                ELECTRONIC CITATION: 2008 FED App. 0019P (6th Cir.)
                             File Name: 08b0019p.06

             BANKRUPTCY APPELLATE PANEL OF THE SIXTH CIRCUIT

In re: JENNIFER DENISE CASSIM,                    )
                                                  )
                  Debtor.                         )
_____________________________________             )
                                                  )
JENNIFER DENISE CASSIM,                           )
                                                  )
                     Plaintiff-Appellee,          )
                                                  )
        v.                                        )       No. 07-8080
                                                  )
EDUCATIONAL CREDIT                                )
MANAGEMENT CORPORATION,                           )
                                                  )
                  Defendant-Appellant.            )
_____________________________________             )

                       Appeal from the United States Bankruptcy Court
                    for the Eastern District of Kentucky, London Division.
                          Case No. 07-60311; Adv. Pro. No. 07-6029

                                  Argued: August 13, 2008

                           Decided and Filed: November 7, 2008

  Before: PARSONS, RHODES, and SHEA-STONUM, Bankruptcy Appellate Panel Judges.

                                   ____________________

                                           COUNSEL

ARGUED: Curtis P. Zaun, EDUCATIONAL CREDIT MANAGEMENT CORPORATION, St.
Paul, Minnesota, for Appellant. Fred N. Owens, Jr., Harlan, Kentucky, for Appellee. ON BRIEF:
Curtis P. Zaun, A.L. Brown, EDUCATIONAL CREDIT MANAGEMENT CORPORATION, St.
Paul, Minnesota, for Appellant. Fred N. Owens, Jr., Harlan, Kentucky, for Appellee.
                                     ____________________

                                           OPINION
                                     ____________________

       STEVEN RHODES, Bankruptcy Appellate Panel Judge.                   Shortly before obtaining
confirmation of her chapter 13 plan, the debtor, Jennifer Denise Cassim, filed an adversary
proceeding seeking a determination that payment of her student loan would impose an undue
hardship and was, therefore, dischargeable.       The student loan creditor, Educational Credit
Management Corporation (“ECMC”), moved to dismiss the proceeding for lack of subject matter
jurisdiction, contending that the action was not constitutionally ripe until Cassim obtained a general
discharge upon the completion of her plan. The bankruptcy court denied the motion, as well as the
creditor’s motion to reconsider. Finding no error, we affirm the orders of the bankruptcy court.

                                     I. ISSUE ON APPEAL

       The sole issue on appeal is whether the bankruptcy court erred in holding that the
determination of whether the debtor was entitled to a hardship discharge of her student loan debt was
constitutionally ripe for review.

                    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 Eastern District of Kentucky has authorized appeals to the
BAP. 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 is final if it “‘ends the litigation on the merits and leaves nothing
for the court to do but execute the judgment.’” Midland Asphalt Corp. v. United States, 489 U.S.
794, 798, 109 S. Ct. 1494, 1497 (1989) (citations omitted). The orders denying the motion to
dismiss and motion for reconsideration became final following entry of an agreed judgment resolving
the adversary proceeding.

       The issue of ripeness is a question of law, reviewed de novo. Ammex, Inc. v. Cox, 351 F.3d
697, 706 (6th Cir. 2003). “De novo review requires the Panel to review questions of law
independent of the bankruptcy court’s determination.” First Union Mortgage Corp. v. Eubanks (In
re Eubanks), 219 B.R. 468, 469 (B.A.P. 6th Cir. 1998) (citation omitted).


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                                             III.   FACTS

       On April 11, 2007, Cassim filed a voluntary petition for relief under chapter 13 of the
Bankruptcy Code. According to her Schedule I, Cassim is disabled and her sole income is from
Social Security in the amount of $675 per month. Under her chapter 13 plan, which was confirmed
by the bankruptcy court on July 17, 2007, Cassim will make plan payments of $50 per month, and
her bankruptcy attorney will be paid fees of $1,474. No other creditor, secured or unsecured, will
be paid under the plan.1

       On July 11, 2007, Cassim filed this adversary proceeding for a determination that her student
loan debt to ECMC in the amount of $22,241.39 is dischargeable under 11 U.S.C. § 523(a)(8). On
August 13, 2007, ECMC filed a motion to dismiss for lack of subject matter jurisdiction. ECMC
asserted that the issue of whether Cassim is entitled to a hardship discharge of her student loans is
not ripe until she successfully completes her plan payments and obtains a general discharge under
11 U.S.C. § 1328. On September 19, 2007, the bankruptcy court denied ECMC’s motion to dismiss.
On September 28, 2007, ECMC filed a motion for reconsideration, which was denied by the
bankruptcy court on October 22, 2007.

