MEMORANDUM OF DECISION
ZOBEL, District Judge.
Robert E. Murphy appeals from the bankruptcy court's judgment that his student loan debt is nondischargeable under 11 U.S.C. § 523(a)(8)(A)(i). The judgment is AFFIRMED.
The basic facts are undisputed. Murphy is 63 years old. He is married and lives in good health in Duxbury, Massachusetts. He has been unemployed since 2002. He last worked as president of a corporation, but in 2002, the corporation was sold, its operations were moved overseas, and Murphy's employment was terminated. He has looked for work, without success, since then. He attributes his prolonged unemployment to the shrinking American manufacturing base, his age, his overqualification for some non-executive positions, and the stigma of prolonged unemployment itself.
Murphy financed — at least in part — the college education of his three now-grown children. He took out twelve loans between 2001 and 2007 in the total amount of $220,765. The loans have since been consolidated and are all held by defendant Educational Credit Management Corporation ("ECMC"). The current balance is approximately $242,697.90. Murphy's children are not responsible for repaying the loans.
Murphy filed an adversary proceeding in the bankruptcy court seeking a discharge
II. Legal Standard
A debtor may not discharge an educational loan "unless excepting such debt from discharge ... would impose an undue hardship on the debtor and the debtor's dependants." 11 U.S.C. § 523(a)(8). The debtor must prove undue hardship by a preponderance of the evidence. Grogan v. Garner, 498 U.S. 279, 286, 111 S.Ct. 654, 112 L.Ed.2d 755 (1991). The Bankruptcy Code does not define "undue hardship," and courts apply one of two tests to determine what constitutes one: the "totality of the circumstances" test or the Brunner test. See Brunner v. N.Y. State Higher Educ. Servs. Corp., 831 F.2d 395 (2d Cir. 1987) (per curiam). The differences between the two tests are "modest," Bronsdon v. Educ. Credit Mgmt. Corp. (In re Bronsdon), 435 B.R. 791, 798 (1st Cir. BAP 2010), and I do not explore them here.
The bankruptcy court applied the "totality of the circumstances" test, and so do I.
Lorenz v. Am. Educ. Servs./Pa. Higher Educ. Assistance Agency (In re Lorenz), 337 B.R. 423, 430 (1st Cir. BAP 2006). I
Id. (quoting Hicks v. Educ. Credit Mgmt. Corp. (In re Hicks), 331 B.R. 18, 31 (Bankr.D.Mass.2005)). The test boils down to one question: "Can the debtor now, and in the foreseeable future, maintain a reasonable, minimal standard of living for the debtor and the debtor's dependents and still afford to make payments on the debtor's student loans?" In re Hicks, 331 B.R. at 31.
This inquiry poses a mixed question of fact and law. In re Bronsdon, 435 B.R. at 796. I review the bankruptcy court's findings of fact for clear error and its legal conclusion — here, whether Murphy
Murphy has a steep hill to climb, not only because of the standard of review, but because of the legal substance. Congress intended that "the general purpose of the Bankruptcy Code to give honest debtors a fresh start does not automatically apply to student loan debtors." Nash v. Conn. Student Loan Found., 446 F.3d 188, 191 (1st Cir.2006). Section 523(a)(8) prioritizes the continued financial integrity of the federal student loan programs over the debtor's ability to make a fresh start. Id. (citing DelBonis, 72 F.3d at 937). For this reason, discharges for undue burden are granted in only "truly exceptional circumstances." DelBonis, 72 F.3d at 927.
At the outset, I clarify two issues. First, the parties disagree about the breadth and depth of Murphy's job search. Murphy states that he has "earnestly" looked for work "at all levels from positions of president to accountant," and has also applied, unsuccessfully, for a job as a chauffeur. Appellant's Br. at 31. He further notes that the bankruptcy court found his trial testimony "completely credible." Id. ECMC counters that Murphy has focused too narrowly on executive level positions and therefore has not endeavored to maximize his income. Appellee's Br. at 7 (quoting O'Hearn v. Educ. Credit Mgmt. Corp. (In re O'Hearn), 339 F.3d 559, 566 (7th Cir.2003) ("[I]t is not uncommon for individuals to take jobs not to their liking in order to pay off their student loans....")). In its memorandum, the bankruptcy court stated that Murphy "has looked far and wide for employment, using several employment agents and services."
Second, the parties dispute the import of Murphy's failure to participate in the William D. Ford Direct Loan Program's income contingent repayment plan ("ICRP") and thereby reduce or eliminate his monthly payments.
The ICRP is one of many "circumstances" courts must consider, but it is not dispositive as to undue hardship. Ayele v. Educ. Credit Mgmt. Corp., 468 B.R. 24, 32 (Bankr.D.Mass.2012). Sometimes, participating in an ICRP will leave a debtor worse off, because
In re Bronsdon, 435 B.R. at 802 (quoting In re Booth, 410 B.R. 672, 676 (Bankr. E.D.Wash.2009)). An ICRP may be especially detrimental where one expects no significant long-term improvement in a debtor's financial situation. Id.; see Denittis v. Educ. Credit Mgmt. Corp., 362 B.R. 57, 64-65 (Bankr.D.Mass.2007). Given the relative unlikelihood of long-term improvement in Murphy's case, and the bankruptcy court's view that it was not dispositive, I do not place great emphasis on Murphy's failure to explore the ICRP.
Turning to the other factors, there is no doubt that Murphy presently cannot pay back a significant part of the loan. His Bankruptcy Schedule J showed that Murphy and his wife operate at a monthly net loss of $3,854. Appellant's Add. at 93. In 2010 and 2011, Murphy and his wife earned $13,220 and $13,224, respectively, consisting solely of his wife's wages as a teacher's aide. Id. 95-98. His house is under water. Id. at 88 (showing a home valued at $500,000 with a secured claim of $709,677). He testified at trial that foreclosure proceedings are underway. Trial Transcript ("Tr.") at 22. In November 2002, he had an Individual Retirement Account valued at approximately $250,000, Appellant's Add. at 92, but he liquidated it to cover expenses. Tr. at 40.
It is clear Murphy is in financial straits, but I agree with the bankruptcy court that his prolonged unemployment does not support a discharge. Although Murphy's "present income is insufficient to permit [him] to pay [the] student loans and still maintain a minimal standard of living, [he] has not established that [his] prospects for increasing [his] future income are so bleak as to warrant a discharge of the student loans." Burkhead v. United States (In re Burkhead), 304 B.R. 560, 566 (Bankr. D.Mass.2004). True enough, Murphy is unlikely to make significant progress on the loans in the short run. But Murphy has a master's degree and has held high-earning jobs in the past. Tr. at 15, 53-54. He is in his early sixties and is in good health. Id. at 14, 24. He is financially unburdened by his now-grown children. Id. at 12 (confirming that his children are "self-supporting"). In short, he has a significant period of time remaining during which he can work, and the door on his ability to use that time successfully has by no means closed. Murphy's situation is trying, but it does not present "truly exceptional circumstances." DelBonis, 72 F.3d at 927.
As the Brunner court explained, a student loan borrower strikes a bargain with
The judgment of the bankruptcy court is AFFIRMED.