In re: Nicole Ng-A-Qui

FILED OCT 09 2015 1 NOT FOR PUBLICATION SUSAN M. SPRAUL, CLERK U.S. BKCY.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. WW-14-1551-FJuKi ) 6 NICOLE NG-A-QUI, ) Bk. No. 13-18196-MLB ) 7 Debtor. ) Adv. No. 13-01591-MLB ______________________________) 8 ) NICOLE NG-A-QUI, ) 9 ) Appellant, ) 10 ) v. ) MEMORANDUM* 11 ) COLLEGE ASSIST, ) 12 ) Appellee. ) 13 ______________________________) 14 Argued and Submitted on September 25, 2015 at Seattle, Washington 15 Filed – October 9, 2015 16 Appeal from the United States Bankruptcy Court 17 for the Western District of Washington 18 Honorable Marc L. Barreca, Bankruptcy Judge, Presiding 19 Appearances: Appellant Nicole Ng-A-Qui argued pro se. 20 21 Before: FARIS, JURY and KIRSCHER, Bankruptcy Judges. 22 23 24 25 26 * This disposition is not appropriate for publication. 27 Although it may be cited for whatever persuasive value it may have (see Fed. R. App. P. 32.1), it has no precedential value. 28 See 9th Cir. BAP Rule 8024-1.

1 INTRODUCTION 2 Appellant Nicole Ng-A-Qui (“Appellant” or “Ms. Ng-A-Qui”) 3 appeals from the bankruptcy court’s judgment under 11 U.S.C. 4 § 523(a)(8) (2010)1 that declined to discharge her debt to 5 Appellee College Assist (“Appellee” or “College Assist”). 6 Essentially, Ms. Ng-A-Qui argues that the bankruptcy court erred 7 when it determined that she would not suffer “undue hardship” if 8 the court did not discharge her student loans. Although we 9 disagree with the bankruptcy court’s analysis in one respect, we 10 agree that Ms. Ng-A-Qui did not establish “undue hardship.” 11 Accordingly, we AFFIRM. 12 FACTUAL AND PROCEDURAL BACKGROUND 13 In September 2013, Ms. Ng-A-Qui filed a petition for 14 chapter 7 bankruptcy. Shortly thereafter, she initiated an 15 adversary proceeding seeking the discharge of her student loans 16 under § 523(a)(8). The bankruptcy court held a one-day trial on 17 June 30, 2014, in which Ms. Ng-A-Qui was the only witness. 18 On September 19, 2014, the bankruptcy court issued its oral 19 ruling. The bankruptcy court made the following eight findings 20 of fact: 21 (1) Ms. Ng-A-Qui is 40 years old, unmarried, and has three 22 children, ages 17, 3, and 1. Neither she nor any of the children 23 are disabled. 24 (2) After receiving her Bachelor of Science degree in 25 26 1 Unless specified otherwise, all chapter and section 27 references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and all “Rule” references are to the Federal Rules of Bankruptcy 28 Procedure, Rules 1001-9037.

1 Natural Resource Management in 1996, Ms. Ng-A-Qui took out two 2 $5,000 student loans to continue her higher education. In 1998, 3 she discontinued her studies. In 2004, she executed a promissory 4 note for a consolidation loan. The promissory note has a current 5 outstanding balance of $16,000 with interest accruing at 6 4.25 percent. College Assist is the holder of the note, and 7 since 2004, Ms. Ng-A-Qui has paid $1,240 on the loan debt. 8 (3) Ms. Ng-A-Qui is aware that she can enter into an 9 Income-Based Repayment plan, which College Assist believes would 10 be feasible. However, she has chosen not to apply, because she 11 currently has no income and, based on her employment history, 12 believes that she cannot secure stable employment. 13 (4) Ms. Ng-A-Qui pursued a number of temporary jobs before 14 settling in Washington State in 2000. She worked in a daycare 15 facility from 2000 to 2001 for $12 per hour. From 2001 to 2006, 16 she worked as a substitute teacher for $100 per day or $45 to $50 17 per half-day. During that same period, she worked as a park 18 ranger for $14 per hour and as a landscape technician for $12 per 19 hour. Between 2004 and 2008, Ms. Ng-A-Qui ran her own business, 20 which did not generate more than $5,000 in any given year. From 21 2007 to 2008, she worked for Turning Leaf Tree Service and 22 Seattle Tree Preservation for $20 per hour, but left her job 23 because of an injury. In 2008, she worked in a temporary 24 position for the City of Seattle, earning $25 per hour, but lost 25 that job due to lack of funding. From 2009 to 2010, she worked 26 for the City of Bellevue for $22 per hour. She was eight months 27 pregnant when she was laid off. From 2010 to 2012, Ms. Ng-A-Qui 28 was unemployed. She began working at ArborMetrics in 2012, but

