Halliwell v. USDOE - SDWV Denies Student Loan Discharge

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April 16, 2026 Get Citation Alerts Download PDF Add Note

In re: Amber Dawn Halliwell v. United States Department of Education and Missouri Higher Education Loan Authority

United States Bankruptcy Court, S.D. West Virginia

• Citations: None known
• Docket Number: 3:24-ap-03006

• Precedential Status: Unknown Status

• Opinion

• Authorities (22)

• Cited By (0)

• Summaries (0)

• Similar Cases (16K)

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Trial Court Document

B. McKay Mignault, fe Judge
Qe is eS United States BankruptcyCourt

UNITED STATES BANKRUPTCY COURT
FOR THE SOUTHERN DISTRICT OF WEST VIRGINIA
AT HUNTINGTON
IN RE: CASE NO. 3:24-bk-30045
AMBER DAWN HALLIWELL, CHAPTER 7
No Asset
Debtor. JUDGE B. MCKAY MIGNAULT
AMBER DAWN HALLIWELL,
Plaintiff,
ADVERSARY PROCEEDING
v. CASE NO. 3:24-ap-03006
UNITED STATES DEPARTMENT OF
EDUCATION and MISSOURI HIGHER
EDUCATION LOAN AUTHORITY,
Defendants.
MEMORANDUM OPINION AND ORDER

Pending is the Motion for Summary Judgment dkt. 37, filed on
January 7, 2026, by the United States of America, Department of Education (“DOE”). Plaintiff
Amber Dawn Halliwell (the “Debtor”) filed a response [dkt. 45] on January 22, 2026, and DOE
filed a reply [dkt. 46] on January 29, 2026. A hearing was held on March 4, 2026, at which the
Court heard argument and took the Motion under advisement. All briefing having been completed,
the matter is now ripe for adjudication. For the reasons stated herein, the Court GRANTS the
Motion.

FACTUAL AND PROCEDURAL BACKGROUND
The material facts in this adversary proceeding are undisputed. The Debtor
attended Strayer University (“Strayer”) remotely from 2016 through 2020, where she earned a
bachelor’s degree in criminal justice in 2019 and a master’s degree in human resources in 2020.
To finance her studies at Strayer, the Debtor received twelve direct loans from DOE under the

William D. Ford Federal Direct Loan Program and executed a promissory note obligating her to
repay the same.
The Debtor is now 43 years old. She currently works for the West Virginia Office
of Constituent Services, earning approximately $43,000 in gross annual income. Her current
position is not within either of her chosen fields of study. To date, she has been unable to find
employment in those fields, despite applying for such positions. The Debtor has been diagnosed
with anxiety and post-traumatic stress disorder, for which she receives an ADA accommodation,
and she uses hearing aids. These conditions, however, do not prevent her from working full-time.
The Debtor’s monthly net income is approximately $4,011.00, with monthly

expenses of approximately $3,977.00. The Debtor is a single mother with four children, including
two teenagers and two children above the age of 18. The two teenagers, as well as one of the adult
children, live with the Debtor.
Despite completing her schooling nearly six years ago, the Debtor has not made a
single payment on her student loans. Rather, her student loans have been in deferment since her
graduation in 2020. The Debtor currently owes DOE a total of $107,228.19 on her student loans.
These student loans are the largest single type of debt listed in the Debtor’s schedules and make
up more than 50% of her total debt. See Schedules D, E, & F [dkt. 1].
The Debtor filed a petition for relief under Chapter 7 of the Bankruptcy Code on
February 26, 2024. She filed this adversary proceeding on September 6, 2024, seeking to have her
student loan debt discharged.1 DOE subsequently filed the present Motion, seeking summary
judgment on the ground that the Debtor has not shown that repayment of her student loans would
constitute an undue hardship under 11 U.S.C. § 523 (a)(8).

STANDARD OF REVIEW
Federal Rule of Civil Procedure 56, made applicable to this proceeding by Federal
Rule of Bankruptcy Procedure 7056, authorizes summary judgment only if “there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R.
Civ. P. 56(a); Fed. R. Bankr. P. 7056. A fact is material if it may affect the outcome of the case
under the governing law. See Libertarian Party of Va. v. Judd, 718 F.3d 308, 313 (4th Cir. 2013).
In evaluating a summary judgment motion, a court “must consider whether a reasonable jury could
find in favor of the non-moving party, taking all inferences to be drawn from the underlying facts
in the light most favorable to the non-movant[.]” Humboldt Express, Inc. v. The Wise Co., Inc. (In

re Apex Express Corp.), 190 F.3d 624, 633 (4th Cir. 1999). “When a party has submitted sufficient
evidence to support its request for summary judgment, the burden shifts to the nonmoving party
to show that there are genuine issues of material fact.” Emmett v. Johnson, 532 F.3d 291, 297 (4th
Cir. 2008); see also Dewey v. Sallie Mae, Inc. (In re Dewey), 381 B.R. 681, 684 (Bankr. W.D.
Tenn. 2008) (“Although nondischargeability cases are generally fact-intensive, this does not mean
that in the face of a defendant’s motion for summary judgment, the plaintiff may do nothing. A
plaintiff must come forward with proof on each of the elements of his claim.”).

