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pogorelichfan 
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 Topic: Gov't going in the wrong direction --Study
Posted: 08/March/2007 at 10:09am |
GOVERNMENT STUDENT LOANS, GOVERNMENT DEBTS AND BANKRUPTCY: A COMPARATIVE STUDY
Stephanie Ben-Ishai. The Canadian Business Law Journal. Agincourt:Dec 2006. Vol. 44, Iss. 2, p. 211-244
ABSTRACT:
A review of the current position and historical trajectory of the treatment of government student loans in bankruptcy in Canada, Australia, England, the United States and New Zealand suggests that all five jurisdictions are converging on a model where the bankruptcy systems provides limited to no relief for loans transacted under a program funded or guaranteed by a government unit to fund a post-secondary education.
This article argues that the two key justifications relied upon to justify this model - student abuse of the bankruptcy process and the need do protect the public interest - are unsubstantiated.
Reform effort should be directed at the substantive and procedural aspects of the exception. This article suggests that the current exception to discharge for government-funded student loans in Canada should be abolished. The onus should be placed on the government to oppose a discharge where the bankrupt has not experienced financial hardship in repaying government-funded student loans and/or where there is evidence of bad faith.
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SolveStudentDebt
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Posted: 08/March/2007 at 1:02pm |
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The onus should be on the bankruptcy sector to ensure that it does not allow borrowers to enter into such proceedings as an effort to frustrate the system.
The government can and wil oppose a discharge in any event, and they make sure that their bases are covered.
The bankrupcy administration played a big part in frustrating the system in the few years before the government stepped on their toes by restricting that industry from causing more losses.
Prior to 1998, the bankruptcy industry saw a lucrative market in former students with loans to pay. Basically, they were flagging and rounding up student loan borrowers in mass droves and telling them that they could go bankrupt and not have to pay back student loans. The government could only put up with that for so long. That is why the system is as thight as it is today.
Johnny
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Solve Student Debt specializes in solutions for students and graduates in student loan default, and those at risk of defaulting. solvestudentdebt.com
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Southpa
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Posted: 08/March/2007 at 5:16pm |
BUT if you can exhibit financial hardship you SHOULD be able to discharge your loans through bankruptcy. The fact that I have a defaulted student loan should indicate that I do not have the financial means to make their $800 + minimum monthly payments.
Take that a little further and see what I owe on the credit cards, which have saved me through those really lean times over the years . I can't remember when a trip to the dentist or an emergency vehicle repair would not break my bank account forcing me to use the credit card to get out of a jam. Even if I didn't owe a student loan I would very likely consider bankruptcy anyway! But you can't keep those little plastic cards in line, $600 shelled out and $150 back in, takes a while to get it back that way. The house always wins in this game.
Defaulting on a loan should not be a shameful act, as some would like you to believe. There are LOTS of other people out there who are also victims of their own circumstances. I don't live well by any means, I am just eking by and am thankful to have a roof over my head. In my situation the industry I was working with (fisheries) was downsized by 90%. I have nothing to hide and if I ever wind up in front of someone judging me or harrassing me about my situation I'll tell him that he should be lucky to see me. Otherwise HE would be out of a JOB!
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pogorelichfan
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Posted: 09/March/2007 at 7:14am |
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You may wish to seriously consider a revision of terms. 800.00 a month is simply not doable for most people. Yes, you'll pay more interest in the end, but ultimately you want to think about your quality of life over the decade you repay your loan. My revision of terms has dropped my payments by hundreds of dollars per month. If I wish to pay more I can, but at least it is my choice to do so....
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SolveStudentDebt
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Posted: 09/March/2007 at 11:52am |
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South,
If you are experiencing hardship, and can clearly demonstrate that you cannot pay at this time, you can have the account removed from active recovery - and the interest halted.
If, at a later date, you are able to resume paying nce your situation imporves, you start from where you left off.
Pogo, there are no such benefits or options fro people who are in default. That is the tragic truth.
Bankruptcy is something to consider if one can demonstrate PERMANENT disability, and PERMANENT inability to repay debt. In any other event, who can predict the future? A person may feel the pressure of debt now - but in 8-10, maybe even 16 months from now things will improve.
Bankruptcy is 18th century business, folks. It is good for these two audiences:
1. The permantly disabled and in debt,
2. People who would rather not pay debt
Johnny
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Solve Student Debt specializes in solutions for students and graduates in student loan default, and those at risk of defaulting. solvestudentdebt.com
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administrator
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Posted: 09/March/2007 at 7:57pm |
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I agree with the above regarding bankruptcy. Unfortunately, with regards to student loans, there is a third category that the govt has missed/ignored and treated harshly...
3) Those who cant afford to pay and are ineligible for assistance.
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Mark OMeara
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https://LaughSingWrite.com - http://bit.ly/heal2024
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SolveStudentDebt
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Posted: 10/March/2007 at 3:44am |
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That is one of the problems - no assistance for people who cannot afford to pay. The other problem is the number of people in default because of a faulty student loan system. A double whammy, if you will.
The government recognizes that there is a systemic malfunction. Why don't they fix it? Maybe they do not know how to fix it (?) Maybe they do not want to fix it (?).
I will tell you this much ...
THey recognized that bankruptcy was causing them a lot of losses so they fixed that system right away by changing rules within the BIA that apply to student loans. THey did not hesitate to address that systemic failure because that systemic failure was something that immediately affected them as a result of a student loan borrower's inability to pay. THe government does not see one's inability to pay. They viewed it at it as a borrower's "lack of wanting to pay".
Johnny
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Solve Student Debt specializes in solutions for students and graduates in student loan default, and those at risk of defaulting. solvestudentdebt.com
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pogorelichfan
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Posted: 11/March/2007 at 7:12am |
Of course, people have different individual situations and loan amounts, but a revision of terms is apparently possible at any time.
From reading posts on this site, it appears that that many people haven't been able to obtain interest relief---why are people not qualifying? Is it that their incomes are too high or something else? If people are taking too long to apply for interest relief that is presumibly a different story...
Strategy to consider:
As far as I can tell, there is absolutely no down side to doing a revision of terms. If you extend you amortization and pay twice the interest the following happens:
a/ you reduce your payments immediately for the life of the loan
b/ all the extra interest you are paying is refundable as a tax credit
c/ you may now be able to make your monthly payments so your principle is actually being reduced instead of being put on hold while on interest relief
Something to think about...
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frustrated-guy
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Posted: 11/March/2007 at 8:55am |
I think many people on this site are in default, once you are in default the loan is payable in full now and it is difficult to get the bank/gov to agree to a reasonable repayment schedule
This is one of the things that has to change. If someone in default becomes in the position they can make payments (aka get a job or better job, or cheaper rent ...) why wont the bank/gov agree to a reasonable repayment schedule or longer repayment schedule like pogo suggests?
it would be great if we could get the gov to agree to something reasonable
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SolveStudentDebt
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Posted: 11/March/2007 at 10:00am |
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Borrowers can apply to revise terms of their loans when they are in repayment and good standing. Revision of terms doe snot apply to borrowers in default. Once a borrower is in default, the debt is due in full at all times. There is nothing to revise.
Johnny
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Solve Student Debt specializes in solutions for students and graduates in student loan default, and those at risk of defaulting. solvestudentdebt.com
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pogorelichfan
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Posted: 11/March/2007 at 4:53pm |
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Of course, I was just offering the above with reference to those not yet in default. I have no information concerning what happens to those once in default.
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Gov't going in the wrong direction --Study