                                                          FILED
                                                           NOV 08 2011
 1                                                     SUSAN M SPRAUL, CLERK
                                                         U.S. BKCY. APP. PANEL
 2                                                       OF THE NINTH CIRCUIT


 3                  UNITED STATES BANKRUPTCY APPELLATE PANEL
 4                            OF THE NINTH CIRCUIT
 5   In re:                             )    BAP No. OR-11-1191-ClPaJu
                                        )
 6   RICHARD DEAN CARTER,               )    Bk. No.   10-30555-tmb7
                                        )
 7                            Debtor.   )    Adv. No. 10-03136-tmb
     ___________________________________)
 8                                      )
     RICHARD DEAN CARTER,               )
 9                                      )
                            Appellant, )
10                                      )
     v.                                 )    M E M O R A N D U M1
11                                      )
     UNITED STATES                      )
12   DEPARTMENT OF EDUCATION,           )
                                        )
13                          Appellee.   )
     ___________________________________)
14
                     Argued and Submitted on October 20, 2011
15                             at Portland, Oregon
16                          Filed - November 8, 2011
17               Appeal from the United States Bankruptcy Court
                           for the District of Oregon
18
              Honorable Trish M. Brown, Bankruptcy Judge, Presiding
19
20   Appearances:     Donald H. Grim, Esq. of Greene & Markley, P.C.
                      argued for Appellant Richard Dean Carter
21                    Sean E. Martin, Esq., Assistant United States
                      Attorney, argued for Appellee United States
22                    Department of Education
                      ______________________________
23
     Before: Clarkson2, Pappas and Jury, Bankruptcy Judges.
24
25
          1
26           This disposition is not appropriate for publication.
     Although it may be cited for whatever persuasive value it may have
27   (see Fed. R. App. P. 32.1), it has no precedential value. See 9th
     Cir. BAP Rule 8013-1.
28        2
             Hon. Scott C. Clarkson, United States Bankruptcy Judge for
     the Central District of California, sitting by designation.

                                       -1-
 1        This appeal arises from the bankruptcy court’s judgment
 2   denying Chapter 7 debtor and appellant Richard Carter’s (“Carter”
 3   or “Debtor”) request that his student loans, in the current amount
 4   of approximately $26,000.00, be discharged pursuant to 11 U.S.C.
 5   §523(a)(8).3
 6        The Debtor has a compelling personal story consisting of
 7   several decades of substance abuse, related crimes and
 8   punishments, the eventual recovery from that dark abyss, and his
 9   reentry as a productive member of mainstream society.     For the
10   past seven years, the Debtor has been steadily employed and
11   currently holds a position as a service station manager at a gas
12   station in the Portland, Oregon area.
13        Filing his chapter 7 petition on January 26, 2010, and
14   thereafter commencing his adversary proceeding, the Debtor
15   asserted that, based upon his current income and living expenses,
16   he was unable to pay his student loans and maintain a minimal
17   standard of living.   After trial, and with sympathetic
18   acknowledgment of the Debtor’s destructive past and remarkable
19   recovery, the bankruptcy court determined that the Debtor had a
20   current ability to repay his student loans under the government
21   administered Income Contingent Repayment Plan and at the same time
22   continue to maintain a minimal standard of living.   Thus, the
23   bankruptcy court concluded that the Debtor’s student loans could
24   not be discharged. For the reasons discussed below, we AFFIRM the
25   bankruptcy court’s judgment.
26
27
          3
             Absent contrary indication, all section and chapter
28   references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532.

