by After extensive review of the evidentiary record, the court, applying a “totality of the circumstances” test, found that the debtor failed to establish past and future inability to pay his consolidated student loans and denied discharge. Golliday v. ECMC, No. 16-20014, Adv. Proc. No. 16-2028 (Bankr. D. Me. July 12, 2018).
In 2016, Gregory Golliday filed for chapter 7 bankruptcy seeking to discharge over $200,000 in student loan debt and accumulated interest under section 523(a)(8). After a hearing, the court applied a totality-of-circumstances test in which, in order to show undue hardship, a debtor must “prove by a preponderance of the evidence that (1) . . . his past, present, and reasonably reliable future financial resources; (2) . . . his and . . .[his] dependents’ reasonably necessary living expenses; and (3) other relevant facts and circumstances unique to the case, prevent [him] from paying the student loans in question while still maintaining a minimal standard of living . . .”
In 1995, Mr. Golliday incurred approximately $75,000 in student loans in pursuit of a chiropractor’s license. Though he worked as a chiropractor for several years, by the time Mr. Golliday filed for bankruptcy he had given up his practice due to several occurrences in which he was found to have conducted himself inappropriately with female clients. On two occasions, the licensing board imposed restrictions on his practice including that he be employed by a supervising chiropractor and that he always have a chaperone in the room when working with female clients. Mr. Golliday apparently functioned under those restrictions, but after they were lifted, he resumed his inappropriate conduct and found himself facing censure and re-imposition of restrictions. He left his practice and embarked upon a series of jobs consisting largely of manual labor, none of which lasted more than about two years before he quit. Meanwhile, Mr. Golliday and his first wife divorced and he became obligated under a domestic support order which went into default almost immediately. After court-intervention, he began making payments under the DSO based on his ability to pay. At the time he filed for bankruptcy, he was unemployed but anticipating finding a job as a truck driver. He testified that, while he had never undergone a psychological evaluation, he felt unable to take up his chiropractic practice due to the restrictions on his autonomy and his sense that he would be unable to refrain from engaging in inappropriate conduct with female clients.
The court found that Mr. Golliday failed to satisfy the first prong of the totality of circumstances test requiring that he demonstrate past and future inability to repay the loans. In so finding, the court was persuaded more by inadequacies in the evidence than affirmative evidence of ability to pay. With respect to Mr. Golliday’s past ability to repay the loans, the court found the evidence sketchy and incomplete requiring it to cobble together information from a prior bankruptcy and from often inconsistent information provided about his current financial condition. It found no evidence that he had ever attempted to repay the loans despite successfully working for a time as a chiropractor and apparently having adequate income to do so.
As to his future ability to pay, the court questioned his recent employment history and whether he was maximizing his employment potential. While noting that a medical diagnosis is not always necessary to show a condition rendering full employment impossible, in this case, the court found that Mr. Golliday’s testimony concerning his “condition” was insufficient to convince it of his inability to work in his chosen field, especially in light of the fact that he had worked under Board-imposed restrictions before and offered no persuasive reason why he could not do so again.
In general, the court expressed concern about Mr. Golliday’s credibility. Much of his financial testimony and evidence was spotty and inconsistent. Moreover, the fact that he referred to his wife as his “girlfriend” in some of his bankruptcy filings, and omitted her income in his schedules, suggested negligence, at the very least, in his financial disclosures.
In short, the court found Mr. Golliday’s claim of past and future inability to pay to be unsupported or contradicted by the evidence presented. It denied discharge.