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Barker v. Educational Credit Management Corporation

March 18, 2008


The opinion of the court was delivered by: Reagan, District Judge


This case comes before the District Court on Appellant Hal Barker's appeal of the Bankruptcy Court for the Southern District of Illinois's Order denying his claim for discharge of educational loans. For the reasons explained below, the Court AFFIRMS the bankruptcy court's order.

A. Introduction and Procedural History

On August 6, 2002, Barker filed a petition for Chapter 13 bankruptcy relief (Case No. 02-41788, Doc. 1). Barker's Chapter 13 petition was ultimately terminated by a final decree entered on February 16, 2005 (Case No. 02-41788, Doc. 31). On March 14, 2006, Barker filed a motion to reopen his Chapter 13 proceedings to file an adversarial complaint (Case No. 02-41788, Doc. 37), which was granted on April 3, 2006 (Case No. 02-41788, Doc. 38). On April 25, 2006, Barker brought an adversary proceeding seeking to discharge government-guaranteed educational loans owed to various parties, including Educational Credit Management Corporation (ECMC), a not-for-profit organization that administers guaranteed student loans (Case No. 06-04089, Doc. 1).

Barker appeared pro se in the adversarial proceedings and filed his amended complaint on July 24, 2006, disputing the amount of his student loans and alleging that his student loans should be discharged on the grounds of undue hardship pursuant to 11 U.S.C. § 523(a)(8) (Case No. 06-04089, Doc. 31). On June 8, 2006, ECMC filed a motion to substitute defendant, asserting that it held the student loans in issue and was the proper party in interest (Case No. 06-04089, Doc. 17). On June 13, 2006, the bankruptcy court set a hearing and ordered ECMC to submit a report on the history of the loans (Case No. 06-04089, Doc. 21). ECMC submitted the affidavit of Kelly Prettner establishing the history and amount of the loans on July 7, 2006 (Case No. 06-04089, Doc 27 & 28). In its September 12, 2006 ruling, the bankruptcy court accepted as true the affidavit of Kelly Prettner, Attorney for ECMC, and ruled that ECMC was the proper party in interest and had verified the proper amount of the loans as $72,012.28. As a result, the bankruptcy court struck these issues from Barker's amended complaint (Case No. 06-04089, Docs. 28 & 42; see also Doc. 21-4, p. 4).

On November 15, 2006, Barker filed a brief in support of his amended complaint, accompanied by over 200 documents (Case No. 06-04089, Doc. 52).*fn1 On January 30, 2007, a hearing was held before the Honorable Kenneth J. Meyers in the U.S. Bankruptcy Court for the Southern District of Illinois. After considering the evidence and arguments of Barker and ECMC, the bankruptcy court entered an order on February 13, 2007 denying Barker's claim for discharge of student loans (Case No. 06-04089, Doc. 71).

The bankruptcy court made several factual findings in support of its decision. (Case No. 06-04089, Doc. 71). The bankruptcy court found that Barker is a 38-year-old healthy man not suffering from any medical infirmity that would prohibit him from obtaining gainful employment. The court also noted that Barker holds a B.A. in Christian Ministries, a Masters Degree in Theology and Philosophy, and a Masters Degree in Counseling from Lincoln Christian College and Seminary. Between 1996 and 2005, Barker was employed and earned between $30,000 and $40,000 each year, except for a brief period of unemployment in 2000 where he only earned $13,720. Barker is currently unemployed and residing with a friend. Additionally, Barker is divorced and has four sons, ages 9, 12, 15, and 16. Upon reemployment, Barker will be required to provide child support for his four children. The bankruptcy court also found that Barker owes $72,012.28 on various student loans, each of the type described in 11 U.S.C. § 523(a)(8). The bankruptcy court further noted that Barker had requested several forbearances and deferments and had made only a handful of payments on his student loans.

