            United States Bankruptcy Appellate Panel
                           FOR THE EIGHTH CIRCUIT
                             ____________________

                                 No. 05-6030NI
                             ____________________

In re: James E. Cumberworth Jr.,         *
and Leah H. Cumberworth,                 *
                                         *
      Debtors.                           *
                                         *
Leah H. Cumberworth,                     * Appeal from the United States
                                         * Bankruptcy Court for the
      Plaintiff-Appellee                 * Northern District of Iowa
                                         *
            v.                           *
                                         *
The United States Department of          *
Education,                               *
                                         *
                                         *
      Defendant-Appellant                *
                                         *


                               ________________

                             Submitted: June 15, 2006
                              Filed: August 10, 2006
                               ________________

Before KRESSEL, Chief Judge , MAHONEY, and McDONALD, Bankruptcy
Judges
                           ________________

McDONALD, Bankruptcy Judge.

                                       -1-
      The United States Department of Education (the “DOE”) appeals from the
judgment of the bankruptcy court1 determining that Debtor’s obligation to the DOE
on her student loans was discharged under 11 U.S.C. §523(a)(8). We affirm.

                                          I.
       Debtor Leah E. Cumberworth (“Leah”) attended the University of Iowa from
1984-1992. She obtained a bachelor’s and master’s degree in liberal studies as well
as a master’s degree in nursing during that time. Leah procured several student loans
totaling approximately $34,000.00 to finance her education. (collectively the “Student
Loans”).

      After obtaining her master’s degree in nursing in 1992, Leah worked for the
Veteran’s Administration (“VA”) hospital in Iowa City, IA as a nurse. Leah made
timely payments on the Student Loans from 1992 until 1997. Leah then defaulted on
her obligations under the Student Loans sometime in 1997 or 1998. At the time of
Leah’s default, the primary lenders assigned the Student Loans to the DOE.

      Shortly after the DOE was assigned the Student Loans, it and Leah negotiated
an income contingent repayment plan whereby Leah paid $208.00 per month. Leah
regularly made the payments under this alternative plan from 1998 through December
2000. The DOE then notified Leah in January 2001 that it was reviewing her case and
requested that Leah provide it with information concerning her financial situation.
The DOE claimed that Leah failed to provide it with all the financial information it
requested and demanded that Leah begin making regular monthly payments of
$580.00 per month in March 2001.




      1
        The Honorable Paul J. Kilburg, Chief Judge, United States Bankruptcy
Court for the Northern District of Iowa.
                                         -2-
       Both Leah and her husband James Cumberworth (“James”) attempted to supply
the information that the DOE claimed was incomplete. Leah and James also
attempted to negotiate another income contingent repayment plan. These
negotiations, however, ultimately failed. Leah made no payment on the Student Loans
after January 2001 with the exception of one payment of $750.00 in January 2002.
Thus, by the time Leah filed the instant adversary complaint in February 2003, the
principal balance on the Student Loans including penalties and accrued interest was
$64,233.89.

       Leah underwent surgery in January 2001 to alleviate severe pain in her lower
back. The operation, however, failed to alleviate the pain. The Social Security
Administration (the “SSA”) determined that Leah was 100% permanently disabled
based on her treating physician’s recommendation. Leah also retired from the VA
because of her disability. Thus, Leah receives both social security disability income
and a federal pension.

      James suffers from severe bipolar disorder resulting from post-traumatic stress
disorder connected to his military service in Viet Nam. James additionally has had
both hips and his left knee replaced and underwent quadruple bi-pass surgery. Based
on these mental and physical conditions, the SSA also classified James as 100%
permanently disabled. James, therefore, receives both social security disability
income and VA disability income.

       At the time of trial, Leah received $1,417.00 per month in social security
disability income and $728.00 per month from her federal pension. James received
VA disability income in the amount of $ 2,317.00 per month and $426.00 per month
in social security disability income.

