United States District Court, D. Colorado
In re: CHAD DAVID GUBRATH and NICOLE DIANN GUBRATH, Debtors.
CHAD DAVID GUBRATH and NICOLE DIANN GUBRATH, Appellees COLLEGE ASSIST, and MRU STUDENT LOAN TRUST, 2007-A, Appellants,
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For Chad David GuBrath, Nicole DiAnn GuBrath, Plaintiffs: John R. Torbet, LEAD ATTORNEY, Torbet & Tuft, LLC, Colorado Springs, CO.
For College Assist, Defendant: Mary Kristine Vossberg, LEAD ATTORNEY, Taylor Anderson, LLP, Denver, CO.
For MRU Student Loan Trust, 2007-A, Defendant: John Frederick Young, LEAD ATTORNEY, Markus Williams Young & Zimmermann LLC, Denver, CO.
For National Collegiate Trust, Defendant: Devi C. Yorty, John Frederick Young, LEAD ATTORNEYS, Markus Williams Young & Zimmermann LLC, Denver, CO.
ORDER AFFIRMING BANKRUPTCY COURT'S ORDER DISCHARGING STUDENT LOAN DEBT
William J. Martínez, United States District Judge.
College Assist and MRU Student Loan Trust, 2007-A (" Appellants" ) appeal from the Bankruptcy Court's March 10, 2014 Order discharging the student loan debts of debtors Chad and Nicole GuBrath (" the GuBraths" or " Debtors" ). For the reasons set forth below, the Bankruptcy Court's Order is AFFIRMED.
In 2005-06, Debtor Chad GuBrath executed promissory notes in favor of Appellant MRU Student Loan Trust 2007-A in a total sum of $64,184.85. (ECF Nos. 16-11 & 16-12.) Nicole GuBrath was a co-borrower on at least one of these loans. (ECF No. 16-12.) Chad GuBrath also executed two promissory notes in favor of Appellant College Assist, which have a value of $64,162.95. (ECF Nos. 16-25 & 16-27.) Nicole GuBrath executed a promissory note in favor of College Assist for $8,446.09. (ECF No. 16-28.) In addition to these loans, the GuBraths obtained over $150,000 in additional student loans from other lenders.
After these loans went into repayment, Appellants allowed the GuBraths to make payments under income-based repayment plans, such that the GuBraths' monthly payments on these loans was between $0 and $30 per month. (ECF Nos. 16-15 & 17.) Before seeking discharge of their student loan debt, Debtors made only five payments totaling $153 on the loans to Appellants. (ECF No. 17 at 82.) Other loans taken out by the GuBraths were not subject to income-based repayment plans and required payments of at least $377 per month, and these loans were in collection at the time of the proceedings before the Bankruptcy Court. (ECF No. 17 at 129-130.)
On May 4, 2012, the Debtors filed for Chapter 7 bankruptcy, and listed a total of $340,297.85 in unsecured debt, with $282,421.25 in student loans. (ECF Nos. 16-5 & 16-6.) On February 14, 2013, Debtors brought an adversary proceeding, seeking discharge of their student loan debt. (Bankr. Docket No. 1.) A number of loan holders, including Sallie Mae, National Collegiate Trust, and the Education Resources Institute, did not respond to this adversarial proceeding, and default was entered against them. (Bankr. Docket Nos. 29-31.) The only note holders who contested the adversarial proceeding were Appellants. ( See generally Bankr. Docket.)
Bankruptcy Judge Bruce Campbell presided over a one-day bench trial. (Bankr. Docket No. 92.) At trial, Chad and Nicole GuBrath testified about their financial situation, earning opportunities, and lifestyle. (ECF No. 17.) Their testimony shows that the GuBraths have one dependent, a 12-year-old son who suffers from anxiety reaction, epilepsy, intermittent explosive disorder, autism, and constipation. ( Id. at 38-42, 142-45; ECF No. 16-4.) He is non-verbal, requires a special diet, and attends a specialized school program. ( Id.) It is not anticipated that his condition is likely to significantly improve; rather, he will need intensive care for the rest of his life. (ECF No. 17 at 48-49, 146-47.)
With regard to income, Nicole GuBrath testified that, due to the need to care for her child, she has been unable to obtain paid employment. (ECF No. 17 at 48, 145-46.) She has pursued part-time work,
but has been unsuccessful in finding a position that can accommodate her schedule. ( Id.) Chad GuBrath works full-time as an investigator for the State of Colorado, where he nets $3,181.05 per month. (ECF No. 16-2.) Because he sometimes has to work weekends and evenings, he is unable to get a second job. (ECF No. 17 at 50.) Mr. GuBrath has received a number of raises this year, but does not anticipate this trend continuing. ( Id. at 86-87.)
The Debtors also testified extensively about their monthly spending habits. They cancelled their cable and landline telephone, do their own home and auto repairs, and use coupons when possible. (ECF No. 17 at 64-65.) They do not vacation, get books and movies from the library, and minimize gift giving. ( Id. at 65-66.) They have no credit cards, no savings, and receive no help from outside sources. ( Id. at 51, 63-64.) However, the Debtors spend $130 per month on life insurance, have internet service in their home, and have cell phones. ( Id. at 88.) The Debtors spend about $1,000 a month on groceries, which far exceeds the guidelines put out by the United ...