             ELECTRONIC CITATION: 2003 FED App. 0004P (6th Cir.)
                              File Name: 03b0004p.06


           BANKRUPTCY APPELLATE PANEL OF THE SIXTH CIRCUIT

In re: MICHAEL J. OYLER,              )
                                      )
           Debtor.                    )
_____________________________________ )
                                      )
MICHAEL J. OYLER,                     )
                                      )
     Appellee,                        )
                                      )
v.                                    )               No. 03-8001
                                      )
EDUCATIONAL CREDIT MANAGEMENT         )
CORP.,                                )
                                      )
     Appellant.                       )
_____________________________________ )

                   Appeal from the United States Bankruptcy Court
             for the Northern District of Ohio, Eastern Division at Canton.
                         No. 99-62796, Adv. P. No. 02-6090.

                               Argued: August 6, 2003

                        Decided and Filed: October 23, 2003

      Before: AUG, LATTA, and RHODES, Bankruptcy Appellate Panel Judges.

                              ____________________

                                      COUNSEL

ARGUED: Matthew J. Thompson, NOBILE, NEEDLEMAN & THOMPSON, Columbus,
Ohio, for Appellant. Donald M. Miller, Canton, Ohio, for Appellee. ON BRIEF: Matthew
J. Thompson, NOBILE, NEEDLEMAN & THOMPSON, Columbus, Ohio, for Appellant.
Donald M. Miller, Canton, Ohio, for Appellee.
                                 ____________________

                                       OPINION
                                 ____________________

       STEVEN W. RHODES, Chief Judge. Educational Credit Management Corp.
appeals the bankruptcy court’s order discharging Oyler’s student loan debt pursuant to 11
U.S.C. § 523(a)(8). Educational Credit Management Corp. argues that the bankruptcy
court erroneously gave too much weight to the fact that Oyler’s student loans were for an
education in a low-paying field, the ministry, and the fact that Oyler’s circumstances are not
likely to continue. Upon examining the totality of the facts and circumstances of the case,
the Panel holds that Oyler is entitled to a discharge based on undue hardship.


                                  I.   ISSUE ON APPEAL
       The issue before the panel is whether the bankruptcy court erred in determining that
the debt should be discharged pursuant to 11 U.S.C. § 523(a)(8).


                   II.   JURISDICTION AND STANDARD OF REVIEW
       The Bankruptcy Appellate Panel of the Sixth Circuit has jurisdiction to decide this
appeal. The United States District Court for the Northern District of Ohio has authorized
appeals to the BAP. Dolph v. Penn. Higher Educ. Assistance Agency (In re Dolph), 215
B.R. 832, 834 (B.A.P. 6th Cir. 1998). A final order of a bankruptcy court may be appealed
by right under 28 U.S.C. § 158(a)(1). For purposes of appeal, an order determining the
discharge of a student loan under 11 U.S.C.§ 523(a)(8) is a final order. Id.
       A determination that a student loan poses an undue hardship and is subject to
discharge under 11 U.S.C. § 523(a)(8) is a mixed question of law and fact.               The
conclusions of law are subject to de novo review. Cheesman v. Tenn. Student Assistance
Corp. (In re Cheesman), 25 F.3d 356, 359 (6th Cir. 1994). De novo means that the
reviewing court is “deciding the issue as if it had not been heard before with no deference
being given to the trial court’s conclusions of law.” In re Falvo, 227 B.R. 662, 664 (B.A.P.
6th Cir. 1998).
       Findings of fact are reviewed under the clearly erroneous standard. FED . R. BANKR .
P. 8013; FED . R. CIV. P. 52. A finding of fact is clearly erroneous when the reviewing court

                                             -2-
is “left with the definite and firm conviction that a mistake has been committed.” Tenn.
Student Assistance Corp. v. Hornsby (In re Hornsby), 144 F.3d 433, 436 (6th Cir. 1998)
(quoting United States v. United States Gypsum Co., 333 U.S. 364, 68 S. Ct. 525 (1948)).