       It is undisputed that neither Leah nor James will be able to obtain employment
in the future because of their respective disabilities. Thus, there is no possibility that

                                           -3-
the couple’s future income will increase in real dollars because any future increase
will be limited to cost of living adjustments. It is also undisputed that James and
Leah’s monthly expenses at the time of trial were $4,148.00, excluding Leah’s
obligation on the Student Loans.

         Just prior to trial, the VA declared James incompetent to manage his affairs
and appointed a fiduciary, Gregory Epping (“Epping”). Epping testified at trial that
a fiduciary may not pay the personal debt of a beneficiary’s spouse absent express
approval from the VA. Thus, absent such approval, Epping remarked that he could
only pay James’ portion of the household’s total expenses with James’ disability
income.

       The bankruptcy court concluded that it would be unlikely that Leah would be
able to utilize any portion of James’ VA disability income to meet her obligation on
the Student Loans. The bankruptcy court further noted that Epping’s testimony
established that in all probability, Epping would be limited to paying James’ portion
of the household’s expenses with James’ disability income. Thus, the bankruptcy
court reduced the household’s total expenses by one-half in its undue hardship
analysis. The bankruptcy court additionally found that Leah’s monthly payment on
the Student Loans would be $580.00 per month for a period of twelve years.

       Given this financial framework, the bankruptcy court determined that Leah had
monthly income of $2,145.00. Also, her portion of the household’s total expense was
$2,074.25 ($4,148.50/2). Thus, the bankruptcy court determined that Leah has
discretionary income of only $70.00 per month while her monthly payment on the
Student Loans is $580.00 per month.

       The bankruptcy court also observed that Leah and James attempted in good
faith to negotiate with the DOE to lower the monthly payment on the Student Loans
but failed to reach an agreement. Additionally, the bankruptcy court found that both

                                         -4-
James and Leah are completely and permanently disabled and Leah did make a good
faith effort to repay the Student Loans while she was employed.

       The bankruptcy court held that given these facts, requiring Leah to repay the
debt resulting from the Student Loans would constitute an undue hardship under 11
U.S.C. §523(a)(8). The court, therefore, entered judgment in favor of Leah and found
that Leah’s debt contained in the Student Loans was discharged. This appeal
followed.

                                         II.

       The determination of whether requiring Leah to repay her debt on the Student
Loans constitutes an undue hardship under 11 U.S.C. §523(a)(8) is a question of law
that we review de novo. Long v. Ed. Credit Mgmt. Co (In re Long), 322 F.3d 549,
553 (8th Cir. 2003). The bankruptcy court’s subsidiary factual findings that underpins
its undue hardship analysis, however, are subject to the clearly erroneous standard of
review. Reynolds v. Pennsylvania Higher Ed. Assistance Agency (In re Reynolds),
425 F.3d 526, (8th Cir. 2005); Bankr. R. 8013. Accordingly, we will not upset the
bankruptcy court’s subsidiary factual findings unless, after reviewing the entire
record, we are left with the definite and firm conviction that the bankruptcy court
made a mistake. Shodeen v. Airline Software, Inc. (In re Access Air, Inc.), 314 B.R.
386, 391 (B.A.P. 8th Cir. 2004).



                                         III.

      Section 523(a)(8) states in relevant part that any debt resulting from an
educational loan made, insured or guaranteed by a governmental agency is excepted
from the debtor’s general discharge unless “excepting such debt from discharge...will
impose an undue hardship on debtor and debtor’s dependants.” The debtor has the

                                         -5-
burden of establishing by a preponderance of the evidence that excepting her debt on
the student loan from discharge will impose such an undue hardship. Long v. Ed.
Credit Mgmt. Corp. (In re Long), 292 B.R. 635, 638 (B.A.P. 8th Cir. 2003).

       The undue hardship test under §523(a)(8) in this Circuit is fact intensive and
requires the court to examine the totality of the circumstances of each case. Long, 322
F.3d at 554. The bankruptcy court should consider the following factors in its fact
intensive analysis: (1) the debtor's past, present, and reasonably reliable future
financial resources; (2) a calculation of the debtor's and her dependents’ reasonably
necessary living expenses; and (3) any other relevant facts and circumstances
surrounding each particular bankruptcy case. Id.

