## Facts

- Mark Warren Tetzlaff, age 56, was unemployed and lived with his 85-year-old mother in Wisconsin, relying on her Social Security income.
- He financed an MBA and a law degree with federally guaranteed student loans and consolidated the loans in 2004.
- By his Chapter 7 filing, he owed about $260,000 in consolidated student-loan debt guaranteed by Educational Credit Management Corporation (ECMC).
- Tetzlaff had prior work experience in financial services and insurance and asserted he could not obtain employment due to depression, alcohol abuse, domestic disputes, and misdemeanor convictions.
- ECMC presented expert testimony that his mental-health conditions were not clinically disabling and that symptom reporting might be exaggerated.
- Tetzlaff showed repayment of most loans associated with his law school, but did not show repayment of the ECMC-guaranteed loans at issue.

## Issues

1. Whether Tetzlaff proved “undue hardship” under 11 U.S.C. § 523(a)(8) to discharge ECMC-guaranteed student-loan debt in Chapter 7.
2. Whether, under the Brunner test, Tetzlaff established (a) inability to maintain a minimal standard of living if forced to repay, (b) additional circumstances indicating long-term inability to repay, and (c) good-faith repayment efforts.

## Decision

- The Seventh Circuit affirmed the district court’s affirmance of the bankruptcy court’s judgment.
- The court held Tetzlaff failed to carry his burden under Brunner and therefore could not discharge the ECMC-guaranteed student-loan debt.
- The court upheld findings that Tetzlaff had not shown a long-term, insurmountable inability to work and had not shown good-faith efforts to repay the loans at issue.

## Legal Principles

- Student loans are nondischargeable in bankruptcy absent proof of “undue hardship” under 11 U.S.C. § 523(a)(8).
- Under Brunner, the debtor must prove: (1) inability to maintain a minimal standard of living if required to repay; (2) additional circumstances showing the inability is likely to persist for a significant portion of the repayment period; and (3) good-faith efforts to repay.
- The debtor bears the burden on all three prongs; failure on any prong defeats discharge.
- “Additional circumstances” must show a long-term barrier to repayment; advanced education, work history, and credited evidence of employability weigh against a finding of persistent inability.
- Good faith focuses on efforts directed to the specific debt at issue (including payment history and attempts to obtain work or pursue repayment options), not repayments of unrelated loans.

## Conclusion

The court concluded that Tetzlaff did not prove undue hardship because the record supported findings that his earning capacity could improve and that he lacked evidence of good-faith repayment efforts on the ECMC-guaranteed loans; accordingly, the student-loan debt remained nondischargeable.


Tetzlaff v. Educ. Credit Mgmt. Corp., 794 F.3d 756 (7th Cir. 2015)