                                        III.   FACTS
      On September 9, 1999, Oyler filed a chapter 13 bankruptcy petition. On June 13,
2002, Oyler commenced an adversary proceeding seeking to discharge his student loans
pursuant to 11 U.S.C. § 523(a)(8). The student loans at issue consist of four separate
loans obtained by Oyler from December, 1991, to December, 1992, to fund his education
at Fuller Theological Seminary. Educational Credit Management Corporation (ECMC)
assumed the student loans from Great Lakes Higher Education Corporation.
      During the trial of this adversary proceeding, four witnesses testified. The witnesses
were Oyler, his wife, Eric Walch, a retired pastor, and Lee Anderson, a minister who
recently began his own congregation. ECMC did not call any witnesses.
      Oyler, age 48, is a licensed pastor and current leader of a Messianic Jewish
congregation that he began in June 1998. He is married and has three children. For the
past two years, the annual income of this family of five has been less than $10,000. The
family lives in an apartment, which is paid for by the congregation. Oyler is supposed to
receive an allotted salary of $1,200 per month. However, the actual amount Oyler receives
varies depending on the amount of contributions received by the congregation. The family
does not have any health insurance. Oyler has experienced four retinal detachments.
These occur from a medical condition known as scleral buckle. No testimony or evidence
was admitted about the prognosis of his condition. The only debts scheduled in the
chapter 13 plan are the student loans to ECMC. At the time of trial, Oyler was current in
his monthly payments of $50 into the chapter 13 plan.
      There were four exhibits admitted into evidence. Exhibit A consists of copies of
Oyler’s tax returns. Exhibit B is a statement from the office manager of the congregation
about Oyler’s salary. Exhibit C is a list of Oyler’s income and expenses. Exhibit 1 is an
itemized statement of the outstanding amount of the student loans. As of June 26, 2002,
the student loans totaled $38,978.20.
      At the conclusion of the trial, the bankruptcy judge rendered an oral decision
concluding that Oyler had established that repayment of the student loans would create

                                               -3-
an undue hardship and therefore entered a judgment discharging the debt.               The
bankruptcy court considered Oyler’s current financial situation, the likelihood that the
financial situation would continue, whether Oyler exercised good faith, the ability of Oyler
or his wife to obtain outside employment, Oyler’s lifestyle choice, and the use of the loans
for education for the ministry. ECMC filed a timely appeal.


                                    IV.    DISCUSSION
       Section 523(a)(8) of the Bankruptcy Code provides:


                     A discharge under section 727, 1141, 1228(a), or
              1328(b) of this title does not discharge an individual debtor
              from any debt . . . for an educational benefit overpayment or
              loan made, insured, or guaranteed by a governmental unit, or
              made under any program funded in whole or in part by a
              governmental unit or nonprofit institution, or for an obligation
              to repay funds received as an educational benefit, scholarship,
              or stipend, unless excepting such debt from discharge under
              this paragraph will impose an undue hardship on the debtor
              and the debtor’s dependents.


       “Congress has not defined ‘undue hardship,’ leaving the task to the courts.”
Hornsby, 144 F.3d at 437. The United States Court of Appeals for the Sixth Circuit has
adopted a “multiple factor” approach to applying § 523(a)(8). In Cheesman, the court
started with, then expanded on, the three-prong analysis announced by the Second Circuit
in its Brunner case:

              One test requires the debtor to demonstrate “(1) that the
              debtor cannot maintain, based on current income and
              expenses, a ‘minimal’ standard of living for herself and her
              dependents 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 ...;
              and (3) that the debtor has made good faith efforts to repay the
              loans.”