1 voluntarily left that job because it was too strenuous and she 2 was pregnant with another child. She has not worked from 2012 to 3 the present and has been staying at home to care for her 4 children. 5 (5) Ms. Ng-A-Qui recently began applying for jobs again and 6 exploring other income-producing activities, such as teaching 7 music. However, she does not expect to obtain a job in her 8 field, as she believes that her degree is outdated. She is 9 looking for a job that pays at least $1,300 per month to cover 10 the cost of daycare for her children. 11 (6) Ms. Ng-A-Qui has no employment income, but receives 12 child support of $260 per month from the father of her eldest 13 child and Women Infants and Children (“WIC”) Supplemental 14 Nutrition Program benefits of $50 to $100 per month. Mr. Labrum, 15 the father of her two younger children, provides her with $1,500 16 per month for food and rent. The cost of rent is $1,300 per 17 month, including $150 a month for a horse that she keeps on the 18 property that she rents. Ms. Ng-A-Qui has decided not to pursue 19 child support from Mr. Labrum, because she believes that he is 20 paying more than what she could get in child support, and she 21 does not want to create animosity. She has not filed for food 22 stamps, because it would interfere with her arrangement with 23 Mr. Labrum. She is ineligible for unemployment benefits. 24 Considering the payments from her ex-partners and WIC, 25 Ms. Ng-A-Qui’s estimated monthly income is between $1,910 and 26 $1,960. 27 (7) Ms. Ng-A-Qui’s current expenses differ from those listed 28 in Schedule J in minor regards. First, her current monthly

1 expenses are approximately $2,655. Second, in addition to rent 2 and food expenses paid by Mr. Labrum, Ms. Ng-A-Qui pays $55 per 3 month for internet and phone service, $190 per month for her pet 4 horse, $150 per month for insurance for two cars, $80 per year 5 for two car registrations, $25 per month for school activities 6 for her children, and $200 every three to four months for Amway 7 purchases. She has cancelled her YMCA membership of $30 per 8 month, and a $600 expense for her child’s band camp was paid by 9 her mother. As a result, Ms. Ng-A-Qui has a monthly budget 10 deficit of $695 to $745. She does not expect a substantial 11 increase in expenses in the future and expects her expenses to 12 decrease as her children leave the household. 13 (8) Ms. Ng-A-Qui lives a modest lifestyle and has attempted 14 to mitigate her expenses. For example, she tried to sell the 15 horse, but it was unmarketable; she has eliminated expenses 16 related to horse tack and shows; she moved the horse to a pasture 17 where she lives; she cancelled her YMCA membership; she does not 18 own a cell phone; she rarely dines out; and she will likely 19 eliminate her Amway expenses. 20 The bankruptcy court thoroughly discussed the application of 21 the legal standard to Ms. Ng-A-Qui’s situation. The bankruptcy 22 court stated that, under § 523(a)(8), student loan debt is 23 excepted from discharge unless exception from discharge will 24 impose undue hardship on the debtor and her dependents. There is 25 no definition of “undue hardship” in the Bankruptcy Code, but the 26 Ninth Circuit follows the three-part test in Brunner v. New York 27 State Higher Education Service, 831 F.2d 395, 396 (2d Cir. 1987), 28 which was adopted by Pena v. United Student Aid Funds, Inc.

1 (In re Pena), 155 F.3d 1108, 1112 (9th Cir. 1998). To obtain a 2 discharge of student debt, the debtor bears the burden of proving 3 all three prongs of the Brunner test: (1) the debtor cannot 4 maintain, based on current income and expenses, a minimal 5 standard of living for the debtor and the debtor’s dependents if 6 forced to repay the loans; (2) additional circumstances exist 7 indicating that this state of affairs is likely to persist for a 8 significant portion of the repayment period of the loans; and 9 (3) the debtor has made good faith efforts to repay the loans. 10 As to the first prong, the bankruptcy court stated that the 11 debtor must show more than just tight finances. The first prong 12 will only be satisfied where it would be “unconscionable” to 13 require the debtor to increase his income or decrease his 14 expenses. Ms. Ng-A-Qui has a monthly deficit of $695 to $745. 15 She and her children live a modest lifestyle, and she has taken 16 reasonable steps to decrease her expenses, but she generates no 17 employment income. Her employment history demonstrates that she 18 is capable of earning $25 per hour, but, assuming a continuation 19 of other forms of income, even a full-time job at $14 per hour 20 would cover childcare, cure her current budget deficit, and allow 21 a modest repayment. Although Ms. Ng-A-Qui asserts that her 22 degree is outdated, there is no evidence that she is completely 23 unemployable in all fields. Regardless whether she is able to 24 obtain a job in her desired field, she is capable of obtaining a 25 job in general and generating some income. Therefore, the 26 bankruptcy court held that it is reasonable to require 27 Ms. Ng-A-Qui to increase her income of $0, and the first prong 28 was not satisfied.