1 In addition to DOE, the Debtor’s complaint also included the Missouri Higher Education Loan
Authority (“MOHELA”) as a defendant. The Debtor’s causes of action against MOHELA will be
addressed by separate order of the Court.
DISCUSSION
Government-guaranteed student loan debt is ordinarily not dischargeable in
bankruptcy unless the debtor and the debtor’s dependents would suffer an undue hardship if
repayment is required. 11 U.S.C. § 523 (a)(8). The seminal case in the Fourth Circuit interpreting
§ 523(a)(8) is Educational Credit Management Corp. v. Frushour (In re Frushour), 433 F.3d 393 (4th Cir. 2005). Frushour held that the undue hardship standard requires more than the usual
hardship that accompanies bankruptcy. Id. at 399. Inability to pay one’s debts, by itself, is
insufficient, and repayment cannot be avoided merely because it would require some major
personal and financial sacrifices. Id. at 399-400. As Frushour explained, this difficult burden is
essential to the longevity of the student-loan program:
It is thus understandable why Congress would exact a quid pro quo for government-
guaranteed loans by using the undue hardship standard. Debtors receive valuable
benefits from congressionally authorized loans, but Congress in turn requires loan
recipients to repay them in all but the most dire circumstances. This heightened
standard protects the integrity of the student-loan program and saves it from fiscal
doom. It also ensures public support for the program by preventing debtors from
easily discharging their debts at the expense of the taxpayers who made possible
their educations. Id. (cleaned up).

Considering these factors, Frushour adopted the three-part test set forth by the
Second Circuit, generally referred to as the Brunner test. See Brunner v. N.Y. State Higher Educ.
Servs. Corp., 831 F.2d 395, 396 (2d Cir. 1987). To receive a discharge under the Brunner test, a
debtor must first demonstrate that she cannot maintain, based on current income and expenses, a
minimal standard of living for herself and her dependents if forced to repay her student loan
obligation. Frushour, 433 F.3d at 398. Second, a debtor must show that some additional
circumstances exist indicating that her state of affairs is likely to persist for a significant portion
of the repayment period of the student loans. Id. Lastly, a debtor must show that she has made
good faith-efforts to repay the loans. Id. The debtor seeking a discharge bears the burden of
proving all three factors of the Brunner test by a preponderance of the evidence. Id. at 400. If one
of the three requirements is not met, the bankruptcy court’s inquiry must end there, with a finding
of nondischargeability. Hixson v. U.S. Dep’t of Educ. (In re Hixson), 450 B.R. 9, 22 (Bankr.
S.D.N.Y. 2011); see also Frushour, 433 F.3d at 400 (“We do not decide whether [the debtor] has

satisfied the first part of the Brunner test, because we hold that she has failed to prove the second
and third factors.”).
Similar to Frushour, the Debtor in this case has failed to satisfy the second and
third prongs of the Brunner test as a matter of law.2 Under the second prong of Brunner, a debtor
must demonstrate additional circumstances exist that show that the current state of affairs is likely
to persist for a significant portion of the repayment period. According to Frushour, the second
prong is at the heart of the Brunner test. 433 F.3d at 401. “It is a demanding requirement and
necessitates a ‘certainty of hopelessness’ that a debtor won’t be able to repay her student loan
obligations.” Eddy v. Educ. Credit Mgmt. Corp. (In re Eddy), No. 1:05-bk-02523, Adv. No. 1:05-

ap-00210, 2006 WL 2818793, at *3, 2006 Bankr. LEXIS 2545, at *10 (Bankr. N.D.W. Va. Sept.
28, 2006) (quoting Brightful v. Pa. Higher Educ. Assistance Agency, 267 F.3d 324, 328 (3rd Cir.
2001)). “Only a debtor with rare circumstances will satisfy this factor. For example, although not
exhaustive, a debtor might meet this test if she can show ‘illness, disability, a lack of useable job
skills, or the existence of a large number of dependents.’” Frushour, 433 F.3d at 401 (quoting
Oyler v. Educ. Credit Mgmt. Corp. (In re Oyler), 397 F.3d 382, 386 (6th Cir. 2005)).

