United States Bankruptcy Appellate Panel
                         FOR THE EIGHTH CIRCUIT
                              _______________

                                    No. 09-6022
                                  _______________

In re: Michele D. Walker,                 *
                                          *
      Debtor                              *
                                          *
Michele D. Walker,                        *
                                          *
      Plaintiff - Appellee                *   Appeal from the United States
                                          *   Bankruptcy Court for the
            v.                            *   District of Minnesota
                                          *
Sallie Mae Servicing Corp.,               *
SLM Education Credit Finance              *
   Corporation,                           *
Zwicker & Associates, P.C.,               *
Kohn Law Firm, S.C., and                  *
Sallie Mae, Inc.,                         *
                                          *
      Defendants                          *
                                          *
Educational Credit Management             *
  Corporation,                            *
                                          *
      Defendant - Appellant               *

                                  _______________

                             Submitted: February 24, 2010
                                 Filed: April 9, 2010
                                 _______________

Before SCHERMER, FEDERMAN, and SALADINO, Bankruptcy Judges

FEDERMAN, Bankruptcy Judge
       Educational Credit Management Corporation appeals from the Order of the
Bankruptcy Court1 finding Debtor Michele D. Walker’s student loans to be
dischargeable as an undue hardship pursuant to 11 U.S.C. § 523(a)(8). For the reasons
that follow, we AFFIRM.

                          I. PROCEDURAL BACKGROUND

      Debtor Michele D. Walker filed a Chapter 7 bankruptcy petition on April 2,
2004, and received her discharge on July 12, 2004. Three years later, on August 15,
2007, she filed an adversary proceeding seeking to discharge $300,000 in student loan
debt as an undue hardship under § 523(a)(8) of the Bankruptcy Code. The
Bankruptcy Court conducted a trial on May 19, 2008, and issued its Judgment and
Memorandum Opinion on June 18, 2009, finding that requiring Michele to repay her
student loans would impose an undue hardship on her and her dependents and,
therefore, the student loans were dischargeable under § 523(a)(8). ECMC appeals.2

                             II. FACTUAL BACKGROUND

       In its Memorandum Opinion, the Bankruptcy Court made extensive findings as
to the circumstances surrounding Michele’s incurring the student loans, as well as her
current family situation. We need not repeat all of those facts in such detail here. To
summarize, however, Michele received her bachelor’s degree in 1989, and then
attended medical school in the hopes of becoming a psychiatrist, but was unable to
pass the boards and was dismissed from medical school in 1995. After working for


       1
          The Honorable Gregory F. Kishel, Bankruptcy Judge, United States Bankruptcy Court
for the District of Minnesota.
       2
         Sallie Mae Servicing Corporation was also a defendant in the adversary proceeding.
The parties stipulated that Michele Walker owed Sallie Mae $29,253.75, and owed ECMC
$283,354.50, at the time of trial. The Bankruptcy Court determined that all of the student loans
were dischargeable, but Sallie Mae did not appeal.

                                                2
a couple of years as a pharmacy technician and substitute teacher, she entered a
master’s degree program relating to psychology in 1997. She received her master’s
degree in school psychology in 2000.

       Meanwhile, Michele got married in 1996. Her husband, Troy Walker, is a
police officer for the Minneapolis police department and also moonlights as an off-
duty security officer. Michele and Troy have five children – the first child born in
1998, one set of twin sons born in May 2000, and a second set of twins born in
October 2001.

       In 2002, Michele obtained a full-time post-graduate internship as a school
psychologist with the Minneapolis Public Schools, earning $16 to $17,000 per year.
However, due to the demands of her young family, and budgetary restrictions in the
school district, she was unable to continue with that position on a permanent basis
after the 2003-2004 school year.

      In 2003, both of the twin boys born in 2000 were diagnosed with autism.

       In 2004, the Walkers moved from Minneapolis to Hudson, Wisconsin, where
they now live. Michele attempted to get a job with the school district in Hudson, and
attempted to work as a pharmacy technician in Wisconsin, but for a number of
reasons, including caring for the children, the costs of daycare, and Troy’s demanding
work schedules, she has not worked for a third-party employer since 2004. She did,
however, continue to try to further her education even past that point. In 2007, she
enrolled in an associate’s degree program toward licensure as a registered nurse, but
left the program after one semester due to poor attendance attributable to her home
life.

       By the time of trial in 2008, all five of the children were in school. The two
autistic sons, then eight years old, attended school on a mainstreamed basis for most

                                          3
of the school day. They had also been accepted into the Wisconsin Early Autism
Project, a state funded program of intensive therapy for children with autism. These
therapy sessions are done at the home, for eight hours a day each on Saturday and
Sunday, plus an additional nine to nineteen hours per week on weekday afternoons.
One of the parents must be present when the therapy is done. In addition, Michele
spends an average of two hours to prepare the boys for the visit. She also must be
available during regular school hours to respond to calls from school personnel, in
case one of the boys has a “meltdown” at school. She must be able to respond quickly
to such episodes in order to avoid as much disruption at the school as possible.



       As stated, Michele filed a Chapter 7 petition on April 2, 2004, and she received
her discharge on July 12, 2004. Between 2004 and 2007, the Walkers’ combined
gross income, which came almost exclusively from Troy’s employment as a police
and security officer, ranged from $59,261 to $67,639. In 2007, which was after
Michele received her discharge, but before she filed this adversary proceeding, Troy
purchased a $40,000 new Chevrolet Suburban. Previously, the Walkers had incurred
a $50,000 home equity loan in the fall of 2005, using $30,000 of the proceeds to build
a screened-in deck on their home. Michele filed this adversary proceeding to
discharge her student loans on August 15, 2007.