                                         IV.

A. The bankruptcy court properly considered Leah’s past, present and future financial
resources.

      The DOE first argues that the bankruptcy court failed to adequately consider
Leah’s financial resources in its analysis for two reasons. The DOE first contends that
the bankruptcy court erred in excluding James' disability income from its undue
hardship analysis. Both parties and the bankruptcy court agree that generally, a
bankruptcy court must include the non-borrower spouse’s income in its undue
hardship analysis.2 Sweeny v. Ed. Credit Mgmt. Corp. (In re Sweeny), 304 B.R. 360,




      2
         The Court notes that there is authority in this Circuit that the non-borrower
spouse’s income should not be considered, provided that both spouses contribute
equally to the household’s income. Reynolds, 425 F.3d at 535-36 (Bright, J.,
Concurring). Here, because neither party raised this issue on appeal and the
bankruptcy court did not utilize James’ VA disability income, we need not address
this issue. See Id.at 534.
                                          -6-
363 (D. Neb. 2002); Bray v. Edu. Credit Mgmt. Corp (In re Bray), 332 B.R. 186, 192-
93 (Bankr. W.D. Mo. 2005).

        The bankruptcy court here, however, excluded James’ VA disability income
because it found that in all likelihood, James’ VA disability income could only be
used to pay his portion of the household’s monthly expenses. The DOE argues that
this finding is not supported by the evidence. We disagree.

       The DOE notes that Epping testified that because the VA appointed him as
James’ fiduciary the day prior to trial he was unfamiliar with the Cumberworths’
financial situation. The DOE also points out that Epping stated that under certain
circumstances, the VA would allow a fiduciary to utilize the veteran’s disability
benefit to pay the personal debt of a spouse. The DOE argues that because Epping had
no knowledge of the Cumberworths’ situation, the bankruptcy court erred when it
concluded that it was unlikely that the VA would allow Epping to utilize James’ VA
disability income to pay Leah’s debt on the Student Loans.

       The DOE’s argument fails because the bankruptcy court must examine Leah’s
reasonably reliable future financial resources. Long, 322 F.3d at 554. Thus, although
the DOE did produce evidence that there is a theoretical possibility that Epping could
use James’ income to pay Leah’s personal debt at some unspecified point in the future,
the question before the bankruptcy court was whether that possibility was reasonably
likely in the near future. The bankruptcy court answered that question in the negative
and we find that the record amply supports that conclusion for the following reasons.

       First, as mentioned earlier, Epping testified that he did not have the ability to
expend any of James’ VA disability benefit to pay Leah’s debt on the Student Loans
absent express approval from the VA. Additionally, there is no evidence in the record
as to the procedure that Epping would follow in making such a request or the length
of time it would take to procure the VA’s approval. In short, the uncontroverted

                                          -7-
evidence adduced at trial is that absent some unspecified action that would take an
unknown period of time to complete, Epping cannot use James’ disability income to
pay Leah’s debt on the Student Loans.

       Epping additionally testified that if James had to be placed in a long-term care
facility operated by the VA, the VA would likely require James to expend all of his
income to cover his expenses. As discussed above, James is beset with a multitude
of mental and physical aliments and there is certainly a reasonable probability that
James may need long-term care at some point in the future. Thus, the evidence in the
record suggests that there is a reasonable likelihood that James will consume all of his
income at some point in the future to pay for his own care.

        Our review of this record does not leave us with a definite and firm conviction
that it is reasonably likely that Epping will be able to use James’ disability income to
pay Leah’s debt on the Student Loans anytime in the near future. Accordingly, we
cannot find that the bankruptcy court’s factual determination is clearly erroneous.

       The DOE also asserts that the bankruptcy court applied the wrong standard in
evaluating Leah’s financial resources. The DOE contends that the bankruptcy court
should have required Leah to demonstrate that repaying her debt on the Student Loans
would result in a certainty of financial hopelessness or would cause an indefinite and
extraordinary hardship. It is true that some bankruptcy courts have applied such tests
while still nominally using the totality of the circumstances test. See e.g. Randall v.
Nw. Student Loan Serv., 255 B.R. 570, 577 (Bankr. D.N.D. 2000). The totality of the
circumstances test properly applied, however, is not nearly as rigid as either of these
tests.