1 As to the second prong, the bankruptcy court stated that the 2 determinative question is whether the debtor’s inability to pay 3 will persist throughout a substantial portion of the loan’s 4 repayment period. Educ. Credit Mgmt. Corp. v. Nys (In re Nys), 5 446 F.3d 938, 946 (9th Cir. 2006). The debtor must show that the 6 additional circumstances are insurmountable. Id. Such 7 additional circumstances may include serious mental or physical 8 disability that prevents employment or advancement; lack of or 9 severely limited education, or quality of education; limited 10 number of years remaining in the debtor’s work life to allow 11 repayment; potential increase of expenses that outweigh any 12 potential appreciation in value of the debtor’s assets or 13 increases in the debtor’s income. 14 The bankruptcy court determined that Ms. Ng-A-Qui is a 15 healthy, well-educated, and well-spoken individual. She has held 16 multiple jobs in the past that ranged in salary from $12 to $25 17 per hour. Although she asserted that her degree is outdated, she 18 provided no evidence that she has been or will be denied 19 employment based on the age of her degree. Further, her work 20 history indicates that she may be employable in other fields, 21 such as child care and education. She has made only a minimal 22 effort to seek employment in the last several years, but there is 23 nothing to indicate that she could not obtain employment in the 24 future. She has a present ability to work and will have a 25 greater ability to work with reduced expenses as her children get 26 older. For these reasons, the bankruptcy court held that the 27 second prong was not satisfied. 28 As to the third prong, the bankruptcy court stated that the

1 debtor is required to show that she has made a good-faith effort 2 to repay the debt. Good faith is measured by the debtor’s effort 3 to obtain employment, maximize income, and minimize expenses. 4 Pa. Higher Educ. Assistance Agency v. Birrane (In re Birrane), 5 287 B.R. 490 (9th Cir. BAP 2002). The fact that the debtor has 6 made no payments or has made some payments on the loan is not, in 7 and of itself, dispositive. However, a debtor’s effort or lack 8 thereof to negotiate a repayment plan is an important indicator 9 of good faith. Here, Ms. Ng-A-Qui failed to enter into an 10 income-based-repayment plan, and such failure is indicative, but 11 not dispositive, on the issue of bad faith. She made payments 12 totaling $1,240 since 2004, which is modest, but indicates a 13 good-faith effort, despite a lack of substantial income. With 14 the exception of the past two years, she has made substantial 15 efforts to obtain employment and maximize her income through a 16 series of jobs. Although she has not maintained a job for an 17 extended period of time, such failure is due generally to budget 18 cuts, the temporary nature of those positions, or Ms. Ng-A-Qui’s 19 life events, not through bad faith. Her efforts to minimize 20 expenses related to her horse and extracurricular activities are 21 also indicative of good faith. The bankruptcy court held that, 22 after balancing the facts, the weight of the evidence supported a 23 conclusion that Ms. Ng-A-Qui made good faith efforts to repay her 24 loans, and the third prong of the Brunner test is satisfied. 25 Accordingly, the bankruptcy court held that, because 26 Ms. Ng-A-Qui failed to meet the first and second prongs of the 27 Brunner test, her student loans are not dischargeable under 28 § 523(a)(8). The bankruptcy court entered judgment against

1 Ms. Ng-A-Qui on October 8, 2014. Ms. Ng-A-Qui filed a motion for 2 reconsideration with the bankruptcy court, but that motion was 3 denied on October 28, 2014. Ms. Ng-A-Qui timely filed her notice 4 of appeal to this Panel on November 12, 2014. 5 JURISDICTION 6 The bankruptcy court had jurisdiction pursuant to 28 U.S.C. 7 §§ 1334 and 157(b)(2)(I). We have jurisdiction under 28 U.S.C. 8 § 158. 9 ISSUE 10 Whether the bankruptcy court erred in holding that the 11 failure to discharge Appellant’s student loan debt will not cause 12 her or her dependents undue hardship under § 523(a)(8). 13 STANDARDS OF REVIEW 14 We review “the bankruptcy court’s interpretation of the 15 Bankruptcy Code de novo and its factual findings for clear 16 error[.]” Hedlund v. Educ. Res. Inst. Inc., 718 F.3d 848, 854 17 (9th Cir. 2013) (quoting Miller v. Cardinale (In re DeVille), 18 361 F.3d 539, 547 (9th Cir. 2004)). 19 DISCUSSION 20 A. Student loan debt can only be discharged under § 523(a)(8) upon a showing of “undue hardship.” 21 22 The bankruptcy court accurately stated the applicable 23 standard for determining whether a student loan debt is 24 dischargeable. Section 523(a)(8) provides: 25 (a) A discharge under section 727 . . . of this title does not discharge an individual 26 debtor from any debt–- 27 . . . . 28 (8) unless excepting such debt from