       On December 4, 2007, upon the stipulation of the parties, the bankruptcy court entered an
agreed judgment finding that Cassim is entitled to a hardship discharge of her student loan obligation
to ECMC when the bankruptcy court enters a discharge order in the case. The judgment preserved
ECMC’s right to appeal the orders denying the motion to dismiss and the motion to reconsider.

       On December 10, 2007, ECMC appealed both orders. During the oral argument on this
appeal, ECMC’s attorney stated that ECMC had agreed to a judgment without a trial in order to have
the appeal of the ripeness issue heard more expeditiously.

                                       IV.      DISCUSSION

       Pursuant to §1328 of the Bankruptcy Code, a chapter 13 debtor is entitled to a discharge of
debts after completion of all plan payments. However, not all debts are automatically discharged


       1
         Because the Appellant did not raise the issue on appeal, the Panel will not address whether
a 0% plan, which pays only a debtor’s attorney fees for filing the bankruptcy case, meets the good
faith requirement for plan confirmation under 11 U.S.C. § 1325(a)(3).

                                                    -3-
upon completion of the plan. To receive a discharge of student loan debt, a debtor must prove that
repayment of the debt would impose an undue hardship on the debtor and the debtor’s dependents.
11 U.S.C. § 523(a)(8).

       According to Federal Rule of Bankruptcy Procedure 4007, a complaint to determine the
dischargeability of a debt, other than under § 523(c) of the Bankruptcy Code, may be filed by a
debtor or a creditor at any time. Section 523(c) pertains to dischargeability actions based on
§ 523(a)(2), (4), and (6) and is, therefore, inapplicable to proceedings to determine the
dischargeability of student loans under § 523(a)(8). Thus, nothing in the Federal Rules of
Bankruptcy Procedure prohibited Cassim from filing her student loan adversary proceeding before
she completed her plan. Nonetheless, ECMC contends that the issue of the dischargeability of
Cassim’s student loan obligation is not ripe and the bankruptcy court lacks subject matter
jurisdiction, until such time as Cassim receives a discharge under § 1328.

       “Ripeness is a justiciability doctrine designed ‘to prevent the courts, through premature
adjudication, from entangling themselves in abstract disagreements.’ ‘Ripeness becomes an issue
when a case is anchored in future events that may not occur as anticipated, or at all.’” Ky. Press
Ass’n, Inc., v. Ky., 454 F.3d 505, 509 (6th Cir. 2006) (internal citations omitted). The ripeness
doctrine arises “both from Article III limitations on judicial power and from prudential reasons for
refusing to exercise jurisdiction.” Reno v. Catholic Soc. Servs., Inc., 509 U.S. 43, 57 n.18, 113 S.
Ct. 2485, 2496 (1993); Warshak v. United States, 532 F.3d 521, 525 (6th Cir. 2008); Brown v. City
of Royal Oak, Mich., 202 F. App’x 62, 65 (6th Cir. 2006). Accordingly, there are two components
to the ripeness doctrine: constitutional ripeness and prudential ripeness. In Brown v. Ferro Corp.,
763 F.2d 798 (6th Cir. 1985), the Sixth Circuit explained that “[t]he ripeness doctrine not only
depends on the finding of a case and controversy and hence jurisdiction under Article III, but it also
requires that the court exercise its discretion to determine if judicial resolution would be desirable
under all of the circumstances.” Id. at 801.

       At the oral argument in this case, ECMC’s attorney confirmed that its ripeness argument was
a constitutional one, based on the contingency of Cassim’s discharge rather than any contingency
as to the particular facts and circumstances of her hardship claim. ECMC argues that a student loan




                                                 -4-
dischargeability claim in a chapter 13 case is never ripe until the debtor receives a discharge,
regardless of the merit of the dischargeability claim at any point in time before then.2

        The constitutional ripeness of a declaratory judgment action depends upon “whether the facts
alleged, under all the circumstances, show that there is a substantial controversy, between parties
having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a
declaratory judgment.” Blakely v. United States, 276 F.3d 853, 872 (6th Cir. 2002). See also Cities
Serv. Co. v. Dept. of Energy, 520 F. Supp. 1132, 1139 (D. Del. 1981) (“A particular case is ripe in
the constitutional sense if ‘the requisite injury is in sharp enough focus and the adverseness of the
parties concrete enough to permit a court to decide a real controversy and not a set of hypothetical
possibilities.”).