       As discussed above, the totality of the circumstances test is fact intensive and
requires the bankruptcy court to examine the unique facts and circumstances of the
particular case. Reynolds, 425 F.3d at 532; Long, 322 F.3d at 554-55; Ford v.

                                          -8-
Student Loan Guar. Found. of Ark. (In re Ford), 269 B.R. 673, 678 (B.A.P. 8th Cir.
2001); Cline v. Illinois Student Loan Assistance Assoc. (In re Cline), 248 B.R. 347,
351 (B.A.P. 8th Cir. 2000); Andersen v. Nebraska Student Loan Program, Inc. (In re
Andersen), 232 B.R. 127, 140 (B.A.P. 8th Cir. 1999). This analysis may include non-
economic factors in appropriate circumstances. Reynolds, 425 F.3d at 532; Andersen,
232 B.R. at 139-40. Thus, the proper analysis requires the bankruptcy court to closely
examine the individual facts of a particular case and not mechanically apply a rigid
rule. The bankruptcy court applied such a fact intensive inquiry here. Accordingly,
we find that the bankruptcy court properly applied the totality of the circumstances
test in this case.

B. The bankruptcy court did not err in finding that the Cumberworths’ expenses were
reasonable and necessary.

       The DOE next maintains that the bankruptcy court erred in finding that the
Cumberworths’ expenses were reasonable and necessary. The essence of the DOE’s
argument here is that the bankruptcy court was obligated to examine the
Cumberworths’ expenses on a line-by-line basis and reduce any expense that was not
reasonable and necessary. The totality of the circumstances test, however, only
requires the bankruptcy court to examine whether the debtor’s total monthly expenses
are reasonable and necessary given the particular facts and circumstances of the case.
Cline, 248 B.R. at 351.

      The bankruptcy court here specifically found that although some of the
Cumberworths’ expenses may have been discretionary, their overall monthly expenses
were reasonable and necessary. Thus, the bankruptcy court applied the correct test in
examining whether the Cumberworths’ expenses were reasonable and necessary.




                                         -9-
        The DOE alternatively argues that even if the bankruptcy court applied the
correct test, it still erred in finding that the Cumberworths’ overall expenses were
reasonable and necessary. The record does contain evidence that supports the DOE’s
contention. We note for example that Leah provides $100.00 per month in support for
a grandchild although she has no legal obligation to do so; the couple makes $120.00
per month in charitable contributions; and also expends $260.00 per month for
recreation and entertainment. Also, the Cumberworths’ monthly expenses of
$4,148.00 per month are atypically high for a debtor seeking to discharge her student
loan debt under §523(a)(8). See Rafeal I. Padro & Michelle R. Lacey, Undue
Hardship in the Bankruptcy Courts: An Empirical Assessment of the Discharge of
Educational Debt, 74 U. CIN. L. REV. 405, 454 (2005) (noting that the median
monthly household expenses for a debtor seeking the discharge of education debt is
$2,251.00 per month with the 75th percentile at $2,762.82 per month).

       But under the clearly erroneous standard of review, we may only upset the
bankruptcy court’s factual finding if, after reviewing the complete record, we are left
with a definite and firm conviction that the finding is incorrect. In re Apex, 406 F.3d
538, 541 (8th Cir. 2005). Accordingly, the mere fact that the evidence in the record
would support the opposite result is not sufficient to disturb the bankruptcy court’s
factual findings. United States v. Sanders, 424 F.3d 768, 778 (8th Cir. 2005). Here,
the evidence in the record is sufficient to sustain the bankruptcy court’s factual finding
that the Cumberworths’ overall expenses were reasonable and necessary.