1 discharge under this paragraph would impose an undue hardship on the debtor 2 and the debtor’s dependents, for-– 3 (A)(i) an educational benefit overpayment or loan made, insured, 4 or guaranteed by a governmental unit, or made under any program 5 funded in whole or in part by a governmental unit or nonprofit 6 institution; or 7 (ii) an obligation to repay funds received as an educational 8 benefit, scholarship, or stipend; or 9 (B) any other educational loan 10 that is a qualified education loan, as defined in section 11 221(d)(1) of the Internal Revenue Code of 1986, incurred by a debtor 12 who is an individual[.] 13 § 523(a)(8). 14 The Bankruptcy Code does not provide any definition of 15 “undue hardship.” The Ninth Circuit has adopted the three-part 16 test set forth by the Second Circuit in Brunner, 831 F.2d at 396. 17 See Pena, 155 F.3d at 1111-12 (“we join the Second, Third and 18 Seventh Circuits and adopt the Brunner test to determine whether, 19 pursuant to 11 U.S.C. § 523(a)(8)(B), a debtor in bankruptcy may 20 discharge a student loan”).2 To demonstrate “undue hardship” and 21 2 The Panel recognizes that there is some dissatisfaction 22 with the Brunner test as a measure of undue hardship. In Roth v. 23 Educ. Credit Mgmt. Agency (In re Roth), 490 B.R. 908 (9th Cir. BAP 2013), Judge Pappas authored a concurring opinion in which he 24 urged the Ninth Circuit to abandon the Brunner test as “truly a relic of times long gone.” 490 B.R. at 920 (Pappas, J., 25 concurring). In his well-reasoned concurrence that traced the 26 development of § 523(a)(8), the corresponding case law, and students’ borrowing practices, Judge Pappas argued that the 27 current test is too rigid and does not allow the bankruptcy court sufficient flexibility to consider all relevant factors. Id. at 28 (continued...)

1 obtain a discharge of a student loan, the debtor must establish 2 three elements: (1) “that she cannot maintain, based on current 3 income and expenses, a ‘minimal’ standard of living for herself 4 and her dependents if forced to repay the loans;” (2) “that 5 additional circumstances exist indicating that this state of 6 affairs is likely to persist for a significant portion of the 7 repayment period of the student loans;” and (3) “that the debtor 8 has made good faith efforts to repay the loans.” Id. at 1111 9 (quoting Brunner, 831 F.2d at 396). 10 “The three Brunner prongs are not elements a court throws 11 into a vial, and then mixes and spins to arrive at an amalgam 12 called ‘undue hardship.’ Rather, they are stand-alone 13 requirements.” Roth, 490 B.R. at 916. The burden is on the 14 debtor to prove each prong by a preponderance of the evidence. 15 Nys v. Educ. Credit Mgmt. Corp. (In re Nys), 308 B.R. 436, 441 16 (9th Cir. BAP 2004), aff’d on other grounds, 446 F.3d 938 (9th 17 Cir. 2006). “If the debtor fails to satisfy any one of these 18 requirements, ‘the bankruptcy court’s inquiry must end there, 19 with a finding of no dischargeability.’” Rifino v. United States 20 (In re Rifino), 245 F.3d 1083, 1088 (9th Cir. 2001) (quoting Pa. 21 Higher Educ. Assistance Agency v. Faish (In re Faish), 72 F.3d 22 2 23 (...continued) 922. He concluded that the Ninth Circuit should “craft an undue 24 hardship standard that allows bankruptcy courts to consider all the relevant facts and circumstances on a case-by-case basis to 25 decide, simply, can the debtor currently, or in the near-future, 26 afford to repay the student loan debt while maintaining an appropriate standard of living.” Id. at 923. Nevertheless, as 27 Judge Pappas acknowledged, the Ninth Circuit has adopted the Brunner test in whole, and we are bound to follow its precedent 28 unless and until the Ninth Circuit directs otherwise.

1 298, 306 (3d Cir. 1995)). 2 B. The bankruptcy court erred in considering Appellant’s ability to increase her income under the first prong of the 3 Brunner test. 4 Ms. Ng-A-Qui’s first point of error takes issue with the 5 bankruptcy court’s holding that she can take steps to increase 6 her income, thereby maintaining a minimal standard of living. 7 She argues that her budget deficit of up to $745 per month 8 evidences that her “income is insufficient to support the basic 9 household expenses.” Opening Br. at 3. 10 Under the first prong of the Brunner test, the debtor must 11 prove, based on her current income and expenses, that she cannot 12 maintain a minimal standard of living if forced to repay her 13 loans. See Birrane, 287 B.R. at 494-95. The debtor must show 14 more than simply tight finances. United Student Aid Funds v. 15 Nascimento (In re Nascimento), 241 B.R. 440, 445 (9th Cir. BAP 16 1999). “In defining undue hardship, courts require more than 17 temporary financial adversity but typically stop short of utter 18 hopelessness.” Id. 19 The bankruptcy court, Ms. Ng-A-Qui, and College Assist all 20 directly or indirectly cite the BAP’s decision in Nascimento for 21 the proposition that, under the first prong, “[t]he proper 22 inquiry is whether it would be ‘unconscionable’ to require the 23 debtor to take steps to earn more income or reduce her expenses.” 24 See Opening Br. at 3; Answering Br. at 6. Indeed, citing 25 Birrane (which quoted the operative language from Nascimento) and 26 Weldon v. Sallie Mae, Inc. (In re Weldon), No. Co8-5665-RBL, 2009 27 WL 1034928 (W.D. Wash. Apr. 16, 2009), the bankruptcy court also 28 stated that the first prong will only be satisfied when it would