        The Panel holds that the contingency of Cassim’s discharge does not create a constitutional
ripeness impediment to the bankruptcy court’s resolution of this adversary proceeding.               A
“substantial controversy” arose between Cassim and ECMC when she filed for bankruptcy relief
under chapter 13 seeking the discharge of her financial obligations. Educ. Credit Mgmt. Corp. v.
Coleman (In re Coleman), No. 06-16477, 9848 (9th Cir. Aug. 1, 2008), vacated on other grounds,
539 F.3d 1168 (9th Cir. 2008).3 Moreover, the controversy is of “sufficient immediacy and reality”
to warrant review prior to the entry of Cassim’s discharge.

        Delay of the dischargeability determination would deprive Cassim of the opportunity to pay
any non-dischargeable student loan debt and attorneys fees related to the adversary proceeding


        2
         ECMC has expressly disavowed any argument that Cassim’s undue hardship claim lacks
prudential ripeness and did not address the issue in its appellate brief. Accordingly, the Panel will
not address any facts related to a potential prudential ripeness argument. In this regard, we note that
no case law suggests that a lack of prudential ripeness alone creates a subject matter jurisdictional
impediment.
        3
         Due to its subsequent determination that the appeal was interlocutory, the Ninth Circuit
vacated its decision in Coleman. However, we find that the reasoning in the decision is sound and
persuasive, and accordingly we cite it in support of our conclusion. In this regard, we note that in
United States v. Smith, 584 F.2d 759 (6th Cir. 1978), the Sixth Circuit was presented with an
argument that cited a decision that had been vacated on procedural grounds. The Sixth Circuit
considered the argument and rejected it on its merits rather than rejecting the argument simply
because the case had been previously vacated. Therefore, we conclude that it is appropriate to cite
Coleman for its persuasive reasoning, if not for its precedential authority.

                                                  -5-
through the chapter 13 plan as well as potential loss of the automatic stay. See Hoffer v. Am. Educ.
Servs. (In re Hoffer), 383 B.R. 78, 82 (Bankr. S.D. Ohio 2008). The Bankruptcy Code’s purpose is
to provide a debtor with a fresh start. Requiring a debtor to wait until after completion of the plan
and entry of the general discharge may well unnecessarily prolong that fresh start. Id.

        A ruling that all undue hardship cases are not ripe at any time before the general discharge
is entered contradicts the historical case-by-case approach traditionally applied by courts. See Lujan
v. Nat’l Wildlife Fed’n, 497 U.S. 871, 894, 110 S. Ct. 3177, 3191 (1990) (“The case-by-case
approach . . . is the traditional, and remains the normal, mode of operation of the courts.”). In
addition, such a ruling would ignore the reality that in some cases a hardship discharge determination
can appropriately and accurately be made prior to the entry of the general discharge. Further, it is
akin to the argument, rejected by the Sixth Circuit, that certain declaratory judgment actions are not
ripe for review unless and until an injury has actually occurred. See Cent. W. Va. Energy Co. v.
Wheeling-Pittsburgh Steel Corp., 245 F. App’x. 415 (6th Cir. 2007).
        The ripeness doctrine, however, does not require the harm to have actually occurred.
        See Pac. Gas & Elec. Co. v. State Energy Res. Conservation, 461 U.S. 190, 201, 103
        S. Ct. 1713, 75 L. Ed.2d 752 (1983) (“One does not have to await the consummation
        of threatened injury to obtain preventive relief.”). That proposition is particularly
        applicable in the instant case, as Wheeling-Pitt sought a declaratory judgment, the
        useful purpose of which is the clarification of legal duties for the future. AmSouth
        Bank v. Dale, 386 F.3d 763, 786 (6th Cir. 2004). Indeed, at the time Wheeling-Pitt
        filed its complaint for declaratory relief, it was in bankruptcy, and it stated that it
        “could not consummate its proposed joint venture without assurance the Agreement
        may be assigned in connection with the joint venture, because any uncertainty as to
        the effect of the assignment significantly affects the value of the proposed joint
        venture.” J.A. at 22. Accordingly, CWVEC’s ripeness argument lacks merit.
Id. at 425-26. To require a chapter 13 debtor to wait until plan completion to obtain a declaration
regarding the dischargeability of a student loan debt would similarly deny the debtor the benefit of
clarification of his or her legal duties for the future.

        We reject the notion raised by ECMC that because there is a chance that Cassim will not
complete her plan and qualify for a general discharge, any determination of dischargeability is too
speculative to warrant the issuance of a declaratory judgment. Confirmation of Cassim’s plan was
premised on a finding that “the debtor will be able to make all payments under the plan[.]”
11 U.S.C. § 1325(a)(6). Indeed, ECMC has never asserted any facts suggesting that Cassim will not
be able to complete her plan; its concern is strictly hypothetical.