       First, the record reflects that the Cumberworths reduced their total monthly
expenses by $1,600.00 per month from the petition date to the trial date, which was
a 27 % reduction. This reduction included the Cumberworths selling their residence
and moving into lower cost rental property. The fact that the Cumberworths
significantly reduced their monthly expenses post-petition, including moving into
lower cost rental property, is evidence that their total current living expenses are



                                           -10-
reasonable and necessary. See Soler v. United States (In re Soler), 261 B.R. 444, 462
(Bankr. D. Minn. 2001).

      The second factor that supports the bankruptcy court’s conclusion is that the
only evidence in the record as to what constitutes the Cumberworths’ reasonable and
necessary expenses given their unique circumstances was the Cumberworths’ own
testimony. Both Leah and James testified that some of the specific expenses that the
DOE questioned were in fact reasonable and necessary given their particular situation.

      For example, both Leah and James testified that their travel and automobile
expenses were high because they made short, but frequent trips to visit their children
and grandchildren who reside nearby. James further testified that the couple’s food
budget was unusually high because he is on a restrictive diet due to his pervasive heart
disease. James additionally noted at trial that the couple is forced to expend $300.00
per month in out-of-pocket medical expenses because of both his and Leah’s chronic
medical conditions.

      The DOE did not offer any contradictory evidence as to whether any of the
Cumberworths’ expenses were reasonable and necessary. Rather, the DOE made the
bald assertion in its reply brief that some of the Cumberworths’ expenses “appear to
be unreasonable”. The DOE failed, however, to produce any evidence as what would
be reasonable give the Cumberworths’ special circumstances. Also, as noted above,
the Cumberworths did offer explanations as to why at least some of their expenses
appeared to be unusually high and we defer to the bankruptcy court’s ability to judge
the credibility of that testimony. See Bankr. R. 8013. Thus, we find that the
bankruptcy court’s determination that the Cumberworths’ overall expenses given their
unique circumstances were reasonable and necessary was not clearly erroneous.




                                          -11-
C. The bankruptcy court properly considered “other factors” in its analysis.

       The DOE additionally attacks the bankruptcy court’s judgment arguing that the
bankruptcy court failed to properly consider “other factors”. The DOE first contends
that Leah was not entitled to a discharge of her debt on the Student Loans because she
failed to qualify for a lower monthly payment under an income contingent repayment
plan. The DOE maintains that Congress established what constitutes undue hardship
under 11 U.S.C. §523(a)(8) in enacting the qualifications for income contingent
repayment plans for federally guaranteed student loans. The DOE’s argument misses
the mark in that it improperly equates the qualifications in the income contingent
repayment guidelines with what constitutes undue hardship under §523(a)(8).

       Under the income contingent repayment guidelines, a borrower must make
some payment towards a student loan if the borrower’s income is at or above the
federal poverty level. 20 U.S.C. §1087e(d)(1); 34 C.F.R. §§685.208-685.209. The
undue hardship analysis, however, requires the court to examine the particular facts
and circumstances of the debtor’s case and determine whether requiring the debtor to
repay the debt on the student loan would constitute an undue hardship. Long, 322
F.3d at 554. We find that these two standards are different in two important respects.

       First, the undue hardship analysis looks at whether the debtor has sufficient
income to make monthly payments on the student loan in question after deducting her
reasonably necessary living expenses now and in the future. See Long, 322 F.3d at
554. (Emphasis added). As one commentator has observed, because a person cannot
pay for her reasonably necessary living expenses if her income is at the federal
poverty level, the standard contained in the income contingent repayment guidelines
is different from the undue hardship standard under §523(a)(8). ALAN N. RESNICK
& HENRY J. SOMMER, COLLIER On BANKRUPTCY ¶ 523.14 (15th rev. ed.).




                                         -12-
        Second, the income contingent repayment guidelines only examine the debtor’s
current financial situation. The undue hardship analysis on the other hand requires the
bankruptcy court to examine the debtor’s present and future financial prospects.
Long, 322 F.3d at 555. Thus, while the income contingent repayment guidelines are
static, the undue hardship analysis is dynamic in that it is forward-looking.