1 be “unconscionable” to require the debtor to increase her income 2 or decrease her expenses. The bankruptcy court concluded that 3 although Ms. Ng-A-Qui has a budget deficit of $695 to $745 per 4 month, she is capable of obtaining some type of employment and 5 generating some income. Therefore, it held that Ms. Ng-A-Qui 6 failed to satisfy the first prong, because it was reasonable to 7 require her to increase her income of $0. 8 However, the Ninth Circuit has stated that it has never 9 required a showing of maximization of income to satisfy the first 10 prong. In rejecting such an interpretation of Nascimento, the 11 Ninth Circuit stated: 12 Even if we were to reach the argument [that the bankruptcy court erred because Mason 13 failed to establish that he maximized his income], however, ECMC’s contention that 14 Mason must establish that he maximized his income in order to meet the first prong of 15 Brunner does not find support in the case law. Although ECMC claims that United 16 Student Aid Funds, Inc. v. Nascimento (In re Nascimento), 241 B.R. 440 (B.A.P. 9th Cir. 17 1999), requires that Mason prove that he has maximized his income, Nascimento appears to 18 impose no such requirement. See In re Nascimento, 241 B.R. at 444-45. In any 19 event, even if Nascimento could be read to require a debtor to prove that he maximized 20 his income to meet the first prong of the Brunner test, we have not specifically 21 imposed such a requirement. See In re Rifino, 245 F.3d at 1088 (requiring only that 22 debtor prove she could not maintain a minimal standard of living based on her current 23 income and expenses); In re Pena, 155 F.3d at 1112-13 (determining whether first prong of 24 Brunner test was met by subtracting debtor’s average monthly expenses from their net 25 monthly income). Accordingly, ECMC’s contention fails. 26 27 Educ. Credit Mgmt. Corp. v. Mason (In re Mason), 464 F.3d 878, 28 882 n.3 (9th Cir. 2006) (emphases added).

1 Based on Mason, the bankruptcy court erred in requiring 2 Ms. Ng-A-Qui to prove that, under the first prong, she could not 3 increase her income. Rather, the Brunner test, as interpreted by 4 the Ninth Circuit, requires only that a debtor cannot maintain a 5 minimal standard of living based on her current income and 6 expenses. See Rifino, 245 F.3d at 1088. The first prong does 7 not require that she must maximize her income. As such, based on 8 the bankruptcy court’s findings that Ms. Ng-A-Qui’s current 9 expenses exceed her income by approximately $700 per month, 10 Ms. Ng-A-Qui satisfies the first prong of the Brunner test. 11 Some courts within this circuit have relied on Nascimento or 12 Birrane for the proposition that the first prong will only be 13 satisfied when it would be “unconscionable” to require the debtor 14 to increase her income or decrease her expenses. See, e.g., 15 Educ. Credit Mgmt. Corp. v. Rhodes, 464 B.R. 918, 923 (W.D. Wash. 16 2012) (holding that the bankruptcy court erred in holding that 17 the debtor satisfied the first prong, inasmuch as it had reached 18 the “unavoidable conclusion that Mr. Rhodes has elected not to 19 maximize his income”); Weldon, 2009 WL 1034928, at *3 (citing 20 Birrane and Nascimento in holding that the bankruptcy court did 21 not err in holding that the debtor could seek employment to 22 increase her income); Educ. Credit Mgmt. Corp. v. DeGroot, 23 339 B.R. 201, 207 (D. Or. 2006) (a debtor “must show that ‘it 24 would be “unconscionable” to require [her] to take steps to earn 25 more income or reduce her expenses.’”). Indeed, the confusion 26 appears to stem from Nascimento’s reliance on Pennsylvania Higher 27 Education Assistance Agency v. Faish (In re Faish), 72 F.3d 298 28 (3d Cir. 1995), which, in turn, made a passing reference to

1 Matthews v. Pineo, 19 F.3d 121, 124 (3d Cir. 1994), cert. denied, 2 513 U.S. 820 (1994), for the proposition that a debtor’s “current 3 income and . . . expenses should [not] be regarded as 4 unalterable. Instead, the proper inquiry is whether it would be 5 ‘unconscionable’ to require [the debtor] to take any available 6 steps to earn more income or to reduce her expenses.” However, 7 Matthews discussed unconscionability in the context of discharge 8 under 42 U.S.C. § 254o(d)(3)(A), not § 523(a)(8) or the Brunner 9 test. 10 We are bound to follow the Ninth Circuit’s holding that the 11 first prong does not require a debtor to maximize her income. 12 Thus, we hold that Mason forecloses an interpretation that 13 Birrane or Nascimento requires a showing of income maximization 14 under the first prong of the Brunner test. 15 This is not to say, however, that a debtor’s potential 16 income is irrelevant to the determination of undue hardship. 17 Rather, the Ninth Circuit has considered the debtor’s ability to 18 increase her income both as evidence of additional circumstances 19 under the second prong, see Nys, 446 F.3d at 947 (under the 20 second prong, a court may consider a debtor’s “[m]aximized income 21 potential”), as well as evidence of a lack of good faith under 22 the third prong, see Hedlund, 718 F.3d at 852 (“Good faith is 23 measured by the debtor’s efforts to obtain employment, maximize 24 income, and minimize expenses.” (quoting Birrane, 287 B.R. at 25 499)). In other words, the bankruptcy court erred, not by 26 considering the debtor’s potential income, but rather by 27 28

