213 Ed. Law Rep. 106, Bankr. L. Rep. P 80,726, 06 Cal. Daily Op. Serv. 9158, 2006 Daily Journal
D.A.R. 13,142
(Cite as: 464 F.3d 878)

“Good faith is measured by the debtor's efforts to ob- faith in attempting to pay back the student loans.
tain employment, maximize income, and minimize While Mason has minimized his expenses, he has not
expenses.” In re Birrane, 287 B.R. at 499 (citations maximized his income, nor has he made adequate ef-
omitted); see also In re Pena, 155 F.3d at 1114. forts to obtain full-time employment. Mason works
Courts will also consider “[a] debtor's effort-or lack only part-time as a home siding installer, despite
thereof-to negotiate a repayment plan,” In re Birrane, holding a bachelor's degree in philosophy and a law
287 B.R. at 499, although a history of making or not degree. Mason sought to justify his unwillingness to
making payments is, by itself, not dispositive, see id. find a second part-time job on the ground that it
at 499-500. would make it difficult for him to continue his ongo-
ing search for a full-time position. The record belies
[9] The bankruptcy court concluded that Mason ex- this testimony, instead revealing that Mason's search
hibited good faith because he attempted to maximize for full-time employment has been inadequate in light
his income, minimize his expenses, and negotiate of the significant free time his schedule provides him.
with his student loan creditors. The court rejected See In re Birrane, 287 B.R. at 499-500 (finding lack
ECMC's argument that Mason has not shown good of good faith, in part, because debtor declined to ob-
faith based on his failure to attempt the bar exam a tain a second part-time job).
second time, his failure to obtain a second part-time
job in the evening, and his failure to sign up for the Mason also claims that he is unable to seek work as
Income Contingent Repayment Plan (“ICRP”). an attorney because he cannot pass the bar examina-
ECMC now renews these arguments on appeal. tion. Mason has, however, made only one attempt to
pass the Idaho bar exam, without requesting special
In In re Birrane, the Ninth Circuit BAP recently re- testing accommodations, despite blaming his failure
versed the bankruptcy court, inter alia, because the on his learning disability. Mason further testified that
debtor did not use her “best efforts to maximize her he does not intend to take the bar exam a second
income” and failed to take steps towards re- time, even though he acknowledged that he has sub-
negotiating a repayment schedule under the ICRP. stantial free time that he could dedicate to studying.
FN4
See 287 B.R. at 499-500; 34 C.F.R. § 685.209. See Pobiner v. Educ. Credit Mgmt. Corp. (In re
There, the BAP reasoned that the debtor failed to Pobiner), 309 B.R. 405, 418 (Bankr.E.D.N.Y.2004)
maximize her income because she worked only part- (“In general, courts have found that failure to pass the
time and provided no evidence that “she explored the bar exam is not a sufficient reason for the discharge
possibility, or was even willing, to take a second job of student loans.” (citations omitted)); Parks v.
outside her field.” Id. at 499. While the BAP recog- Graduate Loan Ctr. (In re Parks), 293 B.R. 900, 904
nized that the debtor had “previously made some ef- (Bankr.N.D.Ohio 2003) (refusing to discharge law
fort in negotiating repayment of her student debt,” it school loans after debtor failed bar exam primarily
further reasoned that the debtor's failure *885 to ex- due to insufficient effort to retake exam).
plore the ICRP option that became available to her
also weighed against finding that she had met her Finally, while Mason appears to have made some
burden of proof on the issue of good faith. Id. at previous efforts to negotiate repayment of his debt,
499-500. his efforts have been inadequate. The record demon-
strates that Mason could have attempted renegoti-
FN4. Under the ICRP, a debtor's monthly ation of his debt under the ICRP, but failed to pursue
payments vary based on the debtor's ability this option with diligence. See In re Birrane, 287
to pay. After 25 years, any debt remaining B.R. at 500 (finding lack of good faith, where debtor
on the consolidated loans is forgiven. See 34 previously made some effort in negotiating repay-
C.F.R. § 685.209(c)(4)(iv). ment of her student debt but failed to pursue ICRP
option when it became available). For the foregoing
We conclude that, like the debtor in In re Birrane,
reasons, we conclude that the bankruptcy court
Mason has not met his burden of establishing good
clearly erred in finding that Mason demonstrated

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464 F.3d 878 Page 8
464 F.3d 878, 213 Ed. Law Rep. 106, Bankr. L. Rep. P 80,726, 06 Cal. Daily Op. Serv. 9158, 2006 Daily Journal
D.A.R. 13,142
(Cite as: 464 F.3d 878)

good faith efforts to repay his loans.

CONCLUSION

Accordingly, the BAP's decision is REVERSED and

REMANDED for further proceedings consistent
with this opinion.

C.A.9,2006.
In re Mason
464 F.3d 878, 213 Ed. Law Rep. 106, Bankr. L. Rep.
P 80,726, 06 Cal. Daily Op. Serv. 9158, 2006 Daily
Journal D.A.R. 13,142

Briefs and Other Related Documents (Back to top)

• 2005 WL 925834 (Appellate Brief) Reply Brief of

Appellant Educational Credit Management Corpora-
tion (Mar. 10, 2005) Original Image of this Docu-
ment (PDF)
• 2005 WL 925833 (Appellate Brief) Brief of Ap-
pellee Keith Mason (Mar. 4, 2005) Original Image of
this Document (PDF)
• 2005 WL 516699 (Appellate Brief) Brief of Appel-
lant Educational Credit Management Corporation
(Jan. 13, 2005) Original Image of this Document
(PDF)
• 04-35988 (Docket) (Nov. 5, 2004)

END OF DOCUMENT

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