                                                   -6-
       Moreover, it is noteworthy in the present case that there is no suggestion that Cassim’s
completion of her plan will “significantly advance our ability to deal with the legal issues
presented[.]” Duke Power Co. v. Carolina Envtl. Study Group, Inc., 438 U.S. 59, 82, 98 S. Ct. 2620,
2635 (1978); see also In re Coleman, No. 06-16477, 9849 (“[P]lan completion is a single factual
contingency–not a ‘series of contingencies’ rendering the decision ‘impermissibly speculative.’”).
Indeed, plan completion is irrelevant to the elements of a student loan dischargeability claim.4

       The Fourth and Ninth Circuits have reached the same conclusion as this Panel. As explained
by the Fourth Circuit:
       [W]e decline to adopt a hard and fast rule which would preclude bankruptcy courts
       from ever entertaining a proceeding to discharge student loan obligations until at or
       near the time the debtor has completed payments under a confirmed Chapter 13 plan.
       The text of the pertinent statutes does not prohibit such an advance determination
       and, although cognizant of the policy concerns expressed by Congress in its refusal
       to discharge such loans, we can envision exceptional circumstances where the
       Brunner factors could be predicted with sufficient certainty in advance of the
       conclusion of a Chapter 13 proceeding.
Ekenasi v. Educ. Res. Inst. (In re Ekenasi), 325 F.3d 541, 547 (4th Cir. 2003). The Ninth Circuit in
Coleman likewise found no constitutional ripeness impediment to the undue hardship determination.
Observing that a determination regarding hardship discharges involves contemplating factual
contingencies many years into the future, the court of appeals concluded that “whether it is premature
for the court to make such a determination varies depending on each debtor’s situation.” In re
Coleman, No. 06-16477, 9856.

       4
        By stipulating that Cassim’s student loan debt is dischargeable due to undue hardship,
ECMC agreed, at least implicitly, that the mere passage of time will not change the outcome in this
case. To establish undue hardship, it must be established that:
       (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 of the student loans;
       and (3) that the debtor has made good faith efforts to repay the loans.
Barrett v. Educ. Credit Mgmt. Corp. (In re Barrett), 487 F.3d 353, 358-59 (6th Cir. 2007)
(alterations omitted) (quoting Brunner v. New York State Higher Educ. Serv. Corp., 831 F.2d 395,
396 (2d Cir. 1987)). Although the record in this case does not identify the repayment period of
Cassim’s student loans, ECMC’s consent to the entry of the agreed judgment suggests that the
second element of the Brunner test has been met and that Cassim’s undue hardship will extend into
the foreseeable future.

                                                  -7-
       The only contrary appellate authority is Bender v. Educ. Credit Mgmt. Corp. (In re Bender),
368 F.3d 846 (8th Cir. 2004).        In that case, the Eighth Circuit held that the student loan
dischargeability claim was not ripe three and a half years before the general discharge would occur.
The court noted that the exception for a hardship discharge must be measured considering the facts
at the time of discharge and rejected the debtor’s argument that her situation was “so dire, and the
possibility of improvement so remote, that a court could determine whether repayment of her student
loans three and a half years down the road would constitute undue hardship.” Id. at 848. The court
held that “[d]eferring a decision until the case is ripe will allow a court to make its undue hardship
determination on the basis of real rather than speculative circumstances.” Id. The court noted that
“[a]s a matter of administrative convenience, of course, it makes sense to commence an adversary
petition to determine undue hardship before the actual date of discharge, but such proceedings should
take place relatively close to that date so that the court can make its determination in light of the
debtor’s actual circumstances at the relevant time.” Id.

       The Panel concludes that Bender provides no support for ECMC’s argument in this case for
two reasons. First, in Bender, the creditor did not argue, as ECMC does here, that the debtor’s
dischargeability claim lacked ripeness because the debtor might not receive a discharge, and the
Bender court expressed no such concern. Second, the court’s analysis addressed only whether it was
prudent to evaluate the debtor’s hardship claim more than three years before the debtor would be
entitled to a discharge. Therefore, although the Bender court did not explicitly state whether its
disposition was based on constitutional or prudential ripeness, its analysis certainly suggests that it
was guided by considerations of prudential ripeness rather than constitutional ripeness. This appeal,
however, involves only constitutional ripeness, not prudential ripeness.

       For these reasons, the Panel agrees with the Fourth Circuit and Ninth Circuit’s conclusions
that there is no constitutional ripeness impediment to the bankruptcy court’s determination of a
chapter 13 debtor’s student loan dischargeability claim before a discharge is entered.

                                       V. CONCLUSION

       The bankruptcy court did not lack jurisdiction over the adversary proceeding. Accordingly,
the bankruptcy court’s orders denying the motion to dismiss and the motion for reconsideration are
AFFIRMED.

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