                                     -2-
 1         I.   FACTS
 2              a.    Pre-Bankruptcy Events
 3         Carter is fifty years old and has no dependents.     In 1991,
 4   Carter graduated from ITT Technical Institute in Portland, Oregon
 5   with an Associate of Applied Science, Electronics Engineering
 6   Technology Degree, and in 1992, he received his Bachelor of
 7   Applied Science Degree in Automated Manufacturing Technology.
 8   Between 1989 and 1992, Carter originally financed his education
 9   through two student loans.    In April 2003, Carter consolidated
10   these student loans (the “Consolidated Loan”), which resulted in a
11   principal amount of $21,122.19, with an interest rate of 4.5%.
12   Prior to consolidating his student loans, Carter had made no
13   payments on either, and his student loans were in default.
14         Commencing before his education at ITT, Carter used and
15   became addicted to various illicit substances.     This use continued
16   until approximately January, 2004.      Carter also engaged in
17   criminal activities associated with his drug addiction, including
18   selling drugs.     As a result of those activities Carter was
19   arrested and imprisoned on many occasions.
20         From August 1992 to March 2003, Carter worked as an
21   electronics technician, and from March 1999 to 2004, Carter
22   obtained a second job as a field service technician.     From 1999 to
23   2004, he was earning between $10.00 and $15.00 per hour performing
24   field technical services.
25         In January 2004, Carter entered into a six month
26   ///
27   ///
28   ///

                                       -3-
 1   rehabilitation program,4 and in June 2004, completed his treatment
 2   and moved into the Oxford House.5
 3         After completing his treatment, Carter worked part-time at a
 4   furniture manufacturing company and in December 2004, commenced
 5   working for his present employer, WSCO Petroleum.   Clean and
 6   sober, Carter advanced from a part-time employee to a full-time
 7   employee, then to an assistant manager and finally became a
 8   service station manager.   Carter’s commute to work is
 9   approximately twenty miles each way.
10         The Trial record is clear that as a service station manager,
11   Carter receives $9.00 per hour, periodic bonuses based on
12   performance of his service station, vacation benefits, health
13   benefits, and overtime pay.    Carter’s monthly bonuses are based
14   upon unit sales of gasoline and cigarettes.   However, Carter is
15   also financially liable for any and all cash shortages, and if
16   inventory is short, it results in a reduction of his monthly
17   bonus.    Interestingly, any overtime (time in excess of forty hours
18   per week) that Carter or any of his employees work is deducted
19   from Carter’s monthly bonus.   As Carter describes the situation,
20   he basically pays himself to work overtime.
21         Beginning in 2003, Carter’s monthly payment on the
22   Consolidated Loan was $78.25 under the Income-Contingent Repayment
23   ///
24
25
           4
             The Volunteers of America Men’s Rehabilitation Center is a
26   publicly funded drug addiction treatment center.
27         5
             The Oxford House is a publicly funded, non-profit low-cost
     housing alternative for recovering alcoholics and drug addicts.
28   Carter stayed at the Oxford House until December 2008.

                                      -4-
 1   Plan (“ICRP”) program.6      Following the consolidation in April
 2   2003, Carter failed to make any payments on the Consolidated Loan
 3   and in September 2004, the Department of Education (“DOE”)
 4   declared his loan in default.      On December 14, 2005, Carter
 5   submitted to DOE an offer to settle the Consolidated Loan for
 6   $1,000.00, which was rejected, and on January 6, 2006, Carter
 7   offered to commence paying $25.00 per month on the Consolidated
 8   Loan.       He made a single payment of $25.00.   On July 18, 2006,
 9   Carter renewed his offer to settle the Consolidated Loan for
10   $1,000.00, which was also rejected.       No further payments on the
11   Consolidated Loan were made until June 15, 2009, when eight
12   consecutive monthly payments were made, each in the amount of
13   $230.00.7
14                  b.   Procedural History
15           On January 26, 2010, Carter filed a voluntary chapter 7
16   petition, and on May 5, 2010, Carter filed a complaint initiating
17   an adversary proceeding against DOE to determine the
18   dischargeability of the Consolidated Loan under § 523(a)(8) (the
19   “Complaint”).       Carter alleged that excepting the student loans
20   from discharge would impose an undue hardship on him.
21
22           6
             The Income Contingent Repayment (ICRP) Plan is designed to
     make repaying education loans easier for students who intend to
23   pursue jobs with lower salaries, such as careers in public
     service. It does this by pegging the monthly payments to the
24   borrower's income, family size, and total amount borrowed. The
     monthly payment amount is adjusted annually, based on changes in
25   annual income and family size. Income-contingent repayment is
     currently available only from the U.S. Department of Education.
26
             7
             While the parties’ stipulation (ER p. 13) states that
27   seven payments were made, a review of the record demonstrates that
     eight payments were actually made. Carter made monthly payments
28   in the amount of $230.00 from June 15, 2009 to January 1, 2010.