2 Because the Debtor has not satisfied the second and third prongs of the Brunner test, the Court
need not address whether she has satisfied the first prong. See Frushour, 433 F.3d at 400.
The Debtor has not met this exacting standard. The Debtor is well-educated,
holding a master’s degree, which increases her income potential. See Spence v. Educ. Credit
Mgmt. Corp. (In re Spence), 541 F.3d 538, 544 (4th Cir. 2008) (holding that Brunner’s second
prong was not satisfied where the debtor was in a low-paying job but held “a master’s degree along
with completed Ph.D. course work”); Eddy, 2006 WL 2818793, at *4, 2006 Bankr. LEXIS 2545,

at *10 (holding that Brunner’s second prong was not satisfied where “[t]he Debtor [was] well-
educated and ha[d] earned a Bachelor of Arts degree, which serve[d] to increase her employment
potential”). The Debtor does not have an exceptionally large number of dependents. Cf. Myers v.
Fifth Third Bank (In re Myers), 280 B.R. 416, 421-24 (Bankr. S.D. Ohio 2002) (finding that the
debtor was entitled to an undue hardship discharge on several of her student loans where she had
nine children, one of whom had cerebral palsy). Perhaps most important, the Debtor is only in her
early 40s, many years away from retirement. See Simms v. USA Funds (In re Simms), 328 B.R.
437, 441 (D. Md. 2005) (finding Brunner’s second prong was not met where the debtor, who was
44 years old, was “far from retirement age”). And although she suffers from anxiety and post-

traumatic stress disorder, there is no indication that this prevents her from working full-time or
maintaining employment. See Spence, 541 F.3d at 544 (holding that the bankruptcy court erred in
finding that the debtor was entitled to discharge her student loans where the debtor “suffer[ed]
from diabetes and high blood pressure, but neither these ailments nor any other age-related health
problems affect[ed] her ability to work full-time”); McClain v. Am. Student Assistance (In re
McClain), 272 B.R. 42, 45, 48 (Bankr. D.N.H. 2002) (finding that the debtor’s depression, which
had manifested itself through two suicide attempts, did not satisfy the second element of the
Brunner test where he had been steadily employed for two years). It is true that the Debtor has
not yet been able to obtain employment in her chosen fields of study. But she is “not entitled to
an undue-hardship discharge by virtue of selecting an education that failed to return economic
rewards.” Coveney v. Costep Servicing Agent (In re Coveney), 192 B.R. 140, 143 (Bankr. W.D.
Tex. 1996). While the Court is not unsympathetic to the Debtor’s current circumstances, the
undisputed facts point to no “additional circumstances” outside of the normal hardships
accompanying bankruptcy that would render her situation hopeless.

The Debtor has also failed to establish Brunner’s third prong: whether she has made
good-faith efforts to repay her student loans. “Brunner’s good faith prong is meant to effect
Congressional intent by requiring the repayment of student loans in all but the most extreme cases.”
Straub v. Sallie Mae Educ. Credit Mgmt. Corp. (In re Straub), 435 B.R. 312, 317 (Bankr. D.S.C.
2010). This factor looks to the debtor’s efforts to minimize expenses, maximize income, and
obtain employment. Frushour, 433 F.3d at 402. Additionally, “the debtor’s hardship must be a
result of factors over which she had no control.” Id. Here, the Debtor has not shown the requisite effort to repay her student loans. As
an initial matter, the Debtor’s budget reflects discretionary spending that undermines her assertion

that she has made a good-faith effort to minimize expenses. For example, the Debtor testified
during her deposition that her cell phone bill is approximately $400.00 per month. See Mot., Ex.
A [dkt. 37-1], at 39:9-18. Additionally, the Debtor’s schedules provide for an expense of $125.00
per month for entertainment. See Schedule J. These discretionary—and notably high—expenses
are not necessary to maintain a minimal standard of living. In In re Mosko, the Fourth Circuit
rejected comparable spending patterns as evidence of good faith under Brunner, reasoning that
the budget the [debtors] presented to the bankruptcy court does not minimize their
expenses. Each month, the [debtors] spend $75 for internet, $80 for cell phones,
$60 for satellite television, $68 for a YMCA membership, and an undisclosed
amount for cigarettes. Expenditures on such items are generally unnecessary to
maintain a minimum standard of living and, under the facts of this case, the failure
to minimize or eliminate these expenditures does not demonstrate a good-faith
effort to minimize expenses. 515 F.3d 319, 325 (4th Cir. 2008). Other courts are in accord. See, e.g., Educ. Credit Mgmt. Corp.
v. Buchanan, 276 B.R. 744, 751-52 (N.D.W. Va. 2002) (finding that foregoing satellite television
and internet service does not constitute an undue hardship); East v. Educ. Credit Mgmt. Corp. (In
re East), 270 B.R. 485, 494 (Bankr. E.D. Cal. 2001) (observing that basic cable television was not
necessary to maintain a minimal standard of living); Wardlow v. Great Lakes Higher Educ. Corp.
(In re Wardlow), 167 B.R. 148, 151 (Bankr. W.D. Mo. 1993) (finding that the debtors were
maintaining more than a minimal standard of living where their budget included expenses for cable
television, recreation, and miscellaneous expenses). Here, too, the Debtor’s failure to minimize
cell phone and entertainment expenses does not demonstrate a good-faith effort to repay her
student loans.
It is also undisputed that the Debtor has failed to make a single payment on her
student loans. While what is considered a good-faith effort varies among courts, “courts are
generally reluctant to find good faith where a debtor made minimal or no payments on his or her
student loans.” Wright v. RBS Citizens Bank (In re Wright), No. 12-05206-TOM-7, Adv. No. 13-
00025-TOM, 2014 WL 1330276, at *6, 2014 Bankr. LEXIS 1266, at *20 (Bankr. N.D. Ala. Apr.
2, 2014); see also Murphy v. Sallie Mae (In re Murphy), 305 B.R. 780, 801 (Bankr. E.D. Va. 2004)
(finding a lack of good faith where the debtor made no payments on her student loans); Kapinos
v. Graduate Loan Ctr. (In re Kapinos), 253 B.R. 709, 714 (Bankr. W.D. Va. 2000) (“[T]here is no