Id., 25 F.3d at 359 (quoting, Brunner v. New York State Higher Educ. Servs. Corp., 831
F.2d 395 (2d Cir. 1987)). Other factors that may be considered include “‘the amount of

                                              -4-
the debt ... as well as the rate at which interest is accruing and the debtors’ claimed
expenses and current standard of living, with a view toward ascertaining whether the
debtor has attempted to minimize the expenses of himself and his dependents.’” In re
Hornsby, 144 F.3d at 437 (quoting Rice v. United States (In re Rice), 78 F.3d 1144, 1149
(6th Cir. 1996)).
       In the present case, the bankruptcy court considered the factors identified in
Cheesman and concluded that Oyler had met all three factors.
       ECMC contends that the evidence does not support the bankruptcy court’s
determination that Oyler met the three factors of the Brunner-Cheesman test and that the
court incorrectly applied the test by placing a great deal of weight on the fact that the loans
were for an education in the ministry. In particular, ECMC takes issue with the court’s
determination that the facts demonstrate that Oyler’s circumstances are likely to continue.
       It is clear that the bankruptcy court’s decision to discharge the debt was strongly
influenced by the fact that the student loans were obtained to finance Debtor’s education
to become a minister. In discussing the factors in favor of discharging the loans, the
bankruptcy court stated:


              [W]hat seems the most compelling is the fact that the loans
              were for the ministry. And so if we’re going to make
              guaranteed loans for the ministry, it’s hard to believe that we
              can’t anticipate that people are going to wind up in low-paying
              situations or going to be employed in callings that aren’t going
              to be well-paid. If the loans had been for a law school or for
              something else I think it might be a different question. I don’t
              know how that question would come out. But it seems a much
              simpler question given that the loans were for the ministry.


(Trans. of 12/16/2002 Hrg. at 78.)
       ECMC argues that this language indicates that the bankruptcy court did not properly
apply the second prong of the Brunner/Cheesman test. ECMC argues that Oyler did not
establish that his circumstances would continue to persist for the foreseeable future
because the bankruptcy court refused to consider that Oyler could have simply obtained
a higher paying job either with a different congregation or in another field.




                                              -5-
       Upon review of the entire record, the Panel concludes that the bankruptcy court
properly considered the totality of the circumstances, as required by Cheesman. Contrary
to ECMC’s assertion, Cheesman did not adopt the Brunner test. Rather, Cheesman
indicates that the Brunner test is one of several that can be used to determine if an undue
hardship exists.
       Furthermore, Cheesman makes it clear that a debtor’s choice to work in a low-
paying field is not by itself an indication of bad faith, nor should it be used against a debtor
in an evaluation of undue hardship. In Cheesman, the court noted that the debtors “chose
to work in worthwhile albeit low-paying professions.”1 Id., 25 F.3d at 360. The debtors’
income was slightly higher than poverty level and they maintained a frugal lifestyle.
Despite the fact that the debtor-husband testified that he hoped for a promotion and the
debtor-wife testified that she was actively seeking employment as a teacher’s aide, the
court of appeals found that “there [was] no indication that [their] financial situation [would]
improve in the foreseeable future.” Id.
       In the present case, Oyler’s income is well below poverty level. Oyler’s family of five
lives a very frugal lifestyle. They live in an apartment, drive used, high-mileage vehicles,
and wear donated clothing. They rarely eat out and budget $400-450 per month for food
expense. Moreover, Oyler testified that he was completely committed to his calling as a
minister in his Messianic Jewish congregation and that his circumstances would be likely
to continue for the foreseeable future. Additionally, two pastors testified that Oyler was
committed to his calling and that his circumstances are unlikely to change.
       The bankruptcy court held that in the totality of the circumstances, Oyler was entitled
to discharge his student loan debt. The bankruptcy court properly noted:


              The poverty level for a family of five is twenty-one thousand
              one hundred and eighty dollars ($21,180). And they’re a long
              way from that. So the question isn’t what their current
              circumstances are, I think the question is the likelihood of this



       1Unlike the bankruptcy court, we conclude that the fact that the low-paying
profession in this appeal is in the ministry should have no bearing on our decision. Rather
we focus on ”whether [Oyler] has attempted to maximize his income by seeking or
obtaining stable employment commensurate with his education background and abilities.”
Rice, 78 F.3d at 1149-50.