The bankruptcy court applied the three-pronged Brunner test, established by the Second Circuit and adopted by the Seventh Circuit, to determine whether Barker had established that his student loans presented an undue hardship. Matter of Roberson,999 F.2d 1132 (7th Cir. 1993) (adopting Brunner v. New York State Higher Education Services Corp.,831 F.2d 395 (2d Cir. 1987)). With regard to the first prong of the Brunner test, the bankruptcy court found that Barker did not demonstrate that his temporary unemployment and financial strain would prevent him from maintaining a minimal standard of living if forced to repay the loans. With regard to the second prong of the Brunner test, the bankruptcy court found that Barker's age, education, past employment history, health, and other financial obligations did not indicate that his state of financial affairs would likely persist for a substantial portion of the repayment period. Because the bankruptcy court found that Barker failed to meet his burden of establishing the first two prongs of the Brunner test, the court made no analysis of the third prong (whether Barker made good-faith efforts to repay the loans).

On March 28, 2007, Barker filed a thirty-one page notice of appeal in this District Court (Doc. 1). Barker challenges the bankruptcy court's determination of the amount of his student loans and its finding that the student loans could not be discharged because Barker failed to establish an "undue hardship." In response, ECMC disputes whether documents attached to Barker's appellate brief are properly before this Court for consideration on appeal and has filed a motion to strike (Docs. 19 & 24). The Court, having fully considered the record and the briefs submitted by both parties, AFFIRMS the decision below.

B. Scope of the Record on Appeal

On December 14, 2007, ECMC filed a motion to strike portions Barker's brief on the grounds that Barker's exhibits were not part of the record below (Doc. 19).*fn2 On December 27, 2007, Barker filed a motion in opposition to ECMC's motion to strike (Doc. 24), a military document Barker acknowledges was not before the bankruptcy court (Doc. 25), and a designation of the record on review (Doc. 27). Barker maintains that the exhibits attached to his brief were considered by the bankruptcy court and asks this Court to consider these exhibits along with additional exhibits that were not before the bankruptcy court.

It is a well-recognized principle in the Seventh Circuit that "the Court does have a duty to 'take appropriate measures to permit the adjudication of pro se claims on the merits, rather than to order their dismissal on technical grounds." In re Crossen, 333 B.R. 794, 798 (Bankr. N.D. Ill. 2005). Pro se litigants are "entitled to have [their] filings construed more liberally than papers which are drafted by attorneys, although this does not change the substantive law governing the rights of the parties, merely the court's expectations concerning a pro se litigant's ability to comply with the court's procedural requirements." In re Loubser, 2006 WL 219059, *1 (Bankr. N.D. Ind. July 31, 2006) (citing Kincaid v. Vail,969 F.2d 594, 598 (7th Cir. 1992)); see also Estelle v. Gamble,429 U.S. 91, 106 (1976); Anderson v. Hardman, 241 F.3d 554, 545 (7th Cir. 2001).

An adversary proceeding in bankruptcy presumes and in large measure relies upon the file in the underlying case. Berge,37 B.R. at 708.As reflected in both the Federal Appellate Rules and the Bankruptcy Rules,considerations of judicial impartiality dictate allowing the appellant greater latitude and broad discretion in designating the record on appeal. Id. As a result,"[a] reviewing court should have before it 'all documents and evidence considered by the bankruptcy judge in reaching his decision.'" Id. at 707 (quoting In Re Food Fair, Inc.,15 B.R. 569, 572 (Bankr. S.D.N.Y. 1981)).

Barker's 31-page notice of appeal fully sets forth the issues Barker raises on appeal and designates exhibits B1-B227 (Doc. 1). Documents specified by Barker within his notice of appeal can properly be considered a designation of record by a pro se litigant within the spirit of Bankruptcy Rule 8006 (see Doc. 17). Barker filed each of these exhibits with the bankruptcy court on November 15, 2006 in a pre-trial brief supporting his amended complaint (Case No. 06-04089, Doc. 52). While it is true that Barker did not move to admit any of these exhibits into evidence during trial ...

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