                             III. STANDARD OF REVIEW

      “Undue hardship ‘is a question of law which we review de novo. Subsidiary
findings of fact on which the legal conclusion is based are reviewed for clear error.’”3




       3
         Educational Credit Mgmt. Corp. v. Jesperson, 

, 779 (8th Cir. 2009)
(quoting In re Reynolds, 

, 531 (8th Cir. 2005)).

                                              4
                                         IV. DISCUSSION

    A. Subject Matter Jurisdiction / Collateral Attack on the Discharge Order

         Dischargeability of student loans is governed by § 523(a)(8), which provides,
in relevant part, that a discharge under § 727 does not discharge an individual debtor
from any debt for student loans, “unless excepting such debt from discharge under this
paragraph would impose an undue hardship on the debtor and the debtor’s dependents
. . . .”4 In contrast to many other types of debts, § 523(a)(8)’s exclusion of student
loans from discharge is “self-executing” in the sense that, “[u]nless the debtor
affirmatively secures a hardship determination, the discharge order will not include
a student loan debt.”5 In other words, a debtor’s obligation on a student loan remains
until there has been an express determination that the loan is dischargeable because
it imposes an undue hardship on the debtor and the debtor’s dependents.

      As stated above, Michele did not seek a determination that her student loans
were dischargeable until three years after the general discharge order was entered in
her bankruptcy case in 2004. ECMC’s first point on appeal is that the Bankruptcy
Court lacked subject matter jurisdiction to enter the Order discharging the student
loans after the discharge order was entered. Relying on the Supreme Court’s recent
decision in Travelers Indemnity Company v. Bailey,6 ECMC asserts that the 2004
general discharge order is a final judgment, and that Rules 59 and 60 provide the
exclusive means for disturbing such a final judgment.7 Because neither of those rules


          4
              11 U.S.C. § 523(a)(8).
          5
        Tennessee Student Assistance Corp. v. Hood, 

, 450, 

, 1912,

(2004).
          6
              Travelers Indem. Co. v. Bailey, ___ U.S. ____, 

, 2205, 

(2009).
          7
         Federal Rules of Civil Procedure 59 and 60 are made applicable in bankruptcy cases
pursuant to Federal Rules of Bankruptcy Procedure 9023 and 9024, respectively.

                                                   5
applies here due to time limitations and other reasons, ECMC asserts that the Court
lacked subject matter jurisdiction to discharge the student loans.

       At the outset, this is not a subject matter jurisdiction issue. Perhaps ECMC
couches it as a jurisdictional issue because, it concedes, it did not raise the issue before
the Bankruptcy Court,8 and subject matter jurisdiction can be raised at any time.
Indeed, Travelers Indemnity Company v. Bailey does not consider jurisdiction, but
instead deals with a collateral attack on a prior order. Similarly, here, the issue is
whether the adversary proceeding was an attempt to collaterally attack the 2004
discharge order. Although Michele’s argument that it is improper to raise this issue
for the first time on appeal is thus well-taken, we will nevertheless address the merits
of ECMC’s argument that the Court lacked the authority to enter the order discharging
the student loan debt.

       Fundamentally, ECMC’s argument confuses the distinction between entry of
a general order of discharge pursuant to §§ 727, 1141, 1228, or 1328, and a
determination of dischargeability as to the obligation owed to a particular creditor
under § 523. The general order of discharge relieves the debtor of obligations, other
than those which are nondischargeable because they fit within a category of debt
specified by § 523. As to certain categories of debts covered by § 523(c), such as
those obtained by actual fraud, the creditor is obligated to itself seek a determination
of dischargeability within strict time limits, or the debt is covered by the general
discharge. As to others, such as student loans, either the creditor or the debtor may
seek a later determination as to whether a statutory exception to dischargeability is
applicable.

      Contrary to ECMC’s assertion, the Bankruptcy Code and Rules provide
sources of authority, other than Rules 59 and 60, for the Bankruptcy Court here to


       8
           Brief for the Appellant at 9, n.4.

                                                6
have determined the student loan dischargeability action after the discharge order was
entered. Specifically, § 350(b) provides that “[a] case may be reopened in the court
in which such case was closed to administer assets, to accord relief to the debtor, or
for other cause,”9 and Rule 5010 provides that “[a] case may be reopened on motion
of the debtor or other party in interest pursuant to § 350(b).”10 Most notably, however,
Rule 4007(b) provides:

       A complaint other than under § 523(c) may be filed at any time. A case
       may be reopened without payment of an additional filing fee for the
       purpose of filing a complaint to obtain a determination under this rule.11

In contrast, a complaint to determine the dischargeability of a debt under § 523(c)
shall be filed no later than 60 days after the first date set for the meeting of creditors.12

       ECMC asserts that “at any time” in Rule 4007 means “at any time before
discharge is entered.” We disagree. Had that been the intent of the rule, the rule could
have said that. Moreover, if that had been the rule’s meaning, the next sentence in the
rule, allowing the reopening of a case to seek a discharge of student loans without
payment of fees, would be meaningless. In sum, we read the rule to mean what it
plainly says, namely, that a complaint requesting the determination of dischargeability
of student loans under § 523(a)(8) may be filed “at any time” and, if necessary, a
closed bankruptcy case may be reopened without payment of an additional filing fee
to do so. In fact, some courts, including the District of Minnesota, permit debtors to




       9
            11 U.S.C. § 350(b).
       10
            Fed. R. Bankr. P. 5010.
       11
            Fed. R. Bankr. P. 4007(b).
       12
            Fed. R. Bankr. P. 4007(c).