                                         -5-
 1           On June 9, 2010, DOE filed its answer (the “Answer”) which
 2   further contained a counterclaim against Carter, alleging that
 3   Carter is indebted on the Consolidated Loan in the principal
 4   amount of $20,866.12, plus interest of $4,915.80, for a total of
 5   $25,781.92 and interest continues to accrue at a daily rate of
 6   $2.57, and that the DOE had received $1,865.00 in payments on the
 7   loan.    DOE’s counterclaim further alleged that the Consolidated
 8   Loan was not dischargeable and non-discharge of Carter’s student
 9   loan would not create an undue hardship on Plaintiff.
10           On March 31, 2011, the bankruptcy court conducted trial,
11   taking testimony from Carter regarding, inter alia, his income and
12   expenses.    Carter testified that (1) his transportation costs had
13   increased, (2) his utilities had increased, (3) he has forgone
14   certain medical procedures because he does not have the available
15   funds, (4) his car insurance premium was $148.00 per month, (5) he
16   estimated that a reasonably reliable car would cost approximately
17   $346.00 per month, and (6) he anticipated a decrease in earnings
18   of approximately $100.00 to $200.00 per month because of slower
19   business at the station.    Also, Carter testified that he is in
20   line for a promotion to work at another store which is closer to
21   his home in The Dalles.
22           Carter testified regarding his current health condition that
23   he suffers from right foot tremor disorder, Hepatitis C, and
24   chronic fatigue syndrome.
25           The bankruptcy court also took testimony from Carter’s
26   witness, Clariner Boston.    Ms. Boston testified that, considering
27   Carter’s background, legal history, previous drug abuse, and
28   education, it would be “highly improbable” within a short amount

                                       -6-
 1   of time for him to obtain an alternative better and more lucrative
 2   position.   Ms. Boston testified that “given everything that we
 3   know about his background, that considering his own disposition,
 4   and given the competitiveness out there of people looking for
 5   jobs, I think it’s great that he’s doing everything that he can to
 6   hold onto his position because if he lost it, he even in The
 7   Dalles would have to stand in line, and I don’t know if he could
 8   get something that would be as lucrative as this has been for him,
 9   and that’s even in a limited way.”
10        The bankruptcy court further took testimony from DOE’s
11   witness, Sheryl Davis, who testified that based on Carter’s
12   Adjusted Gross Income of $35,500.00, his monthly payment on the
13   Consolidated Loan under the ICRP would be $203.98 per month.
14        The bankruptcy court, instructed by the Ninth Circuit case
15   United Aid Funds v. Pena (In re Pena), 155 F.3d 1108, 110 (9th
16   Cir. 1998), identified and applied the three factors set forth
17   under the Brunner test to determine “undue hardship” under
18   § 523(a)(8).   Brunner v. N.Y. State Higher Educ. Services, Corp.
19   (In re Brunner), 831 F.2d 396 (2d Cir. 1987).   The bankruptcy
20   court made the following findings with respect to the first prong
21   of the Brunner test:
22         So I – so I’m going to find that [Carter] can make
           payments under the income-contingent repayment plans,
23         so he doesn’t meet the first criteria under the Brunner
           test...I think he does have an ability to – a current
24         ability to pay under the ICRP, so I’m finding against
           the debtor on the first prong of the Brunner test. I
25         know it’s tight, but I mean the budget that he filed
           with the Bankruptcy Court showed that he could make
26         $230 a month payments.
27   Transcript, 31 March 2011, pages 98-99.
28        With respect to the second prong of the Brunner test, the

