Federal student loans that were issued between August 1, 1995 and July 31, 2000 were issued pursuant to the Canada Student Financial Assistance Act. These loans were issued by various banks, credit unions and caisses populaires who had signed an agreement with the Federal government. These loans were called "risk-shared" loans because the issuer of these loans, i.e. banks, etc. were responsible for the collection of any defaulted loans. In return, the Federal government paid a "risk premium" to the issuer of these loans ( similiar to an insurance premium ) for those loans that had gone into default or were about to default, hence the name "risk-shared". However, there was one exception to this agreement. For those loans that had been issued under this Act, and for which no payments had been made for 18 months after the student's "end of study date", these loans were returned to the Federal government for collection. These loans were called "put-back" loans for which the Federal government reimbursed the issuer of these loans. Now, the CIBC was relieved of their responsibility to collect on this defaulted student loan and now the Federal government assumed that responsibility. That is why you were contacted by the Canada Revenue Agency ( CRA ) who is the official collection agency of the Federal government regarding your outstanding and unpaid Canada student loan. The CIBC is now officially "out of the picture".
Under the Canada Student Financial Assistance Act, Section 16.1 sets out a "limitation period" under which the Federal government can litigate a student loan and obtain a judgment.
16.1(1) Subject to this section and section 16.2, no action or proceedings shall be taken to recover money owing under a student loan more than six years after the day on which the money becomes due and payable.
16.1(2) Money owing under a student loan may be recovered at any time by way of deduction from or set-off against any sum of money that may be due or payable by Her Majesty in right of Canada to the borrower or the estate or succession of the borrower.
16.1(3) If a borrower's liability for money owing under a student loan is acknowledged in accordance with subsection (4) the time during which the limitation period has run before the acknowledgment does not count in the calculation of that period.
16.1(4) An acknowledgment of liability means
(a) a written promise to pay the money owing, signed by the borrower or his or her agent or other representative;
(b) a written acknowledgment of the money owing, signed by the borrower or his or her agent or other representative, whether or not a promise to pay can be implied from it and whether or not it contains a refusal to pay;
(c) a part payment by the borrower or his or her agent or other representative of any money owing; or
(d) any acknowledgment of the money owing made by the borrower, his or her agent or other representative, or the trustee or administrator in the course of proceedings under the Bankruptcy and Insolvency Act or any other legislation dealing with the payment of debts.
16.1(5) If a borrower's liability for money owing under a student loan is acknowledged in accordance with subsection (4) after the expiry of the limitation period in respect of the loan, an action or proceedings to recover the money may, subject to subsections (3) and (6), be brought within six years after the acknowledgment.
Section 16.1 provides for a limitation period of six years in which the Federal government ( i.e. the Attorney General of Canada ) can litigate ( i.e. sue the student loan debtor ) the student loan providing the debtor has NOT acknowledged the student loan liability. Subsection (4) provides for how an acknowledgment can occur. And if an acknowledgment occurs WITHIN the six year period, a new six year period will begin from the date of the acknowledgment. Subsection (5) provides for an acknowledgment OUTSIDE the six year period when a new six year period will begin from the date of the acknowledgment.
If no acknowledgement of this student loan has been made in accordance with subsections (4) and (5), then this student loan is "statute-barred" pending the Federal government having already obtained a "Default Judgment". Whether a "Default Judgment" has been obtained or not, it is still subject to the provisions of subsection (2) ( i.e. the right of set-off ) which means that the Canada Revenue Agency ( CRA ) can still withhold any income tax refunds and quarterly GST payments in satisfaction of the outstanding and unpaid Canada student loan.
DO NOT MAKE ANY PAYMENT TO THE CRA. Obtain a FREE Consumer Disclosure Report from both Equifax and TransUnion and examine them carefully. Check to see if there is any "Judgment" shown regarding your student loan. If there is a "Judgment" shown regarding your student debt, then the Attorney General of Canada has been awarded a "Judgment" against you. Make sure that the date of the "Judgment" is within the limitation period as stated above.
If there is no "Judgment" shown on either Report, it means that either the "Judgment" has been "purged" from the Report ( In Ontario, judgments are purged after 7 years ) or the Federal government has failed to obtain a "Judgment". In order to know for sure whether a "Judgment" has been registered against you, you will have to go to your local Federal Courthouse to see if a "Judgment" has been obtained. If you do not know where your closest Federal Courthouse is located, contact your local courthouse and ask where the nearest Federal Courthouse is located. If you are unable to do this because of time or distance, contact a licenced Paralegal who works in the area where the Federal Courthouse is located. The Paralegal will conduct a search on your behalf, give you a written report of their findings and will charge you a fee for their services. In this manner, you will have "peace of mind" knowing whether a "Default Judgment" has been registered against you.
If you choose not to make any further payments on this debt, you can be sure that the CRA will exercise their "right of set-off" and withhold any further income tax refunds and quarterly GST payments.