                                             7
file such dischargeability complaints without even reopening a closed bankruptcy
case.13

        Hence, Rule 4007 expressly provides on-going authority for bankruptcy courts
to adjudicate student loan dischargeability actions after a discharge order is entered,
and a debtor need not rely on Rules 59 and 60 to obtain such an adjudication. Rule
4007 reflects the reality of bankruptcy practice. Debtors who file Chapter 7 cases
generally seek discharge of other debts apart from student loans. To provide eligible
debtors the opportunity to get a fresh start and move on with their lives, the Code and
Rules impose quick deadlines for the holding of the debtor’s meeting of creditors,14
and the entry of a general discharge order if no creditor objects within sixty days after
the first date scheduled for the meeting of creditors.15 ECMC’s argument, if accepted,
would mean that a debtor would be required to either litigate the dischargeability of
its student loan to judgment within that sixty day period, or seek a delay of its
discharge as to all other debts. While there may be other procedural or substantive
impediments to a debtor bringing a student loan dischargeability case after the
discharge has been entered (such as ripeness, mootness, or laches, for example), we
find no Rule or Code-based time limitation at all as to when a bankruptcy court may
adjudicate the dischargeability of student loans.16


       13
          See Rule 5010-1(a)(2) of the Local Rules of the United States Bankruptcy Court for the
District of Minnesota. Federal Rule of Bankruptcy Procedure 9029 provides authority for courts
to make local rules governing the practice and procedure in cases and proceedings in that court.
       14
            See 11 U.S.C. § 341(a); Fed. R. Bankr. P. 2003(a).
       15
            See Fed. R. Bankr. P. 4004.
       16
          See 4 Collier on Bankruptcy ¶ 523-04 at 523-19 (16th ed.) (“There are no specific time
deadlines imposed by [the] Code or the Federal Rules of Bankruptcy Procedure for the
determination of the dischargeability of a debt with respect to section 523(a) discharge
exceptions other than those arising under subsections 523(a)(2), (4) and (6).”) (emphasis in
original). In addition, except as to debts under § 523(a)(2), (4), and (6), state courts have
concurrent jurisdiction to decide dischargeability, which is most often raised as a defense to a
state court lawsuit brought after the discharge has been entered. See Stabler v. Beyers (In re

                                                 8
      ECMC next asserts that, Rule 4007 notwithstanding, Michele’s adversary
proceeding to discharge the student loans was an improper collateral attack on the
2004 general discharge order. The 2004 discharge order was a standard one-sentence
order of the type entered in most Chapter 7 bankruptcy cases.17 ECMC asserts that,
because Michele did not obtain an express adjudication that her student loans were
discharged, this standard order was, in effect, an adjudication that the student loans
were not discharged, and, again, Rule 59 or 60 do not present a basis to have that
adjudication set aside.

       Without question, Travelers confirmed that bankruptcy court orders have
finality and cannot be collaterally attacked.18 And, as stated above, a student loan is
not discharged until there is a determination that it is dischargeable under § 523(a)(8).
However, contrary to ECMC’s assertion, the general discharge order cannot be
construed as a determination by the Bankruptcy Court that the student loans did not
impose an undue hardship on Michele, or that the loans could not be discharged. We
were unable to find a single case so holding.19

Stabler), 

, 770 (B.A.P. 8th Cir. 2009) (“Aside from determinations of
dischargeability under 11 U.S.C. § 523(a)(2), (4), or (6), state courts have concurrent jurisdiction
to determine the dischargeability of a debt.”). Similarly, there are no time limitations on
bringing such defenses in state court.
       17
          The discharge order reads, in its entirety: “It appears that the debtor is entitled to a
discharge, IT IS ORDERED: The debtor is granted a discharge under section 727 of title 11,
United States Code, (the Bankruptcy Code).”
       18
            Travelers Indem. Co. v. 

.
       19
           ECMC relies on a recent Order from the Bankruptcy Court for the Northern District of
California, in which the court dismissed a student loan adversary proceeding which had been
filed ten years after the discharge order was entered, “on the grounds that the Court lack[ed]
subject matter jurisdiction over such a claim in debtor’s 1998 bankruptcy case, without prejudice
to such an ‘undue hardship’ claim being asserted in a subsequent bankruptcy case.” Ehmke v.
Sallie Mae, Inc. (In re Ehmke), Case No. 98-71834, Adv. No. 09-4364, Order at 2 (Bankr. N.D.
Cal. February 19, 2010). However, the court in that case did not find that the discharge order
had been a final order, did not mention Rules 59, 60, or 4007, and provided no reason for the
finding of lack of subject matter jurisdiction. Hence, we do not know what the basis for that

                                                  9
       Recently, in United Student Aid Funds, Inc. v. Espinosa, the Supreme Court
held, in a Chapter 13 case, that a discharge order was not void for purposes of Rule
60(b)(4), and that the debtor’s student loans were discharged through the general
discharge order, even though the bankruptcy court had not made an express
determination of undue hardship.20 Because it was decided after briefing and oral
argument in this case, ECMC did not cite to it. Nevertheless, we mention here that
Espinosa was a Chapter 13 case in which the discharge order followed the completion
of all payments under a confirmed plan which had expressly provided for discharge
of the debtor’s student loans. In other words, the discharge order in Espinosa was
“final” on the issue of whether the student loans had been discharged because it could
be viewed in conjunction with the order confirming a plan which had provided for the
discharge of the student loans.21 Because this is a Chapter 7 case, and thus the
Bankruptcy Court here had not issued a separate order addressing the dischargeability
of the student loans (such as a confirmation order), Espinosa is distinguishable.