                                     -7-
 1   bankruptcy court found, “And I don’t find that in the future – I
 2   mean, if he has that ability to for the next 15 years, he has the
 3   ability to pay, so I don’t think – I understand it’s going to be
 4   difficult, and I understand what I’m telling you.”     Id. at 99-100.
 5        As to the third prong of the Brunner test, the bankruptcy
 6   court found, “With respect to good faith, though, I think he
 7   probably did make good faith efforts to pay once he started making
 8   payments.   I can’t find that he didn’t, so I can’t find with
 9   respect to the third prong of the Brunner test.”      Id. at 100.
10        The bankruptcy court found that Carter could not satisfy all
11   three prongs of the Brunner test.      Apparently addressing DOE’s
12   counsel, the bankruptcy court said, “[Y]ou win on the first two,
13   and (apparently addressing Carter’s counsel) you have to win on
14   all three in order to – Mr. Greene would have had to win on all
15   three.”   Id. at 100.   Accordingly, on April 12, 2011, the
16   bankruptcy court entered a judgment in favor of DOE (the
17   “Judgment”).   At the same time, the bankruptcy court reinstated
18   Carter’s loan to a non default status and re-enrolled Carter into
19   the ICRP program.8
20        Carter timely filed this appeal asserting that the bankruptcy
21   court erred in (1) holding that the Consolidated Loan did not
22   impose an undue hardship, and (2) not performing “an
23
          8
             The final Judgment provides that (1) pursuant to 11 U.S.C.
24   § 523(a)(8) the student loan owed by Carter to the DOE was not
     discharged; (2) as of March 31, 2011, Carter’s loan balance was
25   $20,866.12 in principal, plus $5,742.22 in interest; (3) the DOE
     shall deem Carter not to be in default, recall his loan, and re-
26   enroll him in the ICRP program; (4) If Carter’s loan remains in
     good standing, including deferrals and forbearances all debt
27   remaining when Carter turns 65 years of age shall be considered
     discharged in this bankruptcy proceeding pursuant to Title 11; and
28   (5) the parties shall bear their own costs and fees. ER p. 261.

                                      -8-
 1   individualized analysis” to determine Carter’s necessary expenses,
 2   but instead applying a mechanical test relying on the National
 3   Poverty Guidelines and DOE’s ICRP.
 4        II.    JURISDICTION
 5        The bankruptcy court had jurisdiction via 28 U.S.C. § 1334
 6   and § 157(b)(1) and (b)(2)(I), and we do so under 28 U.S.C.
 7   § 158(c).
 8        III. ISSUES
 9        Whether the bankruptcy court erred in:
10        1.     its findings regarding undue hardship; and
11        2.     in relying on the National Poverty Guidelines and the
12               IRCP under the first prong of the Brunner test.
13        IV.    STANDARDS OF REVIEW
14        We review the bankruptcy court’s finding of fact for clear
15   error. In re Pena, 155 F.3d at 1110.      “Where there are two
16   permissible views of evidence, the factfinder’s choice between
17   them cannot be clearly erroneous.”      Anderson v. City of Bessemer
18   City, N.C., 470 U.S. 564 (1985).     We review de novo the bankruptcy
19   court’s application of the legal standard to decide whether a
20   student loan debt is dischargeable as an undue hardship.      Pa.
21   Higher Educ. Assistance Agency v. Birrane (In re Birrane),
22   287 B.R. 490 (9th Cir. BAP 2002).
23        V.     DISCUSSION
24               a.   Carter’s Request for Judicial Notice
25        Carter requests that we take judicial notice of the IRS
26   National Standards for a single person living in Hood River,
27   Oregon.    DOE objects to Carter’s request for judicial notice
28   because this evidence was not brought before the bankruptcy court.

                                       -9-
 1        Save in unusual circumstances, an appellate court can only
 2   consider the record on appeal.    See Barilla v. Ervin, 886 F.2d
 3   1514, 1521 n.7 (9th Cir. 1989).    There are exceptions to the
 4   general rule.   For instance, we may correct inadvertent omissions
 5   from the record (See Fed. R. App P. 10(e)(2)(C)), and we may take
 6   judicial notice (See Fed. R. Evid. 201(f); EEOC v. Ratliff,
 7   906 F.2d 1314, 1318 n.6 (9th Cir. 1990)).
 8        We must first determine why Carter requests that we take
 9   judicial notice of the IRS National Standards for a single person
10   living in Hood River, Oregon.    It appears that Carter wants us to
11   notice that his living expenses are lower than the IRS National
12   Standards.   From this observation, Carter wants us to determine
13   that the bankruptcy court inappropriately analyzed his income and
14   expense.   He would ask that we find that his living expenses are
15   reasonable (that they are approximately $66.00 a month less than
16   the local National Standards, not including his medical expenses
17   and telephone and internet access cost) and that his living
18   expenses are simply more than his income.   Therefore, he argues
19   that the bankruptcy court incorrectly determined that he could
20   maintain a minimal standard of living and repay the student loans.
21        We may not take Carter's request to take judicial notice for
22   purposes of reviewing the bankruptcy court's factual findings for
23   clear error, especially since this information was not before the
24   bankruptcy court.   It is inappropriate to use judicial notice to
25   cure failure to present relevant evidence to trial courts.    Yagman
26   v. Republic Ins. Co., 987 F.2d 622, 626 fn. 3 (9th Cir. 1993).
27   Therefore, Carter’s request for judicial notice is DENIED.
28

