Contributed by Doron P. Kenter.
It’s that time of year – Hard Knocks is winding down, the Manning brothers are selling cars on local television, Jerry Jones is brimming with confidence, New Yorkers are calling for Tom Coughlin’s head (“It’s September 4 and he doesn’t have a single regular season win!”), and Tim Tebow is as handsome as ever. You guessed it – at long last, it’s football season. With “real football” kicking off tonight, we at the Bankruptcy Blog must confess our weakness for that blessing/curse that has been the bane of post-summer workplace productivity in America – fantasy football.
Yes, fantasy football. We all know that fantasy football is a welcome diversion from the increasingly shorter days, and has helped so many people to learn what an ACL is and why tearing it is, for some reason, a bad thing (unless, of course, you have that team’s backup running back). It has provided fodder for a reasonably successful cable television program and gives us a reason to watch the Jacksonville Jaguars. (In fact, we at the Bankruptcy Blog held our 20-team fantasy draft last night, and this blogger is pleased to report that he is abundantly confident in Aaron Rodgers’ chances to put up serious numbers this year). But what you may not know is that fantasy football can also help debtors to obtain a discharge of their student loan debt…at least in one case.
In Fields v. Educational Credit Management Corp. (In re Fields), Joe Willie Fields (not to be confused with Joe Willie Namath) filed a voluntary bankruptcy petition under chapter 7 of the Bankruptcy Code. After commencing the chapter 7 case, Fields (no pun intended) commenced an adversary proceeding against the defendant, ECMC, pursuant to which he sought a determination that $115,000 of student loan debt owed by Fields to ECMC was dischargeable pursuant to section 523(a)(8) of the Bankruptcy Code.
As many of us are aware, student loan debt is not ordinarily discharged in bankruptcy. However, if a debtor can show that excepting the student loan debt from the discharge will cause undue hardship to the debtor (and her dependents, if applicable), the court may determine that the debt is discharged in the debtor’s bankruptcy, pursuant to section 727 of the Bankruptcy Code. To show an “undue hardship,” a debtor typically must show that (i) he cannot maintain, based on current income and expenses, a “minimal” standard of living, if forced to repay the loans; (ii) additional circumstances exist, which suggest that this state of affairs is likely to persist for much of the repayment period for the loans; and (iii) he has made good faith efforts to repay the loans.
In Fields, the court concluded that the debtor had shown that he had satisfied the second and third prongs of this “undue hardship” test. For our purposes, though, the most fascinating prong was the first one – i.e., could the debtor maintain a “minimal” standard of living, if forced to repay the loans? To assess whether the student debt repayments are the dividing line between being above or below that “minimal standard of living,” courts compare debtors’ monthly income with their reasonable and necessary monthly expenses, including student debt repayments. Courts have held that this “minimal standard of living” test does not require debtors to face a life of “abject poverty” if forced to repay the student debt, but it does require more than a showing of mere “tight finances.”
In Fields, the debtor’s monthly expenses (before making loan repayments) exceeded his monthly income by $100. The question before the court, then, was whether his monthly expenses were “reasonable and necessary.” The defendant objected, arguing that the debtor could have lived in public housing, where he would have paid only $485 a month in rent, rather than the $775 he had been paying.
The court, considering this $290 difference, noted that the debtor had testified that his only real source of entertainment was fantasy football, for which he paid nothing. The court noted that ordinarily, even a minimal standard of living may include “some small diversion or source of recreation,” such as a television or a pet. Accordingly, the court concluded that the debtor simply traded these reasonable entertainment expenses for a more expensive apartment, which better suited his needs. To the court, this was a fair trade (like Mark Ingram and Cam Newton for Frank Gore and Julio Jones, for example…).
We all knew that fantasy football is fun (except maybe in my keeper league), but now we have still another reason to sign up and get in the game. Good luck to all, and may this season be well-played and injury-free (at least for my roster).