       We conclude that the general discharge order in Michele’s bankruptcy case was
not a “final order” on the issue of dischargeability of the student loans in the sense that
Travelers contemplates. Thus, Michele’s attempt to have her student loans discharged
was not an improper collateral attack against that discharge order.

        Indeed, not only are debtors permitted to seek a discharge of their student loans
after a general discharge has been granted, the Seventh and Second Circuits have both
suggested that debtors are permitted to reopen their cases to seek a discharge of their


finding was. Further, in the event that that court adopted the arguments made by ECMC here,
we simply disagree with that conclusion. Finally, Ehmke is distinguishable from this case
because, as that court expressly stated, the debtor in that case was eligible to file a new
bankruptcy case and seek discharge of her student loans in the new case.
       20
         United Student Aid Funds, Inc. v. Espinosa, ___ U.S. ____, ___ S.Ct. ____, 

(March 23, 2010).
       21
            

at *7-8.

                                             10
student loans based on a post-discharge change in circumstances.22 The District Court
for the Eastern District of Michigan has gone even further and held that § 350(b) and
Rule 4007(b) not only permit a debtor to reopen a case to seek a new determination
of dischargeability based on changed circumstances, but that a debtor who initially
lost a student loan dischargeability determination may reopen his case and seek a new
determination based on changed circumstances, regardless of whether the first
determination was made expressly “without prejudice.”23 Res judicata, that court
essentially held, did not apply if the circumstances had changed.24 While we need not
face that question here, since Michele had not previously sought a determination of
dischargeability, we note that such a holding is consistent with § 523(b), which
provides that, when a debtor files a second bankruptcy case, and seeks a determination
of dischargeability of student loans that were in existence at the time of his first case,
the undue hardship issue is determined de novo in the new case, notwithstanding a
determination of nondischargeability in the prior case.25




       22
           See In re Roberson, 

, 1138 (7th Cir. 1993) (suggesting that a debtor
reopen his case pursuant to Rule 4007 if his situation had not improved following a two-year
deferment of his student loans); In re Brunner, 

, 397 (2d Cir. 1987) (suggesting
that, because the bankruptcy court’s order denying the discharge had been without prejudice, the
debtor might reopen the issue of the dischargeability of her student loans pursuant to Rule
4007(a) and (b), based on circumstances existing five years after she had filed her case).
       23
            In re Sobh, 

, 579-80 (E.D. Mich. 1986).
       24
           

v. Illinois State Scholarship Comm’n (In re Conner), 

,
750 & n. 21 (Bankr. N.D. Ill. 1988) (specifically providing in an order denying dischargeability
of a student loan that the debtor could seek another determination of discharge should his
situation deteriorate, but the modification request must be in the form of a new complaint based
on changed circumstances).
       25
          11 U.S.C. § 523(b); In re Lewis, 

, 920 and n.5 (Bankr. C.D. Ill. 2002)
(“The presumptive nondischargeability of student loans was never meant to be a permanent
millstone around the debtor’s neck.”).

                                               11
     B. Changed Circumstances and Reconsideration Under Rules 59 and 60

      That said, as ECMC points out, we have held that Rules 59 and 60 do indeed
apply in student loan cases where the bankruptcy court has made an actual
determination of undue hardship and one of the parties seeks reconsideration of such
a determination.26 Further, we held in In re Woodcock that, in such a situation, a
judgment of nondischargeability of a student loan is a final judgment and is not
subject to collateral attack based on an argument that the debtor’s circumstances have
not improved.27

       We view our decision in Woodcock to be consistent with Roberson, Brunner,
and Sobh because it arose from a distinguishable context. We emphasize here the
distinction between seeking a determination regarding dischargeability based on
changed circumstances, and seeking reconsideration of a prior determination of
dischargeability. The debtor in Woodcock was proceeding under a Rule 60(b) motion
for relief from an order finding that there was no undue hardship and, as we very
pointedly stated in that case, was essentially arguing that the bankruptcy court had
gotten it wrong the first time.28 In other words, instead of arguing that his

       26
           See, e.g., Woodcock v. U.S. Dept. of Education (In re Woodcock), 

            th
(B.A.P. 8 Cir. 2005) (denying the debtor’s Rule 60 motion to reconsider the court’s
determination that he had an ability to earn a living). As ECMC points out, people often
collectively refer to Rule 59 and 60 motions as motions to reconsider when, in fact, the rules
serve different purposes and produce different consequences. For these purposes, however, the
distinction is not important.
       27
             In re 

.
       28
            We said, at page 446:

       While cast in the rubric of Rule 60, at bottom, all of Woodcock's arguments boil
       down to claims that the Colorado bankruptcy court got it wrong. It was wrong
       because it misunderstood the facts, or it was wrong because it misapplied the law,
       or it was wrong because it did not have all of the facts, or, most fundamentally, its
       decision that excepting Woodcock’s student loans from his discharge would not
       constitute an undue hardship turns out, in hindsight, to have been wrong. . . .

