                                                                              FILED
                            NOT FOR PUBLICATION                                FEB 27 2015

                                                                          MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                          U.S. COURT OF APPEALS



                            FOR THE NINTH CIRCUIT


LAURA KELLY,                                     No. 12-35377

              Plaintiff - Appellant,             D.C. No. 2:11-cv-01263-RSL

  v.
                                                 MEMORANDUM*
SALLIE MAE, INC.; et al.,

              Defendants,

EDUCATIONAL CREDIT
MANAGEMENT CORPORATION,

              Defendant - Appellee.


                   Appeal from the United States District Court
                     for the Western District of Washington
                    Robert S. Lasnik, District Judge, Presiding

                      Argued and Submitted February 2, 2015
                               Seattle Washington




        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.

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Before: BEA and MURGUIA, Circuit Judges, and KOBAYASHI, District Judge.**


      Chapter 13 debtor Laura Kelly appeals the district court’s order reversing the

bankruptcy court’s judgment, which discharged part of her student loan debt for

undue hardship under 11 U.S.C. § 523(a)(8). We have jurisdiction under 28

U.S.C. § 158(d). We independently review the bankruptcy court’s legal

conclusions de novo and its factual findings for clear error. Hedlund v. Educ. Res.

Inst., Inc., 718 F.3d 848, 853-54 (9th Cir. 2013). We reverse the district court.

      The district court correctly upheld the bankruptcy court’s determinations that

Kelly was unable to repay her student loans while maintaining a minimal standard

of living and that this inability was likely to persist for a significant portion of the

repayment period. See id. at 851 (outlining three-prong test for debtor to establish

undue hardship under § 523(a)(8)); see also Rifino v. United States (In re Rifino),

245 F.3d 1083, 1088 (9th Cir. 2001).

      However, the district court incorrectly concluded that the bankruptcy court

had clearly erred by determining that Kelly had made a good faith effort to repay

her student loans. The bankruptcy court justified its conclusion that Kelly had

acted in good faith with reference to its findings that, among other things, Kelly

       **
             The Honorable Leslie E. Kobayashi, District Judge for the U.S.
District Court for the District of Hawaii, sitting by designation.

                                            2
had maximized her income, incurred only marginally excessive expenses, paid

thousands of dollars toward her student debt over an eight year period before filing

for bankruptcy, and at least minimally investigated payment alternatives such as

debt consolidation, deferment, and a federal loan repayment program. The

bankruptcy court further concluded that to the extent Kelly’s expenses were

excessive, a partial discharge was justified rather than the complete discharge

Kelly sought. Moreover, though Kelly did not pursue loan repayment options, the

bankruptcy court did not clearly err in its conclusion that Kelly had a good-faith

belief that she was ineligible for the program, and that applying for the program

would have been futile since she could not afford the payments after consolidation.

      Because the bankruptcy court’s judgment was not “illogical, implausible, or

without support in inferences that may be drawn from the record,” it was not

clearly erroneous. United States v. Hinkson, 585 F.3d 1247, 1263 (9th Cir. 2009)

(en banc). Accordingly, we reverse the district court’s order and remand to the

district court with instructions to reinstate the partial discharge ordered by the

bankruptcy court.

      REVERSED and REMANDED.




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