                                              -6-
              situation to continue – that this situation is likely to continue.
              And even if it was to improve substantially, I don’t think it would
              change much. Because even if there was substantial
              improvement, the amount of things that the family would need
              and/or be viewed as being legally entitled to would be so large
              that it would require a massive improvement before we would
              say there would be any income available for the repayment of
              this debt.


(Tr. 12/16/2002 Hrg. at 76-77.) Based on our review of the record, the Panel agrees that
Oyler carried his burden of proving that he is entitled to a discharge of his student loans.
Simply stated, Oyler’s financial circumstances make it an undue hardship for him to repay
this student loan of almost $40,000, and the record suggests no reason to believe that
these circumstances are likely to change.


                                    V.   CONCLUSION
       The bankruptcy court’s factual findings regarding Oyler’s circumstances are
supported by the record and are not clearly erroneous. Further, the bankruptcy court’s
conclusion that under these circumstances, repayment of the debt would be an undue
hardship is not erroneous. Accordingly, the bankruptcy court order holding the debt
dischargeable pursuant to 11 U.S.C. § 523(a)(8) is AFFIRMED.




                                              -7-
JENNIE D. LATTA, Bankruptcy Judge, dissenting.
       Because I believe that the majority fails to appreciate the development in the legal
standard for determining the presence of an undue hardship that has occurred since the
decision in Cheesman, and because I do not conclude that the facts of this case
demonstrate an undue hardship, I respectfully dissent.
       The majority of the Panel places great weight upon the fact that the Cheesman court
found no evidence that the debtors had acted in bad faith in seeking to discharge their
student loans even though they had chosen low-paying professions. Cheesman, 25 F.3d
at 360. The majority asserts that Cheesman prohibits consideration of a debtor’s choice
of employment in determining the presence of undue hardship. I find no such prohibition
in Cheesman. To the contrary, in Rice, the court announced that one of the relevant
factors to be considered is “whether the debtor has attempted to maximize his income by
seeking employment commensurate with his educational background and abilities. Rice
v. United States (In re Rice), 78 F.3d 1144, 1149 (6th Cir. 1996). In Hornsby, the court
included the factors articulated in Rice among those that are relevant in evaluating
discharge of ordinary student loans even though Rice involved the more stringent
unconscionability standard applied in discharge of Health Education Assistance Loans.
See Hornsby, 114 F.3d. 433, 437 n.7.         While I do not disagree with the majority’s
conclusion that Oyler has acted in good faith, I believe that the majority has failed to
properly consider Oyler’s employment choices in evaluating his entitlement to a discharge
of his student loans. Specifically, I find that Oyler failed to prove that he has attempted to
maximize his income and failed to prove that “additional circumstances” make his current
state of affairs likely to continue.
       The record reflects that the Oylers have voluntarily undertaken a very simple and
frugal lifestyle in pursuance of Mr. Oyler’s ministry. While it is true that Oyler’s actual
salary is well below federal poverty guidelines, the basic needs of the family are met by the
provision of shelter, clothing, and food by Oyler’s congregation. It is significant that after
graduating from Fuller Theological Seminary, but before undertaking his present ministry,
Oyler was employed as a furniture salesman, a position that enabled him to repay $2,000-
$3,000 of his student loan debt over a one-year period. The record also indicates that
Oyler has a musical background, has worked as an audio engineer, and at one time,
owned his own business. Oyler has multiple job skills and a masters degree from a well-

