Case: 13-11868   Date Filed: 10/03/2013   Page: 1 of 5


                                                           [DO NOT PUBLISH]

              IN THE UNITED STATES COURT OF APPEALS

                      FOR THE ELEVENTH CIRCUIT

                       __________________________

                              No. 13-11868
                          Non-Argument Calendar
                       __________________________

                 D.C. Docket No. 1:12-cv-00080-JRH-WLB,
                            Bkcy No. 09-11145

In re:

         KANDACE ZUMBRO,

                                                       Debtor.

_____________________________________________________


THE EDUCATION RESOURCES INSTITUTE, INC.,

                                                       Plaintiff-Appellant,

                                    versus

KANDACE ZUMBRO,

                                                       Defendant-Appellee.

                       __________________________

                 Appeal from the United States District Court
                    for the Southern District of Georgia
                      __________________________
                             (October 3, 2013)
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Before PRYOR, JORDAN, and COX, Circuit Judges.

PER CURIAM:

      The issues in this appeal involve the dischargeability of student loans co-

signed by Kandace Zumbro. The Education Resources Institute, Inc. (which had

guaranteed the loans) appeals the district court’s order affirming the bankruptcy

court’s order finding those loans dischargeable. We affirm.

      While married to Jerry J. Lee, Jr., Kandace Zumbro co-signed three

promissory notes, along with Lee and his father, to obtain loans for Lee’s medical

education. Despite receiving his medical education, and completing his residency

in 1996, Lee only practiced medicine for a few years and ultimately surrendered

his medical license in 2003. Two years later, in 2005, Lee was arrested for

molesting his nine-year-old daughter. He has been incarcerated ever since, and

that same year, Zumbro filed for divorce.

      Zumbro’s obligation under two of the promissory notes became fully due in

2006, while her obligation under the third promissory note does not become fully

due until 2016. Lee’s student loan debt was not the only debt Zumbro incurred

because of her marriage to Lee. Lee lived a lavish lifestyle and incurred large

consumer debts as well. After Lee’s incarceration, Zumbro filed a petition for

relief pursuant to Chapter 13 of the Bankruptcy Code in an effort to discharge

these debts. As part of her larger effort to restructure her finances, Zumbro also

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filed a complaint seeking to discharge her liability on Lee’s student loan debt. The

bankruptcy court initially found the student loan debt to be non-dischargeable.

Later, though, it reversed its prior ruling and discharged the debt because

previously it had mistakenly assumed that Zumbro could restructure and refinance

the debt under 34 C.F.R. § 685.208. On appeal to the district court, the court

affirmed the bankruptcy court’s order discharging the student loan debt.

       The Education Resources Institute, Inc. (“Institute”) presents four issues on

appeal. First, the Institute contends that Zumbro did not prove by a preponderance

of the evidence each of the three prongs of the Brunner test required for a showing

of undue hardship. Second, the Institute contends that the inapplicability of 34

C.F.R. § 685.208 does not override the evidence underpinning the bankruptcy

court’s initial order finding the student loan debt to be non-dischargeable. 1 Third,

it contends that the bankruptcy court erred in reconsidering and reversing its earlier

order finding the loans to be non-dischargeable. Finally, it contends that the

district court erred in affirming the bankruptcy court’s order. Zumbro’s response is

that the court was correct in finding the student loan debt dischargeable and that

she did carry her burden to show that repaying the loans would constitute an undue

hardship by proving, by a preponderance of the evidence, each prong of the


       1
        While the Institute raises this as a separate issue on appeal, the effect of the applicability
of 34 C.F.R. § 685.208 goes to whether Zumbro carried her burden under the second prong of
the Brunner analysis. The district court correctly analyzed it in this manner.
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Brunner test. She also maintains that the inapplicability of 34 C.F.R. § 685.208

does change the analysis under Brunner and that its inapplicability supported the

bankruptcy court’s order reversing its prior ruling. Because the bankruptcy court

incorrectly believed, when issuing its first order, that Zumbro was eligible to

restructure her student loan debt under 34 C.F.R. § 685.208, it found that Zumbro

had not satisfied her burden that she met the second prong of the Brunner test: that

her current state of affairs was likely to persist for a significant portion of the

repayment period. 34 C.F.R. § 685.208 allows borrowers of certain government

issued student loans to restructure their payments for up to a thirty year period. See

34 C.F.R. § 685.208 (emphasis added). However, upon Zumbro’s petition for

reconsideration, the bankruptcy court reversed its position because Zumbro’s loans

were not government-issued and Lee, not Zumbro, was the borrower, thus

rendering Zumbro ineligible for the extended loan repayment period under 34

C.F.R. § 685.208. For that reason, Zumbro contends that the bankruptcy court did

not err in reversing its previous order and that the district court did not err in

affirming the reversal.

      We employ the same standard of review as the district court when reviewing

bankruptcy court decisions that have already been appealed to the district court. In

re New Power Co., 

, 1117 (11th Cir. 2006) (citing In re Optical

Techs, Inc., 

, 1299-1300 (11th Cir. 2005)). Legal conclusions by

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either the bankruptcy court or the district court are reviewed de novo. In re Fin.

Federated Title & Trust, Inc., 

, 1328-29 (11th Cir. 2002) (citing

Capital Factors, Inc. v. Empire for Him, Inc. (In re Empire for Him, Inc.), 

, 1159 (11th Cir. 1993). The bankruptcy court’s findings of fact are reviewed

for clear error. Id. (citing Rush v. JLJ, Inc. (In re JLJ, Inc.), 

, 1116

(11th Cir. 1993)).

      In upholding the bankruptcy court’s order discharging the student loan debt,

the district court addressed, and rejected, each of the Institute’s contentions on this

appeal. We conclude that each of the Institute’s contentions was properly rejected

for the reasons stated in the district court’s order. (Dkt. 13 at 2, 6.) Accordingly,

we affirm.

      AFFIRMED.




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