basis to find that the Debtor has carried the third prong of the Brunner standard . . . when she has
affirmatively established that she made no efforts to make any payments upon [her student loans]
before seeking their discharge.”). That is particularly true where, as here, the student loans “are
the bulk of the debtor’s debt or when student debt is the first or second largest single type of debt.”
Lohr v. Sallie Mae (In re Lohr), 252 B.R. 84, 89 (Bankr. E.D. Va. 2000); see also Ledbetter v. U.S.
Dep’t of Educ. (In re Ledbetter), 254 B.R. 714, 716 (Bankr. S.D. Ohio 2000) (noting that
bankruptcy courts often find “a lack of good faith where the debtor makes nominal payments on a
student loan that represents the majority of the scheduled debt in the bankruptcy case”).
The Debtor has not made a single payment on her student loans in the nearly six

years that have passed since completing her education. Instead, she has obtained continuous
deferments. The Fourth Circuit has held that this alone is insufficient to demonstrate good faith.
See Mosko, 515 F.3d at 326-27 (“The [debtors] argue that their request of deferments and
forebearances [sic] on their student loans demonstrates good faith . . . However, without
reasonable efforts to make subsequent payments, requesting deferments and forebearances [sic]
alone does not establish good faith.”); Spence, 541 F.3d at 545 (“Obtaining the deferment of
student loans is not sufficient to demonstrate a good faith effort to repay them when the deferment
is followed by not one payment or any effort to work out a reasonable payment schedule.”); see
also Murphy, 305 B.R. at 801 (“[The debtor] solely has negotiated forbearances and deferments

of these student loans; no serious, good faith effort to pay any amounts at any time since the
inception of these loans has occurred.”); Daugherty v. First Tenn. Bank (In re Daugherty), 175
B.R. 953, 960 (Bankr. E.D. Tenn. 1994) (finding that the debtor’s failure to make any efforts to
repay student loans after obtaining deferments spanning six years evidenced bad faith). Nor is this
a case where the Debtor filed bankruptcy as a last resort after a sincere but unsuccessful effort to
pay her student loans. Cf. Lohr, 252 B.R. at 89 (finding good faith where “the debtor made
payments when she was financially able, tried to negotiate deferments and forbearance in lieu of
bankruptcy when she was not and filed bankruptcy only as a last resort”). To the contrary, the
Debtor has always been successful in obtaining a deferment of her student loans. Finally, even if,
as the Debtor asserts, she has applied for an income-driven repayment plan or a loan forgiveness
program, that does not outweigh the other factors in this case—specifically, that the student loans
constitute the bulk of her total debt, her failure to minimize expenses, and her failure to make a
single payment on the loans. While each of these factors, standing alone, may not always indicate
bad faith, the totality of the undisputed facts in this case fails to demonstrate that the Debtor made

a good-faith effort to repay her student loans.
CONCLUSION
“Congress enacted the federal student loan program to provide higher education,
but not for free.” Straub, 435 B.R. at 315. The Bankruptcy Code therefore requires repayment of
student loan debt except in the most extreme of cases. This case does not meet that rigorous
standard. Considering the undisputed material facts, the Debtor has not satisfied the second and
third prongs of the Brunner test as a matter of law. As a result, she has not proven that she is
entitled to a discharge of her student loans. Accordingly, it is hereby
ORDERED that the Motion is GRANTED; it is further

ORDERED that the Debtor’s complaint is DISMISSED with prejudice as to
DOE; and it is further
ORDERED that this adversary proceeding be DISMISSED with prejudice as to
DOE and removed from the Court’s active docket following entry of an order resolving the
Debtor’s causes of action against MOHELA.

It is so ORDERED.