1 considering it under the incorrect prong of the three-part test.3 2 C. The bankruptcy court did not err in holding that Appellant’s financial hardships are unlikely to persist. 3 4 For her second point of error, Ms. Ng-A-Qui contends that, 5 because she has been chronically unemployed and believes her 6 degree is outdated, she is unlikely to obtain employment to 7 increase her income and improve her circumstances.4 She argues 8 that her difficult financial situation will persist for the life 9 of the loan repayment period.5 10 Under the second prong of the Brunner test, Ms. Ng-A-Qui 11 must establish “that additional circumstances exist indicating 12 that this state of affairs is likely to persist for a significant 13 portion of the repayment period of the student loans[.]” 14 Brunner, 831 F.2d at 396. This requirement is intended to effect 15 “the clear congressional intent exhibited in section 523(a)(8) to 16 17 3 Although Ms. Ng-A-Qui argues at length in her opening 18 brief and reply brief that she has adequately minimized her expenses–-including costs relating to her horse, childcare, and 19 recreation–-the issue of minimization of expenses is not relevant to this appeal. The bankruptcy court decided this factor in her 20 favor, determining that she has taken reasonable steps to decrease expenses. The bankruptcy court did not require that she 21 reduce expenses any further. 22 4 The arguments submitted under the first prong related to 23 Ms. Ng-A-Qui’s employability are more appropriately considered under the second prong, as discussed above. As such, we consider 24 Ms. Ng-A-Qui’s and College Assist’s arguments and the bankruptcy court’s conclusions as to maximization of income under the second 25 prong. 26 5 The bankruptcy court inquired as to the length of the 27 repayment period. Counsel for College Assist represented that Ms. Ng-A-Qui would reenter the standard repayment plan, which is 28 10 years.

1 make the discharge of student loans more difficult than other 2 nonexcepted debt.” Id. “Requiring . . . additional exceptional 3 circumstances, strongly suggestive of continuing inability to 4 repay over an extended period of time, more reliably guarantees 5 that the hardship presented is ‘undue.’” Id. 6 Regarding the “additional circumstances,” the Ninth Circuit 7 has recognized 8 that courts have found it difficult to predict future income. Consequently, courts 9 have required debtors to present “additional circumstances” to prove that their present 10 financial situation will persist well into the future, preventing them from making 11 payments throughout a substantial portion of the loans’ repayment period. . . . These 12 “additional circumstances” are meant to be objective factors that courts can consider 13 when trying to predict the debtor’s future income; the debtor does not have a separate 14 burden to prove “additional circumstances,” beyond the inability to pay presently or in 15 the future, which would justify the complete or partial discharge of her student loans. 16 17 Nys, 446 F.3d at 945 (citation omitted). The court does not 18 “presume that an individual’s present inability to make loan 19 payments will continue indefinitely.” Id. at 946. Rather, the 20 debtor must provide the court with “circumstances, beyond the 21 mere current inability to pay, that show that the inability to 22 pay is likely to persist for a significant portion of the 23 repayment period. The circumstances need be ‘exceptional’ only 24 in the sense that they demonstrate insurmountable barriers to the 25 debtors’ financial recovery and ability to pay.” Id. (citation 26 omitted). The “additional circumstances” that a court may 27 consider include, but are not limited to: 28 [(1)] Serious mental or physical disability

1 of the debtor or the debtor’s dependents which prevents employment or advancement; 2 [(2)] The debtor’s obligations to care for dependents; [(3)] Lack of, or severely 3 limited education; [(4)] Poor quality of education; [(5)] Lack of usable or marketable 4 job skills; [(6)] Underemployment; [(7)] Maximized income potential in the chosen 5 educational field, and no other more lucrative job skills; [(8)] Limited number of 6 years remaining in [the debtor’s] work life to allow payment of the loan; [(9)] Age or 7 other factors that prevent retraining or relocation as a means for payment of the 8 loan; [(10)] Lack of assets, whether or not exempt, which could be used to pay the loan; 9 [(11)] Potentially increasing expenses that outweigh any potential appreciation in the 10 value of the debtor’s assets and/or likely increases in the debtor’s income; [(12)] Lack 11 of better financial options elsewhere. 12 Id. at 947 (citation omitted).6 13 Ms. Ng-A-Qui argues that the bankruptcy court’s ruling on 14 the second prong was erroneous for several reasons. Although 15 Ms. Ng-A-Qui has thoroughly articulated her arguments, we must 16 disagree. 17 1. Employment history 18 Ms. Ng-A-Qui argues that “the court failed to take note that 19 she has never found any substantial employment in the field of 20 her study,” and “[t]here is no prospect of a drastic increase in 21 22 23 6 Ms. Ng-A-Qui contends that “[t]he court has clearly erred 24 in only taking into [account] other factors relating to the additional circumstances. In Brunner the court has stated 25 accordingly that pursuant to the statute that there is an 26 inexhaustible list of factors to be considered.” Opening Br. at 4; see Reply at 4-5. It is unclear what error she is alleging, 27 or what “other factors” the court allegedly considered or did not consider. She appears to draw largely from the factors laid out 28 in Nys, so we can detect no error as to this point.

