Laura Kelly v. Educational Credit Management

MEMORANDUM

Chapter 13 debtor Laura Kelly appeals the district court’s order reversing the bankruptcy court’s judgment, which discharged part of her student loan debt for undue hardship under 11 U.S.C. § 523 (a)(8). We have jurisdiction under 28 U.S.C. § 158 (d). We independently review the bankruptcy court’s legal conclusions de novo and its factual findings for clear error. Hedlund v. Educ. Res. Inst., Inc., 718 F.3d 848, 853-54 (9th Cir.2013). We reverse the district court.

The district court correctly upheld the bankruptcy court’s determinations that Kelly was unable to repay her student loans while maintaining a minimal standard of living and that this inability was likely to persist for a significant portion of the repayment period. See id. at 851 (outlining three-prong test for debtor to establish undue hardship under § 523(a)(8)); see also Rifino v. United States (In re Rifino), 245 F.3d 1083, 1088 (9th Cir.2001).

However, the district court incorrectly concluded that the bankruptcy court had clearly erred by determining that Kelly had made a good faith effort to repay her student loans. The bankruptcy court justified its conclusion that Kelly had acted in good faith…