                                       -10-
 1        b.   Dischargeability of student loans under § 523(a)(8)
 2        A debtor may not discharge government-funded or guaranteed
 3   student loans “unless excepting such debt from discharge . . .
 4   will impose an undue hardship on the debtor and the debtor’s
 5   dependents[,]”   § 523(a)(8), which is further explained in
 6   In re Nys:
 7              Congress’ main purpose in enacting the bankruptcy
           code was to ensure insolvent debtors a fresh start by
 8         discharging prepetition debts. However, under
           § 523(a)(8), there is a presumption that educational
 9         loans extended by or with the aid of a governmental
           unit or nonprofit institution are nondischargeable in
10         bankruptcy in the absence of undue hardship to the
           debtor or the debtor’s dependents. This law furthers
11         congressional policy to ensure that such loans,
           extended solely on the basis of the student’s future
12         earnings potential, cannot be discharged by recent
           graduates who then pocket all of the future benefits
13         derived from their education.
14              The Debtor bears the burden to prove by a
           preponderance of the evidence that he or she is
15         entitled to a discharge of the student loan.
16              Neither the code nor the legislative history for
           § 523(a)(8) defines “undue hardship,” but case law has
17         held that it is something more than “garden-variety
           hardship” Pena, 155 F.3d at 111. Cases involving “real
18         and sustained” hardship may merit discharge.
19   Nys v. Educ. Credit Mgmt. Corp. (In re Nys), 308 B.R. 436 (9th
20   Cir. BAP 2004) (some citations omitted).
21        The Brunner Test
22        The Ninth Circuit has adopted a three-part test to determine
23   “undue hardship”:
24                  First, the debtor must establish “that she
               cannot maintain, based on current income and
25             expenses, a ‘minimal’ standard of living for
               herself and her dependants if forced to repay
26             the loans. . . .”
27                  Second, the debtor must show “that
               additional circumstances exist indicating that
28             this state of affairs is likely to persist for a

                                     -11-
 1               significant portion of the repayment period of
                 the student loans. . . .”
 2
                      The   third prong requires “that the debtor
 3               has made   a good faith effort to repay the loan
                 . . . .”   Pena, 155 F.3d at 1111 (quoting
 4               Brunner,   831 F.2d at 396).
 5                    Debtor must satisfy all three parts of the
                 Brunner test before her student loans can be
 6               discharged. See Saxman v. Educ. Credit Mgmt.
                 Corp. (In re Saxman), 325 F.3d 1168, 1173 (9th
 7               Cir. 2003). Failure to prove any of the three
                 prongs will defeat a debtor’s case.
 8
 9   In re Nys, 308 B.R. at 441-42.
10                    i.     Minimal Standard of Living
11        The first prong of the Brunner test requires a debtor to
12   prove “that the debtor cannot maintain, based on current income
13   and expenses, a ‘minimal’ standard of living for herself and her
14   dependants if forced to repay the loans.”      In re Brunner, 831 F.2d
15   at 396.
16            To meet this requirement, the debtor must demonstrate
              more than simply tight finances. In re Nascimento,
17            241 B.R. 440, 445 (9th Cir. BAP 1999). “In defining
              undue hardship, courts require more than temporary
18            financial adversity, but typically stop short of utter
              hopelessness.” Id.
19
20   Rifino v. United States (In re Rifino), 245 F.3d 1083 (9th Cir.
21   2001).
22        The “minimal standard of living” must be determined “in light
23   of the particular facts of each case.”      Cota v. U.S. Dep’t of
24   Educ. (In re Cota), 298 B.R. 408, 415 (Bankr. D. Ariz. 2003)
25   (quoting In re Afflitto, 273 B.R. 162, 170 (Bankr. W.D. Tenn.
26   2001)).    We have held that the IRS standards for living may be
27   considered as evidence in evaluating the first prong of the
28   Brunner test, but it should not be the sole measure of what is