1 income.” Opening Br. at 4.7 But the bankruptcy court did 2 consider her history of unemployment or underemployment. In its 3 findings of fact 3 and 4, the bankruptcy court accurately 4 recounted her periods of employment and unemployment based on her 5 testimony at trial. The court considered this history in 6 reaching its conclusions of law as to the first and second prongs 7 of the Brunner test; it held that, even though Ms. Ng-A-Qui has 8 had difficulty finding employment in her chosen field, she is 9 healthy, well-educated, and well-spoken, and she could find 10 employment in other fields. The court also noted that 11 Ms. Ng-A-Qui made only two attempts to obtain employment since 12 2012, but there is nothing indicating that she could not obtain 13 employment in the future. The bankruptcy court did not err in 14 considering her history of unemployment and underemployment. 15 2. Self-imposed limitations on likely future income 16 Ms. Ng-A-Qui challenges the bankruptcy court’s ruling that 17 she is likely able to obtain employment to increase her income 18 and improve her situation. Although we recognize the hardships 19 facing Ms. Ng-A-Qui, we find no error in this decision. It 20 appears that Ms. Ng-A-Qui has sought only jobs that (1) are 21 within her field of study, (2) are located “in the geographical 22 confines within which she chose to live,” and (3) pay at least 23 7 24 Ms. Ng-A-Qui also states that “[t]he court would take note that if the Plaintiff did in fact acquire gainful employment the 25 child support would be reduced accordingly; thereby equalizing 26 any gains or increase in income. So, the Plaintiff would remain substantially in the same predicament.” Opening Br. at 4. 27 However, she did not present any evidence of the reduction of child support before the bankruptcy court, and, therefore, we 28 cannot consider this argument on appeal.

1 $25 per hour. 2 A “debtor cannot purposely choose to live a lifestyle that 3 prevents her from repaying her student loans. Thus, the debtor 4 cannot have a reasonable opportunity to improve her financial 5 situation, yet choose not to do so.” Nys, 446 F.3d at 946 6 (citing Rifino, 245 F.3d at 1089); see also Sederlund v. Educ. 7 Credit Mgmt. Corp. (In re Sederlund), 440 B.R. 168, 174-75 (8th 8 Cir. BAP 2010) (“A debtor is not entitled to an undue hardship 9 discharge of student loan debts when his current income is the 10 result of self-imposed limitations, rather than lack of job 11 skills.”). 12 Each of Ms. Ng-A-Qui’s job criteria are self-imposed 13 limitations that cut against her on the second prong of the 14 Brunner test. 15 As the bankruptcy court correctly noted, Ms. Ng-A-Qui is 16 educated, well-spoken, and probably able to find employment, 17 although perhaps not within her chosen field. Cf. Brunner v. 18 N.Y. State Higher Educ. Servs. Corp. (In re Brunner), 46 B.R. 19 752, 757 (S.D.N.Y. 1985), aff’d, 831 F.2d 395 (2d Cir. 1987) 20 (“Although she claimed to be unable to find any other type of 21 work, the evidence presented at the hearing is too thin to 22 support a finding that her chances of finding any work at all are 23 slim, and I do not read the bankruptcy judge’s decision as so 24 finding.”). The Panel recognizes Ms. Ng-A-Qui’s past challenges 25 in obtaining employment, but the fact that she has not recently 26 found employment in her chosen field does not absolve her from 27 seeking employment in other areas. See, e.g., Weil v. U.S. Bank, 28 N.A. (In re Weil), Nos. 99-00272, 99-6222, 2000 WL 33712215, at

1 *4 (Bankr. D. Idaho June 29, 2000) (“[T]he evidence 2 overwhelmingly suggests Fred cannot obtain employment in his 3 field of study. However, while the Court believes Fred may not 4 necessarily be able to obtain a job using his 5 sociology/psychology background, the Court is not convinced Fred 6 possesses disabilities that would prevent him from obtaining any 7 kind of entry level position.”); Price v. United States 8 (In re Price), Bk. No. 79-390(1), 1980 Bankr. LEXIS 5422, at *6 9 (Bankr. D. Haw. Mar. 21, 1980) (“Even if she is not employed in 10 the field in which she was trained, she can still seek other 11 employment and obtain sufficient compensation for a comfortable 12 living.”). 13 Her choice to seek jobs only in Stanwood, Washington, is 14 another impermissible unilateral limitation. Ms. Ng-A-Qui argues 15 that the bankruptcy court did not consider the fact that she 16 cannot relocate from Stanwood, because her sons’ father would not 17 allow it. However, she did not present any evidence in support 18 of this argument and did not raise this issue before the 19 bankruptcy court, so we do not consider it on appeal. 20 Finally, she has set her sights only on jobs paying at 21 least $25 per hour and has ruled out lower-paying positions. As 22 the bankruptcy court noted, even a lower-paying job would allow 23 Ms. Ng-A-Qui to increase her standard of living and allow some 24 form of repayment on the loans. 25 3. Potential for retraining 26 Ms. Ng-A-Qui argues that it would be “impossible” or 27 “unconscionable” for her to undergo training to enter another 28 profession. She testified at trial, however, that she is not