                                                12
circumstances had changed such that he was now able to demonstrate undue hardship,
he was arguing that the passage of time proved that he had been right all along that he
would not find a suitable job. We concluded that the determination of
nondischargeability was not subject to collateral attack based on an argument that the
debtor’s circumstances had not improved, as opposed to an argument that the
circumstances had changed. Thus, while Rules 59 and 60 apply when a party asks the
court to reconsider a determination of dischargeability as was the case in Woodcock,
they do not apply when there has either been no express determination of
dischargeability or when the circumstances have changed since a prior determination
of nondischargeability.

       ECMC asserts that this conclusion results in piecemeal litigation of
dischargeability. However, as discussed above, the Bankruptcy Code and Rules give
student loans special treatment, including treating undue hardship as a fluid concept.
Allowing debtors an opportunity to attempt to make student loan payments post-
discharge after other debts are wiped away, without fear of losing the ability to bring
a dischargeability action until the debtor is eligible to file a new bankruptcy case, is
a desired result. ECMC also points out that a student loan creditor might be harmed
if, for example, it incurs post-discharge collection costs only to be subject to a
subsequent dischargeability action, but such harm could be a basis for a laches or
other defense in the later dischargeability action. Indeed, ECMC raised a laches
argument before the Bankruptcy Court in this case, but it does not argue in this appeal
that the Bankruptcy Court erred in rejecting that defense.29


       These mistakes all were, could have been, and certainly should have been the
       subject of appeals. They are not proper grounds for a collateral attack at this late
       juncture.
       29
            Although ECMC does not argue on appeal that the Court erred in rejecting its laches
argument, we note that Michele’s waiting three years to bring the dischargeability action, in and
of itself, does not support a laches defense. Laches is an equitable defense based on “all the
particular circumstances of each case. . . including the length of delay, the reasons for it, its
effect on the defendant, and the overall fairness of permitting the plaintiff to assert his or her

                                                13
      In sum, Rule 4007 permitted Michele to bring her nondischargeability action
when she did, and doing so was not a collateral attack on her general discharge order.
ECMC raised a laches argument before the Bankruptcy Court, but it does not argue
on appeal that the Court’s rejection of that argument was error. As a result, the
Bankruptcy Court did not err in hearing the case.

                           C. The Finding of Undue Hardship

                         1. The Relevant Time of Determination

       ECMC next argues that the evidence did not support a finding of undue
hardship. On that point, ECMC first asserts that the Bankruptcy Court erred in
looking at Michele’s circumstances both at the time of the discharge in 2004, and at
the time of trial in 2008. ECMC asserts that the only relevant time period was the
time of the discharge in 2004, and that the Court should have limited its analysis to
the circumstances as they existed at that time. This follows from ECMC’s prior
contention that the student loan determination needed to be made prior to entry of the
2004 discharge order. At the same time, ECMC argues that the Bankruptcy Court
should have given more weight to the Walkers’ post-discharge loans for an SUV and
deck addition. In any event, since we have concluded that a debtor can bring a student
loan case after discharge, and based on changed circumstances, it necessarily follows
that the court may, and should, consider those circumstances existing at the time of
trial.

      In arguing that the relevant time was the time of discharge in 2004, ECMC
focuses on the language in Bender v. ECMC, which was a Chapter 13 case, in which



action.” Citizens and Landowners Against the Miles City/New Underwood Powerline v.
Secretary, U.S. Dept. of Energy, 

, 1174 (8th Cir. 1982). In order to prevail on a
laches argument, ECMC had the burden to demonstrate such circumstances beyond the mere
lapse of time, and it did not do so.

                                                14
the Court of Appeals for the Eighth Circuit said that the factual question in a student
loan case is “whether there is an undue hardship at the time of discharge, not whether
there is an undue hardship at the time a § 523(a)(8) proceeding is commenced.”30 In
addition, relying on Bender, we said in Woodcock, a Chapter 7 case, that “the
determination of dischargeability is best made at the time of discharge.”31 This
language has been construed as ECMC urges here – namely, that the relevant
determination is at the time of discharge, not the time of trial, in all cases.32

       However, squarely faced with ECMC’s basic premise here – that a debtor must
bring a dischargeability action before the general discharge order is entered and, thus,
the only relevant time is the time of discharge – it is important to examine the contexts
in which Bender and Woodcock were decided. Bender was a Chapter 13 case, and the
issue there was ripeness. The debtor in that case sought a determination of
dischargeability of her student loans early in her Chapter 13 case, and the Eighth
Circuit essentially said that the issue was premature. Although some courts have
disagreed with the conclusion reached in Bender on the issue of ripeness, and have
allowed debtors to seek discharge of student loans early in Chapter 13 cases,33 the
conclusion in Bender that these determinations should occur relatively close to the
anticipated discharge date makes sense in the Chapter 13 context, where a general
order of discharge is not entered until the debtor has made the payments required


       30
            In re Bender, 

, 848 (8th Cir. 2004).
       31
          In re Woodcock, 

, 447 (B.A.P. 8th Cir. 2005) (“The determination of
dischargeability is best made at the time of discharge”; declining to revisit the hardship issue in a
Rule 60(b) motion) (citing In re 

).
       32
          See, e.g., In re Mabry, 

, 344 (Bankr. E.D. Mo. 2008) (relying on
Woodcock for the proposition that the court should examine the circumstances at the time of
discharge, and not at the time of trial, in a Chapter 7 student loan case).
       33
         See In re Cassim, 

(6th Cir. 2010); In re Coleman, 

(9th Cir.
2009); Ekenasi v. The Education Resources Institute (In re Ekenasi), 

(4th Cir.
2003).