                                        -12-
 1   necessary to maintain a minimal standard of living.   Educ. Credit
 2   Mgmt. Corp. v. Howe (In re Howe), 319 B.R. 886, 892 (9th Cir. BAP
 3   2004).   “The method for calculating a debtor’s average monthly
 4   expenses is a matter properly left to the discretion of the
 5   bankruptcy court.”   In re Pena, 155 F.3d at 1112.
 6        Carter argues that the bankruptcy court committed error
 7   because it did not perform an individualized analysis of his
 8   income with a mechanical application of the Poverty Guidelines and
 9   the ICRP.   Specifically Carter argues the bankruptcy court erred
10   in finding that because his income was above the National Poverty
11   Guidelines he qualified for the ICRP, and because he qualified for
12   the ICRP, he did not meet the first prong under the Brunner test.9
13   However, a review of the record indicates that the bankruptcy
14   court was given significant evidence to consider and evaluate the
15   first prong of the Brunner test.
16        Further, Carter argues that the bankruptcy court failed to
17   perform an individualized analysis of his necessary expenses.
18   However, the record reflects that the bankruptcy court received
19   considerable evidence from Carter regarding his income and
20   expenses.   Prior to trial, Carter and DOE stipulated that Carter’s
21   average monthly net income on his Bankruptcy Schedule I, after
22   payroll deductions, was approximately $2,357.00, and his necessary
23   expenses, as listed on Schedule J, were $2,361.00 per month.
24   (Carter’s Schedule J included a $230 monthly payment on the
25
26        9
             Carter argues that the bankruptcy court held that because
     Carter’s income was above the National Poverty Guidelines and he
27   qualified for reduced payments under the ICRP, he may not
     discharge his student loan. However, Carter’s argument is not
28   supported by the record.

                                     -13-
 1   Consolidated Loan.)   Prior to trial, the parties also stipulated
 2   that there had been no significant changes in Carter’s financial
 3   situation since the bankruptcy petition date.
 4        At trial, the bankruptcy court took evidence consisting of
 5   (1) Carter’s Schedules I and J, (2) Carter’s post petition changes
 6   to his income and expenses, (3) the testimony of Ms. Boston
 7   regarding Carter’s ability to find other employment, and (4) the
 8   testimony of Ms. Davis regarding Carter’s payment on the
 9   Consolidated Loan under the ICRP.   The bankruptcy court’s ruling
10   with respect to the first prong references Carter’s schedules
11   filed in connection with his bankruptcy: “. . . the budget that
12   [Carter] filed with the Bankruptcy Court showed that he could make
13   $230 a month payments.”   Transcript, 31 March 2011, page 99.   Thus
14   the record reflects that the bankruptcy court did not mechanically
15   apply the Poverty Guidelines and the ICRP, but conducted an
16   individualized analysis of Carter’s income and expenses.
17        We conclude, therefore, that the bankruptcy court did not
18   commit clear error in finding that Carter failed to meet the first
19   prong of the Brunner test.10
20                  ii.    Persistent Additional Circumstances
21        The second prong of the Brunner test requires a debtor to
22   prove “that additional circumstances exist indicating that this
23   state of affairs is likely to persist for a significant portion of
24   the repayment period of the student loans.”   In re Brunner,
25
          10
             The bankruptcy court was not technically required to
26   examine the second or third prongs of the Brunner test. See
     In re Birrane, 287 B.R. 490, 496 (9th Cir. BAP 2002) (citing
27   In re Roberson, 999 F.2d 1132, 1135 (7th Cir. 1993) (Only if the
     Debtor meets the first prong of the Brunner test should a court
28   examine the other two Brunner requirements.).