                                             -8-
recognized theological seminary. He has no significant health problems that prevent him
from working; indeed, he claims to be able to work sixty to seventy hours per week. Oyler
offered no proof that he had been unable to find better paying employment, either within
his chosen field or outside of it. Oyler offered no proof that his arrangement with his
current employer prohibits him from seeking supplemental income from other sources,
other than his unsupported statement that he simply has no time to do so.
       Oyler very candidly explained that he is in essence starting a new business. He did
not accept a position with an existing congregation or ministry, but instead decided to
return to Canton, Ohio to launch a new congregation. It is significant that he chose to
locate his ministry in a community that is not familiar with Messianic Judaism. Although
Oyler is licensed by the International Church of Foursquare Gospel, he apparently receives
no denominational support for this new church endeavor. One might say that the failure
of this endeavor to provide adequate support for Oyler and his family is the result of a poor
business plan.
       While Oyler has no present plans to abandon his ministry, there is nothing to
prevent him from doing so. He has changed occupations in the past and could do so
again. He has many marketable skills and no medical impairment. Further, should he
continue to pursue his ministry, it is hoped and expected that his long hours of work will
eventually result in the growth of his congregation and consequent increase in his income.
Throughout his Chapter 13 case, Oyler has remained current in his plan payments of $50
per month. He has no other debts than his student loans. There is nothing in the record
to indicate that he cannot continue to make payments of at least $50 per month on his
student loans in the future, and nothing to indicate that his current ability to pay only $50
per month will persist over the remaining repayment period of his student loans. “[T]he
dischargeability of student loans should be based upon the certainty of hopelessness, not
simply a present inability to fulfill financial commitment.” In the Matter of Roberson, 999
F.2d 1132,1136 (7th Cir. 1993) quoted with approval in Goulet v. Educational Credit Mgmt.
Corp., 284 F.3d 773, 778 (7th Cir. 2002) (emphasis added in Goulet).
       “[F]undamental to the concept of undue hardship under 523(a)(8) is the notion that
a debtor has done everything in his power to improve his financial condition” and that his
“distressed state of financial affairs is the result of events that are clearly out of the debtor’s
control.” Berry v. ECMC (In re Berry), 266 B.R. 359, 365 (Bankr. N.D. Ohio 2000). Events

                                                -9-
clearly out of the debtor’s control generally involve an unexpected illness, injury or disability
of the debtor or his dependents. Id. Significantly, for purposes of this case, “hardships that
are both foreseeable and voluntarily assumed” as a result of the “[i]nformed free choice of
one’s chosen pursuits” do not qualify as “undue” hardships for purposes of student loan
discharge. Fischer v. State Univ. N.Y. (In re Fischer), 23 B.R. 432, 434 (Bankr. W.D. Ky.
1982) cited with approval by In re Paolini, 124 F.3d 199, 1997 WL 476515, **5 (6th Cir.
1997).1
       According to the Fischer court, “voluntary selection of a curriculum leading to an
unremunerative occupation does nothing to enhance a claim of undue hardship.” 23 B.R.
at 434. Consequently, discharge of student loans has been denied to musicians, social
workers, teachers, nutritionists, psychiatrists working in poverty areas, and poets. Id.
       I know of no other case in which a court has agreed to support a debtor’s
entrepreneurial efforts through discharge of student loans. The focus of enquiry under
§ 523(a)(8) should be upon the capacity of the debtor to repay his or her student loans
without undue hardship. Because I believe that Oyler clearly has that capacity, I would
reverse the decision of the bankruptcy court.




       1“Although not binding [precedent], unpublished decisions of the Sixth Circuit may
be cited if persuasive and no published decisions will serve as well.” Gibson v. Gibson (In
re Gibson), 219 B.R. 195, 210, n.2 (B.A.P. 6th Cir. 1998). Unlike the debtor here, the
debtor in Paolini had been diagnosed with obsessive-compulsive disorder, a circumstance
beyond her control. Nevertheless, the Sixth Circuit determined that although her condition
currently impaired her ability to sustain gainful employment, there was no showing that it
would necessarily impair her ability to work in the future and thus her student loans were
not discharged.

                                              -10-
