United States Bankruptcy Appellate Panel of the Eighth Circuit
In re: Erin R. Kemp, also known as Erin R. Guinn, also known as Erin R. Griffin Debtor
United States Department of Education Defendant-Appellee Erin R. Kemp Plaintiff- Appellant
Submitted: August 2, 2018
from United States Bankruptcy Court for the Western District
of Arkansas - Fayetteville
SALADINO, Chief Judge, NAIL and SHODEEN, Bankruptcy Judges.
SALADINO, CHIEF JUDGE.
Appellant, Erin R. Kemp, appeals the order of the bankruptcy
courtdenying her request for discharge of her
student loan obligations to the United States Department of
Education ("DOE") under 11 U.S.C. § 523(a)(8).
We have jurisdiction over this appeal. See 28 U.S.C.
§ 158(b). For the reasons that follow, we affirm.
ultimate issue on appeal is whether the bankruptcy court
properly held that Appellant failed to meet her burden of
proving an undue hardship under 11 U.S.C. § 523(a)(8).
Appellant argues that the bankruptcy court did not apply the
correct legal standards in its totality-of-the-circumstances
analysis. Specifically, she believes the bankruptcy court
improperly gave "dispositive effect" to her
eligibility for a zero payment income-based repayment program
offered by the DOE. Appellant also believes the bankruptcy
court improperly applied an analysis of ability to make
payments on the loan as directed by Educ. Credit Mgmt.
Corp. v. Jesperson (In re Jesperson), 571 F.3d 775 (8th
Cir. 2009). Finally, Appellant believes the bankruptcy court
made clearly erroneous factual findings regarding her present
income and expenses.
excepting a debtor's student loan debt from discharge
would impose an undue hardship is a conclusion of law that we
review de novo. Walker v. Sallie Mae Servicing Corp. (In
re Walker), 650 F.3d 1227, 1230 (8th Cir. 2011) (citing
Long v. Educ. Credit Mgmt. Corp. (In re Long), 322
F.3d 549, 553 (8th Cir. 2003)). "Subsidiary findings of
fact on which the legal conclusion is based are reviewed for
clear error." Jesperson, 571 F.3d at 779
(citing Reynolds v. Penn. Higher Educ. Assistance Agency
(In re Reynolds), 425 F.3d 526, 531 (8th Cir. 2005)).
"We will not upset the bankruptcy court's findings
of fact unless, after reviewing the entire record, we are
left with the definite and firm conviction that a mistake has
been made." Nielsen v. ACS, Inc. (In re
Nielsen), 473 B.R. 755, 758 (B.A.P. 8th Cir. 2012),
aff'd, 502 Fed.Appx. 634 (8th Cir. 2013)
February 2016, Appellant filed a petition under Chapter 7 of
the United States Bankruptcy Code in the Western District of
Arkansas. On May 3, 2017, she filed the adversary proceeding
that is the subject of this appeal, seeking a determination
that her student loans owed to the DOE were dischargeable in
her bankruptcy case.
time of trial, Appellant was a 36-year-old single mother to a
13-year-old daughter. She began working part-time for Arvest
Bank in 1998 at a starting wage of approximately $10.00 per
hour. While working for Arvest, Appellant began attending
college, but withdrew after two semesters and began working
full-time at Arvest. In 2007, while still working full-time
at Arvest, she began taking online courses through Ashford
University to obtain a college degree and enhance her ability
to be promoted within Arvest. Her education at Ashford was
financed with the student loan that is the subject of this
case. In 2010, she obtained a bachelor's degree in
psychology with a minor in sociology.
Appellant worked at Arvest Bank for 17 years and received
numerous promotions and pay raises. She began as a teller,
was promoted to an administrative assistant, then a credit
manager, an assistant branch manager, and finally a branch
manager. As branch manager, her salary was $45, 000.00 per
year, plus periodic bonuses. She also had health insurance
and a retirement plan, which included contributions from
employed at Arvest, Appellant was able to remain current on
her student loan payments of $350.00 per month. However, she
began having difficulty paying her student loan when she
resigned from her job at Arvest in June 2015, eight months
prior to filing her bankruptcy case. Appellant testified that
she resigned her job at Arvest because the working
environment had become too stressful, resulting in anxiety
and depression for which she takes medication. ...