       Thus, the fact that a debtor may or may not be eligible to take advantage of an
income contingent repayment program is not determinative of whether requiring the
debtor to repay the student loan constitutes an undue hardship under §523(a)(8). See
Ford, 269 B.R. at 678-79. Rather, as we have previously held, the debtor’s ability or
inability to take advantage of an income contingent repayment plan is simply one of
many factors that the bankruptcy court should consider. Id.

       The DOE also maintains that the Leah did not in good faith attempt to lower her
monthly payment by qualifying for an income contingent repayment plan. As just
stated, we agree that the debtor’s good faith effort to lower her monthly payment by
qualifying for an income contingent repayment plan is a factor in the undue hardship
analysis. Id. Here, however, the record amply supports the bankruptcy court’s
finding that Leah did attempt in good faith to qualify for a lower monthly payment
under an income contingent repayment plan.

       Both Leah and James testified that Leah attempted to lower her payment by
exploring different income contingent repayment plans with the DOE but failed in that
attempt. Leah and James additionally testified that the last offer from the DOE was
a payment of $580.00 per month over a twelve year period. The DOE produced no
evidence to controvert the testimony of either Leah or James. Thus, the bankruptcy
court properly considered Leah’s good faith effort to lower her monthly payment on
the Student Loans under an income contingent repayment plan.




                                         -13-
       The DOE finally argues that the bankruptcy court erred in considering other
non-economic factors in its hardship analysis. It is true that the undue hardship
analysis under §523(a)(8) should begin with determining whether the debtor has the
ability to pay the student loan debt and meet her reasonable and necessary living
expense. See Long, 322 F.3d at 554-55. The DOE’s contention, however, fails to
appreciate the flexibility that the bankruptcy court possesses under the totality of the
circumstances test, which includes the ability to examine non-economic factors in
appropriate cases. Id.; Reynolds, 425 F.3d at 532.

       Here, the bankruptcy court cited Leah’s good faith effort to repay the Student
Loans while she was employed and Leah’s complete and permanent disability in its
analysis. A debtor’s good faith attempt to repay the student loan debt while employed
is certainly a non-economic factor that a court may consider in its undue hardship
analysis. In re Roberson, 999 F.2d 1132, 1136 (7th Cir. 1993); Faktor v. United
States (In re Faktor), 306 B.R. 256, 264 (Bankr. N.D. Iowa 2004).

      With respect to Leah’s disability, the DOE argues that this factor is irrelevant
because it concedes that Leah will never be able to work again and argues that the
Cumberworths’ retirement and disability income is sufficient to repay the Student
Loans. Thus, the DOE maintains that Leah’s inability to work because of her
permanent disability has no bearing on whether requiring her to repay the Student
Loans would cause an undue hardship.

       Although Leah’s disability may not have an impact on the financial analysis in
this case, Leah’s disability is relevant because it eliminated her ability to increase her
income through no fault of her own. Andrews v. South Dakota Student Loan
Assistance Corp. (In re Andrews), 661 F.2d 702,704-05 (8th Cir. 1981); Ford, 269
B.R. at 677; see also Andersen, 232 B.R. at 139 (noting that the policy underlying
§523(a)(8) is to prevent a debtor from discharging student loan debt while on the brink



                                           -14-
of a lucrative career). Thus, the bankruptcy court did not err in considering Leah’s
complete and permanent disability.

                                          V.

      In conclusion, after reviewing the record, we cannot find that the bankruptcy
court’s subsidiary factual findings are clearly erroneous. The bankruptcy court also
properly considered Leah’s: (1) good faith attempt to negotiate an income contingent
repayment plan with the DOE; (2) payment history on the Student Loans while she
was employed; and (3) complete and permanent disability, which prevents her from
increasing her income through no fault of her own.

      Our de novo review of this record indicates that Leah established by a
preponderance of the evidence that forcing her to repay the debt on Student Loans
would constitute an undue hardship under §523(a)(8). The bankruptcy court,
therefore, did not err in finding that Leah’s debt on the Student Loans were discharged
pursuant to §523(a)(8). Thus, the bankrupt court’s judgment is affirmed.




                                         -15-