                                                 15
under its plan, for which debtors may be given up to five years to do so.34 Since many
Chapter 13 cases fail before obtaining a general discharge, an earlier undue hardship
determination could be a waste of time. In addition, as the Eighth Circuit noted, a
Chapter 13 debtor remains protected by the automatic stay while the case is pending,
so the student loan creditor may not seek to enforce its debt in another court.
However, those rationales do not apply in a Chapter 7 case such as this one. Once a
general discharge order is entered, a student loan creditor whose debt has not yet been
discharged is no longer barred by the automatic stay from taking enforcement action.

       Woodcock was a Chapter 7 case, but, as discussed above, it involved a Rule 60
motion in which the debtor sought reconsideration of determination that had, in fact,
been made at the time of the discharge. Hence, for purposes of reconsidering that
determination on the allegation that it had been wrongly decided, it would have been
improper to look at events occurring subsequent to the decision. In other words, the
reviewing court could not use the benefit of hindsight to analyze the bankruptcy
court’s decision made at the time of discharge. Thus, the focus in Woodcock was
properly determined to be at the time the action was brought which, in that particular
case, happened to be around the time of discharge.

       When considering the contexts in which Bender and Woodcock were decided,
we do not view it to be the law in this circuit that, when a Chapter 7 debtor seeks to
discharge a student loan after the discharge has been entered, the bankruptcy court is
limited to the circumstances existing at the time of discharge. As one court has
observed, most cases do not even discuss what the appropriate date is in making the
determination of whether a student loan is dischargeable, and instead simply assume
that the circumstances at the time of trial will be used as the basis for deciding whether
repayment of the loan will be an undue hardship.35 In fact, we did so in the case of In


      34
           11 U.S.C. § 1325(b).
      35
           In re Lien, 

, 434 (Bankr. D. Alaska 1998).

                                               16
re Andresen,36 and the Eighth Circuit recently did so in Educational Credit
Management Corporation v. Jesperson.37

      Finally, analyzing the circumstances existing at the time of trial makes practical
sense. As discussed more fully below, the test for determining undue hardship
requires courts to consider, among other things, “reasonably reliable future financial
resources.” In other words, regardless of when the analysis occurs, bankruptcy courts
are required to predict future circumstances. Even if there are no changed
circumstances, it makes no sense to require a court conducting a trial in 2008, for
example, to go back to 2004 and make projections based on the 2004 facts, when it
has the actual facts as they exist in 2008.

     Based on the foregoing, the Bankruptcy Court did not err when it considered
Michele’s circumstances as they existed at the time of trial.

              2. The Evidence of the Circumstances at the Time of Trial

      The Eighth Circuit has adopted a totality-of-the-circumstances test in evaluating
undue hardship in student loan cases:

       We apply a totality-of-the-circumstances test in determining undue
       hardship under § 523(a)(8). Reviewing courts must consider the debtor’s

       36
           

(B.A.P. 8th Cir. 1999), abrogated on other grounds, In re Long, 322 F.3d
      th
549 (8 Cir. 2003). In that case, the debtor had obtained a discharge in 1991, sustained a back
injury in 1993, and filed an adversary proceeding to discharge her student loan in 1996. We
reviewed the bankruptcy court’s decision, which had been based on the circumstances existing at
the time of trial in 1998, including the finding that the disability caused by the debtor’s post-
discharge back injury restricted her earning capacity, and affirmed the bankruptcy court’s
finding that the student loans constituted an undue hardship on the debtor.
       37
         

(8th Cir. 2009) (discharge order entered on March 23, 2006, but the Court
of Appeals reviewed, without comment, the circumstances existing at time of trial held in
February 2007).

                                               17
       past, present, and reasonably reliable future financial resources, the
       debtor’s reasonable and necessary living expenses, and “any other
       relevant facts and circumstances.” The debtor has the burden of proving
       undue hardship by a preponderance of the evidence. The burden is
       rigorous. “Simply put, if the debtor's reasonable future financial
       resources will sufficiently cover payment of the student loan debt-while
       still allowing for a minimal standard of living-then the debt should not
       be discharged.”38

                                       a. Gross Income

       The parties stipulated that the Walkers’ gross household income in 2007 was
$67,939.39 This income came solely from Troy’s employment.40 The Bankruptcy
Court concluded that, due to the family situation, Michele is not reasonably able to
work outside the home at this point. Although no expert testified about how long this
situation would last, the Court found it unlikely that Michele will be able to work at
least until the older twins reach the age of majority, and perhaps even past that point,
given the uncertainty about their future, Michele’s continual absence from the

       38
           Educational Credit Management Corp. v. Jesperson, 

, 779 (8th Cir. 2009)
(citing In re Long, 

, 554-55 (8th Cir. 2003)) (footnote omitted).
       39
            Second Amended Stipulation of Uncontroverted Facts (Doc. # 27) at ¶ 6.
       40
           The Bankruptcy Court was correct in considering his income in its analysis. See
Sweeney v. Educ. Credit Mgmt. Corp. (In re Sweeney), 