1 incapable of being retrained for a position other than 2 landscaping. On appeal, she contends that it is “impossible” to 3 “acquire retraining.” Opening Br. at 5. The proffered reasons 4 for rejecting retraining is that it is cost prohibitive and she 5 would not be able to immediately earn $25 per hour. Ms. Ng-A-Qui 6 did not offer any evidence at trial that retraining, including 7 on-the-job training, would be cost prohibitive. Indeed, she was 8 able to afford further training in her field in 2003 and 2004 to 9 receive an Arborist Certification through the International 10 Society of Arboriculture and a Restoration Ecology Certificate 11 from the University of Washington. Moreover, as discussed above, 12 she appears to be limiting herself to a $25-per-hour job, when 13 she may be able to obtain a lower-paying job. Thus, the record 14 supports the bankruptcy court’s holding that Ms. Ng-A-Qui could 15 increase her income through additional career training or a 16 change in profession. 17 4. Effect of Appellant’s age on likelihood of increased income 18 Ms. Ng-A-Qui argues that her age is an insurmountable 19 barrier to increasing her income. She argues that the bankruptcy 20 court erred in failing to consider “what she would have to do in 21 order to make herself marketable again at 44 years of age for any 22 other field or job that could make her viable for employment.” 23 Opening Br. at 6. She also contends that her younger children 24 will be of college age when she is near retirement. Reply at 4. 25 We see no reason why Ms. Ng-A-Qui’s age presents an exceptional 26 barrier to employment, especially when she appears well-educated 27 and healthy. She is in her early forties, and she still has many 28

1 viable work years ahead of her. Ms. Ng-A-Qui’s age does not 2 present an insurmountable barrier to increasing her income in the 3 future. 4 5. Unchallenged findings on likely income increases and expense reductions 5 6 Ms. Ng-A-Qui does not challenge other findings of the 7 bankruptcy court that support its decision. For example, the 8 bankruptcy court considered Ms. Ng-A-Qui’s stated intention to 9 return to the workforce once her children reach school age. Her 10 youngest child was born in late 2012 and will presumably reach 11 school age in two to three years. She will be able to reenter 12 the workforce then. See Garybush v. U.S. Dep’t of Educ. 13 (In re Garybush), 265 B.R. 587, 592 (Bankr. S.D. Ohio 2001) 14 (“While the Debtor cannot obtain paid employment at this time, 15 she is a healthy 35 year old woman who could return to work once 16 her children are all of school age. Her youngest child will 17 reach school age in less than four years. . . . Debtor’s current 18 inability to pay is unlikely to last into the future once her 19 children are of school age.”). Her financial situation will not 20 persist through the life of the debt, because, by her own 21 statements, she will return to work and increase her income. 22 Furthermore, Ms. Ng-A-Qui testified at trial that her 23 expenses will decrease as her children get older and her pets 24 pass away. She testified that her daughter recently graduated 25 from high school and may move out to live with her boyfriend. 26 Such changes will likely reduce Ms. Ng-A-Qui’s expenses and 27 improve her financial situation over the life of the loan 28 repayment period.

1 Therefore, we hold that the bankruptcy court did not err in 2 holding that Ms. Ng-A-Qui’s situation is unlikely to persist for 3 the entire life of the loan. “What separates a ‘garden-variety 4 debtor’ from a debtor who can show ‘undue hardship’ is the 5 realistic possibility that a ‘garden-variety debtor’ could 6 improve her financial situation in the future.” Nys, 446 F.3d at 7 944. Although we are sympathetic to Ms. Ng-A-Qui’s situation and 8 appreciate her candor at the oral argument, the record shows that 9 she is capable of working and her financial situation will likely 10 improve once she returns to the workforce. She thus has not 11 satisfied the second prong of the Brunner test and is unable to 12 demonstrate requisite undue hardship. 13 CONCLUSION 14 A reasonable person could disagree with Congress’s decision 15 to make it difficult to discharge student loan debt. A 16 reasonable person could also disagree with Brunner’s 17 interpretation of the Congressional standard. But we are bound 18 by the Congressional enactment of § 523(a)(8) and the Ninth 19 Circuit’s adoption of the Brunner test. 20 For the reasons set forth above, we hold that the bankruptcy 21 court erred in requiring Ms. Ng-A-Qui to maximize her income 22 under the first prong of the Brunner test, but did not err in 23 holding that her situation will improve under the second prong of 24 the test. Thus, because Ms. Ng-A-Qui did not establish all three 25 prongs of the Brunner test, we AFFIRM the bankruptcy court’s 26 nondischargeability judgment. 27 28