                                      -14-
 1   831 F.2d at 396.   The debtor must provide evidence that he or she
 2   will be unable to repay for several years, because of psychiatric
 3   problems, lack of useable job skills, severely limited education,
 4   physical problems, or any other circumstances which will
 5   persistently interfere with the debtor’s ability to repay.”
 6   In re Birrane, 287 B.R. at 497.    See, also, In re Nys, 308 B.R. at
 7   444-45.
 8        We have held, based upon prior case law, that “additional
 9   circumstances” may include the following nonexhaustive list of
10   factors: (1) serious mental or physical disability of the debtor
11   or the debtor’s dependents which prevents employment or
12   advancement; (2) the debtor’s obligations to care for dependents;
13   (3) lack of, or severely limited, education; (4) poor quality of
14   education; (5) lack of usable or marketable job skills;
15   (6) underemployment; (7) maximized income potential in the chosen
16   education field, and no other more lucrative job skills;
17   (8) limited number of years remaining in work life to allow
18   payment of the loan; (9) age or other factors that prevent
19   retraining or relocation as a means for repayment of the loan;
20   (10) lack of assets, whether or not exempt, which could be used to
21   pay the loan; (11) potentially increasing expenses that outweigh
22   any potential appreciation in the value of the debtor’s assets
23   and/or likely increases in the debtor’s income; and (12) lack of
24   better financial options.    In re Nys, 308 B.R. at 446.
25        Both Carter and DOE argue that they prevailed on the second
26   prong of the Brunner test.    Carter’s view that he prevailed
27   resulted in his failure to specifically address the second prong
28   in his appeal brief.   However, a careful review of the record is

                                       -15-
 1   consistant with DOE’s view that the bankruptcy court found against
 2   Carter on the second prong.
 3        The hearing transcript clearly indicates that the bankruptcy
 4   court found against Carter as to the second prong.   The bankruptcy
 5   court stated, “. . . I mean if he has that ability to pay for the
 6   next 15 years, he has the ability to pay, so I don’t think. . . .”
 7   Transcript, 31 March 2011, page 99.    Here, the bankruptcy court
 8   found that Carter had the ability to pay his student loans for the
 9   next 15 years and thus found against Carter under the second prong
10   of the Brunner test.
11        The bankruptcy court took evidence regarding (1) Carter’s age
12   and education, (2) his previous drug and legal issues,
13   (3) Carter’s previous and current employment, (4) his growth and
14   responsibilities at his current job, (5) his current physical
15   condition, and (6) his prospects of finding another job near the
16   Portland area.   Carter did not provide any evidence that his
17   current economic situation would change in the next several years
18   which would prevent him from repaying his student loans.   On the
19   contrary, Carter presented evidence that he was next in line for a
20   promotion which would result in some pay increase and a potential
21   decrease in transportation expenses.   Thus, the record indicates
22   that Carter’s current state of financial affairs (current ability
23   to repay his student loan while maintaining a minimal standard of
24   living) would persist for a significant portion of the repayment
25   period.   We conclude that the bankruptcy court did not commit
26   clear error in finding that Carter did not meet the second prong
27   of the Brunner test.
28

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 1                       iii. Good Faith Effort to Repay
 2           The final prong of the Brunner test requires a debtor to
 3   prove “that the debtor has made a good faith effort to repay the
 4   loans.”       In re Brunner, 831 F.2d 396.    Two common factors are
 5   considered in evaluating good faith.         In re Birrane, 287 B.R. at
 6   499-500.      Those are the debtor’s efforts (1) to obtain employment,
 7   maximize income, and minimize expenses, and (2) to negotiate a
 8   repayment plan.      Id.    The bankruptcy court found that Carter met
 9   his burden of the third prong of the Brunner test, and because
10   Carter does not dispute the bankruptcy court’s findings in his
11   favor regarding good faith, we will not disturb them.
12           VI.    CONCLUSION
13           The bankruptcy court’s decision is amply supported by the
14   record.       Applying the Brunner test, the bankruptcy court did not
15   commit clear error in finding that (1) Carter could maintain a
16   minimal standard of living and repay the consolidated loan, and
17   (2) Carter’s financial situation was likely to continue for a
18   substantial portion of the repayment period.        Carter was unable to
19   establish “undue hardship” within the meaning of § 523(a)(8) and
20   was not entitled to a bankruptcy discharge of the Consolidated
21   Loan.
22           For the reasons set forth above, we AFFIRM.
23
24
25
26
27
28

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