, 362-63 (D. Neb. 2002)
(“Overwhelming authority requires that a court consider the spouse’s income. This Court finds
no published opinion of a court that holds to the contrary.”); Collins v. Educ. Credit Mgmt. Corp.
(In re Collins), 

, 714 (Bankr. D. Minn. 2007) (“A court must consider a spouse’s
income in deciding whether a student loan constitutes an undue burden . . . . For reasons of
sound authority and sound public policy, the court must view undue hardship in light of the total
income of the family.”) (citation omitted); Shadwick, v. U.S. Dept. of Education (In re
Shadwick), 

, 11 (Bankr. W.D. Mo. 2006) (“In addition to the current and prospective
income of the Debtor, the Court must consider the income or earning potential of the Debtor’s
spouse.”) (citations omitted). But see Reynolds v. Penn. Higher Educ. Assistance Agency (In re
Reynolds), 

, 535 (8th Cir. 2005) (Bright, J., concurring) (stating that, since the
student loans were incurred prior to the marriage, and each spouse contributed equally to the
household, that should be taken into account).

                                               18
workforce, and the increasing staleness of her education. The evidence supported
those factual conclusions, and the Court did not clearly err in so finding.

       Despite the stipulation that annual gross income in 2007 was $67,939, the
Bankruptcy Court calculated the Walkers’ gross income at $5,700 per month (or
$68,400 per year), based on their 2007 tax return and W-2s from Troy’s police job.
Suggesting that the Bankruptcy Court engaged in some speculation in arriving at this
figure, particularly as to the extra income from Troy’s second job, ECMC suggests
that the record does not support this finding. However, in view of the fact that the
parties stipulated to the gross income amount, it was unnecessary for the Court to
make the separate calculations as to that figure. Based on the stipulated gross annual
amount of $67,939, the Walkers’ monthly gross income was $5,661.58.41

                                        b. Net Income

       Then, using the Walkers’ actual federal and state tax liability for 2007 (as
opposed to withholdings from Troy’s paychecks), the Court averaged the taxes over
twelve months, and arrived at a monthly tax obligation of $372. We find no error in
calculating the Walkers’ tax obligations in this manner. Indeed, when the evidence
suggests that the debtor is under- or over-withholding, as was the case here,42 it is a
particularly appropriate method for making a determination as to tax liability.

      As to other withholdings from income, the Bankruptcy Court found that Troy’s
paystubs from his police job showed that he had $934.10 per month in other regular


       41
          The Court’s alleged speculation actually worked in ECMC’s favor because the Court’s
calculation resulted in a higher monthly gross income than that stipulated to ECMC.
       42
          The parties stipulated that the Walkers received a federal income tax refund for the tax
year 2007 in the amount of $10,460, but owed the State of Wisconsin $2,643 that year, for a net
income tax refund of $7,817. Second Amended Stipulation of Uncontroverted Facts (Doc. #27)
at ¶ 28.

                                               19
payroll deductions for items such as retirement, deferred compensation, medical
insurance, life insurance, and pension. ECMC did not assert that any of these
deductions were inaccurate or improper at the time of trial. ECMC points out that
Michele did not introduce paystubs from Troy’s moonlighting job and asserts that the
Court was thus required to “speculate” that there were no payroll deductions from that
job. Similarly, there had been no evidence that FICA was deducted from any of his
paychecks, and so the Court again “speculated” that there were none. Those
conclusions were not speculation, however. Rather, Michele had the burden of
proving deductions from income and offered no proof of deductions, other than those
shown on the police paychecks. The Bankruptcy Court, therefore, correctly concluded
that there were no other deductions, a conclusion that actually works in ECMC’s
favor. Thus, when added to the averaged (actual) tax obligations, the Bankruptcy
Court held that the withholdings from Troy’s paychecks totaled $1,306.10 per month.
This was not clearly erroneous. Deducting that from gross income of $5,661.58, Troy
had $4,355.48 in net monthly income for 2007.43

                                 c. The Amount of Expenses

        The Bankruptcy Court arrived at a monthly expense amount, as of the time of
trial, in the amount of $5,913, based on a household budget supplied by Michele.
With one exception for an expense for “special services copays” which no longer
existed by the time of trial (and was therefore removed from the calculation), the
Court acknowledged that Michele did not testify about each of the expenses in detail,
nor did it review each line item in detail. The Court pointed out, however, that, other
than the reasonableness of expenses relating to the SUV and deck addition, ECMC
took no exception to the amounts of, or the reasonableness of, any of the expenses,
and ECMC does not assert on appeal that the Court erred in determining that the




      43
           Again, this is less than the $4,394 net income found by the Court.

                                                20
expenses, but for the SUV and deck addition, are reasonable. As a result, the Court
did not clearly err in calculating the amount of the expenses at $5,913.

                     d. The Reasonableness of the SUV and Deck and
                           the Walkers’ Ability to Pay an ICRP

       ECMC asserts that the Bankruptcy Court erred in finding that two of the listed
expenses were reasonable and necessary for Michele’s support. Specifically, in the
fall of 2005, which was after Michele had received her discharge, Troy took out a
$48,000 second mortgage and used a portion of the proceeds to build a $30,000
screened-in deck on their house.44 The monthly payment on the second mortgage is
$373.52. And, in 2007, Troy purchased a new $40,000 “fully loaded” Chevrolet
Suburban, when Troy already owned three cars.45 The monthly payment on the SUV
is $850.

