Long v. Educ.Credit Mgmt. Corp. (In re Long)

Opinion

 [*551]  SMITH, Circuit Judge.

Educational Credit Management Corporation ("ECMC") appeals the Bankruptcy Appellate Panel's ("BAP") decision affirming the Bankruptcy Court's discharge of Nanci Long's student loan debt. This case requires us to address the undue hardship provision found in 11 U.S.C. § 523 (a)(8)(B). ECMC argues that the Bankruptcy Court erred in its determination that repayment of the debt would impose an "undue hardship" on appellee. ECMC also contends that the BAP relied on an incorrect review standard to reach its decision. We reverse and remand.

Background

Appellee, Nanci Long, is a thirty-nine-year old, single-mother. Appellee matriculated through Northwestern College of Chiropractic. She financed her education there, in part, through substantial student loans, which are the subject of this case. In 1987 she passed her state-board examination. Until 1990 she worked as a chiropractor in various clinics. Appellee owned and operated a successful chiropractic [**2]  practice from 1990 until 1993. At some point in 1993, appellee began to experience extreme fatigue, depression, and diminution of her mental faculties. These symptoms increasingly affected her work, causing a substantial drop in her clientele. In 1995, appellee terminated her chiropractic practice altogether, citing an inability to handle life changes. She continued in a downward economic and emotional spiral. ¹ At one point, she attempted suicide. Fortunately, in 1997, appellee obtained appropriate professional help and has begun a recovery process. She is now gainfully employed and is pursuing an additional college degree.

According to appellee, her symptoms currently include "severe, short-term memory loss," persistent ache, dramatic weight gain, and anxiety about being in public places. In order to treat her condition, appellee takes various prescription drugs ² and sleeps in excess of twelve hours per day. ³ The Bankruptcy Court found that appellee's [**3]  medical condition will persist into the future and will interfere with her future earning potential.

Appellee currently works (as a laboratory manager at a community college) nine months of the year, for approximately thirty-two hours per week. She is paid $ 12.59 per hour and earns approximately $ 1,163 per month. Appellee's monthly wage covers all of her existing expenses. She currently resides in her parents' home and pays them $ 500 to $ 600 per month. This  [*552]  amount-in addition to the subsidies her parents provide-covers her and her ten-year old child's rent, utilities, car payment, car insurance, health insurance, cellular phone bill, child care, and food. Appellee's additional monthly expenses include approximately [**4]  $ 50 for personal expenses, $ 100 for entertainment and dining-out, and $ 100 to $ 275 for gasoline. She also pays $ 80 per month towards her child's private-school tuition. Lastly, appellee covers her tuition costs-related to her pursuit of a four-year degree-which vary depending on the particular course, credits, and college. ⁴

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