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debtor's Health Education and Assistance Loan (HEAL Loan). The Tenth Circuit adopted the framework used by the Fourth and Sixth Circuits to determine when discharge of a HEAL loan is permitted under 42 U.S.C. S 292f(g)'s "strict language." The framework adopted by the Tenth Circuit involves application of a "totality of the circumstances" approach. Noting that HEAL loans may only be discharged when the "nondischarge of such debt would be unconscionable," the factors to examine when determining unconscionability include 1) debtor's income, earning ability, health, educational background, dependents, age, accumulated wealth, and professional degree; 2) debtor's claimed expenses and standard of living; 3) whether debtor's current situation is likely to continue or improve, including whether the debtor has attempted to maximize his income by seeking or obtaining employment commensurate with his education and abilities; 4) if the debtor's dependents are, or could be, financially independent; 5) the amount of the debt and the rate at which interest accrues; and 6) debtor's good faith, including his prior repayment efforts and undertaking of new debts despite knowledge of his HEAL debts. The court pointed out that this list is not exclusive and that additional pertinent factors could be considered. After applying each of the above factors to debtor's circumstances, the court overturned the decision of the BAP and overruled the discharge of the HEAL loan.)
Stanley v. Trinchard, 500 F.3d 411 (5th Cir. Sept. 13, 2007) (Debtor's discharge under Chapter 7 did not eliminate compensable damages that may have resulted from debtor's attorney's alleged pre-petition legal malpractice. District court erred in granting summary judgment to defendant in trustee's malpractice action. Defendant argued that debtor suffered no damages as a result of defendant's purportedly negligent actions because all debts were discharged. The appellate court disagreed, finding that it would be improper to excuse the malpractice liability of a potentially negligent attorney because of the financial misfortunes of his client and that allowing the malpractice action to go forward despite the client's bankruptcy discharge would not threaten the primary purpose behind the discharge, which is avoiding financial harm to the debtor.)
Ellett v. Stanislaus, 506 F.3d 774 (9th Cir. Oct. 29, 2007) (Debtor's prepetition taxes were not discharged because the bankruptcy notice sent to the taxing authority incorrectly listed the debtor's Social Security Number. The Social Security Number listed on the notice belonged to another individual who, according to the records of the taxing authority, owed no taxes. Accordingly, the taxing authority did not file a proof of claim or otherwise participate in the case. The misstated Social Security Number violated Rule
