Archive for the ‘student loans’ Category

Question: I have now been paying back my student loans (through a B.C. debtors assistance program) for almost ten years. (I live in Ontario now and have a canada loan and a BC loan.) Despite paying almost $30,000 I owe more now than I did when I started. I of course am considering bankruptcy at the ten year mark but am devastated that I will then have to wait another 7 years before I am clean (I am in my mid forties now) I wonder if there are other options. Am I able to offer my creditors a certain amount on the dollar to clean this up. A family member has offered to help me financially. Any advice that you may have would be greatly appreciated.

Answer: You have three options.

First, keep paying until the loans are paid off; this will have the best impact on your credit, but with the interest is obviously very costly.

Your second option is to declare bankruptcy. If you have been out of school for more than 10 years your student loans will be automatically discharged in the bankruptcy. The rules are somewhat complex; more information is available on the student loan bankruptcy canada web site. Once the bankruptcy is finished you can begin to re-build your credit. You are correct that the bankruptcy remains on your credit report for seven years, but if you have a good job and can save money you can generally re-build your credit in a much shorter period of time.

Your final option would be to file a consumer proposal, where you offer a settlement to your creditors. If you have family that can help, it may be possible to offer a lump sum to the creditors of an amount less than the full amount owing, and they may be willing to write off the remaining balance. Whether or not they will accept the consumer proposal depends on your level of debt, your family income, and your other assets.

You have options, so we suggest you contact a licensed trustee in Ontario for a no-charge initial consultation to review your options.

Question: I currently live in Ontario having moved here 6 years ago from Nova Scotia. I have student loans from my time in Nova Scotia. I was last in school in the year 2000 (I borrowed approx $28,000). My life sort of fell apart for a while due to divorce and other factors and I never graduated, but I have been rebuilding my life for the last 6 years. I am now finally making a decent income (around $42,000) and remarried. My wife has a perfect credit rating and wants to buy a home. Im fairly certain my past is going to cause problems with this.I dont want to declare bankruptcy in Ontario but I also dont want to have my lifestyle go back to the poverty level I was in before. I havent heard from CSL (Canada Student Loans) at all until two years ago when they started keeping my income tax refund. that has been the extent of it so far though. How should I proceed? I would like to look at owning our own home within the next year or so but I also want to be realistic.
any help or advice would be appreciated

Answer: Personal bankruptcy in Ontario may not be the correct option for you.

First, under current rules (early 2008), student loans are not automatically discharged in bankruptcy until you have been out of school for ten years. Therefore, if you went bankrupt today, your student loans would not be automatically discharged. New rules have been proposed by the federal government, and we expect them to come into force later in 2008 or early in 2009. The new rules will reduce the waiting period to seven years, so if you plan to go bankrupt, it may be wise to wait until the new rules come into force.

Up to the minute information on student loans and bankruptcy can be found on the Student Loans Bankruptcy Canada web site. On that site, and on this site, you can sign up for a free e-mail alert service that will alert you to when the new rules come into force.

Second, there are a number of negative implications to bankruptcy. The cost of bankruptcy increases with your family income, so it’s possible that a consumer proposal may be a better option. Without knowing your full circumstances it is impossible to give you a more precise answer.

A licensed Ontario bankruptcy trustee can provide you with more recommendations on your specific situation.