      In the Eighth Circuit, in order to be reasonable and necessary under § 523(a)(8),
an expense must be “modest and commensurate with the debtor’s resources.”46 The
Eighth Circuit also said that, if a debtor can make student loan payments while still
maintaining a minimal standard of living, the absence of a fresh start is not undue
hardship.47 Further, “[a] debtor is not entitled to an undue hardship discharge of
student loan debts when his current income is the result of self-imposed limitations,




       44
            See Second Amended Stipulation of Uncontroverted Facts (Doc. #27) at ¶ 30.
       45
          See Second Amended Stipulation of Uncontroverted Facts (Doc. #27) at ¶ 29. At the
time, Troy owned a 1998 Saturn which they loaned to the Debtor’s mother, a 1998 Ford
Windstar van, and a 2004 Kia Sedona. One of the vehicles was in the shop for repairs.
       46
            In re 

.
       47
            

                                                21
rather than lack of job skills, and he has not made payments on his student loan debt
despite the ability to do so.”48

      In addition, the Eighth Circuit Court of Appeals confirmed in Jesperson that the
Income Contingent Repayment Program for student loans, which is available to
Michele, is a factor to be considered in evaluating the totality of the debtor’s
circumstances:

        [U]ndue hardship under § 523(a)(8) continues to require separate
        analysis under which, in this circuit, the ICRP is “a factor” to consider
        in evaluating the totality of the debtor’s circumstances. However, a
        student loan should not be discharged when the debtor has “the ability
        to earn sufficient income to make student loan payments under the
        various special opportunities made available through the Student Loan
        Program.”49

Although some question remains as to the weight to be given to the ability to make an
ICRP payment following Jesperson,50 the Eighth Circuit made clear that the ability to
do so is, at a minimum, an important factor in the analysis.

     ECMC first asserts that a luxury vehicle and large deck with combined
payments of over $1,200 per month is not modest and commensurate in light of the




        48
             

at 781 (citations omitted).
        50
          See 

(Smith, J., concurring) (stating that, while the ICRP is a factor relating to
good faith in the analysis, a bankruptcy court should not place too much weight on the debtor’s
refusal to enroll in the ICRP) 

(Bye, J., dissenting) (stating that a debtor is not ineligible
for a hardship discharge if capable of making payments under the ICRP).

                                                  22
Walkers’ resources. In addition, ECMC correctly points out that the payment on the
SUV alone is greater than what Michele’s payment would be under the ICRP.51

       The Bankruptcy Court conceded that, viewed in isolation, the SUV and deck
expenditures might not be reasonable under the totality of the circumstances approach.
Nevertheless, in a detailed discussion of the Walkers’ family and marital situation, the
Court concluded that these expenses were reasonable and necessary under the
particular circumstances of the case. We need not decide here whether the Bankruptcy
Court erred in those findings, nor is it necessary for us to discuss the weight to be
given the ability to make the ICRP following Jesperson, because the Walkers’ income
is insufficient to make the ICRP payment, or any payment on the student loans, even
if they were not incurring the SUV and second mortgage expenses.

       As stated above, the uncontroverted evidence was that the Walkers’ monthly
expenses, which included the SUV and second mortgage payment, totaled $5,913. If
the SUV and second mortgage payments are removed, their expenses total $4,689.48
per month. Their monthly net income is $4,355.48. Thus, the Walkers operate at a
deficit of $334 per month, even without considering those expenses. ECMC’s counsel
suggested at the hearing that there was no evidence that the Walkers were not making
the SUV and second mortgage payments and, thus, they must be coming up with the
money somewhere to make them. If they can come up with the money to make those
payments, ECMC argues, they should be required to come up with the money to make
the ICRP. However, there was no evidence to rebut the actual numbers relating to the
Walkers’ income and expenses, and the numbers show that the Walkers are unable to
make the ICRP payments notwithstanding the SUV and second mortgage payments.

      As a result, while we acknowledge, as the Bankruptcy Court did, that
attempting to discharge a large amount of student loans, while enjoying a new SUV

       51
        The parties stipulated that the ICRP payment would be $593.98 per month. Second
Amended Stipulation of Uncontroverted Facts (Doc. # 27) at ¶ 24.

                                            23
and deck addition may seem troublesome to the casual observer, the reality of the
Walkers’ budget is that Michele cannot afford to make any payments on her student
loans and still maintain a minimal standard of living for herself and her family. That
circumstance, based on the evidence offered, is highly likely to continue for many
years, regardless of whether the Walkers are able to keep the house and SUV, or not.
Therefore, the Bankruptcy Court did not err in finding the student loans to be
dischargeable under § 523(a)(8) as an undue hardship on Michele and her dependents.

                                V. CONCLUSION

       For the foregoing reasons, the Bankruptcy Court had the authority to determine
the dischargeability of Michele D. Walker’s student loans. Further, the Bankruptcy
Court did not err in finding that requiring Michele to repay her student loans would
impose an undue hardship on her and her dependents and, therefore, that such debts
are dischargeable pursuant to 11 U.S.C. § 523(a)(8). The judgment is, therefore,
AFFIRMED.




                                         24