I had a lengthy discussion with some former associates this afternoon that work for a law firm that handles the majority of CSL litigation against defaulted borrowers in Canada. I remembered somewhere in one forum or another that a member/poster was seeking some sort of evidence regarding cases or statistics that detail CSL accounts being discharged after the 10 year rule (Section 178 of the BIA). Well, based on the conversation I had with this individual, they have never lost a case in regards to the motioning of a section 178 on behalf of a borrower. They say that people do reserve the right to motion a section 178 after discharge from bankruptcy - and after being out of school for 10 years, however, the courts are not in favor of granting discharge to student debt. Basically, the Crown has influence, and has all of their bases covered. The lawyers they have are elite, you see.

 Johnny

 Yes, that is what I am saying, unfortunately. People can excercise their right to motion a section 178, however, the chances of an actual discharge are slim to none.

This raises yet another concern regarding the challenge to have the 10 year limitation period reduced to 5 years. The only difference is that people will be able to request a section 178 after 5 years from ceasing to become a full or part-time student. This charter challenge doesn't make it any easier to succesfully execute a section 178. It will be just as difficult with or without change.

 So, how will this challenge to reduce the limitation period to 5 years make any real difference?

 Johnny  

I filed a consumer proposal in 2000 that was rejected by HRDC.  Mostly I blame the attorneys here as they had not done their homework.  My trustee seemed almost catatonic for most of the conference call. The firm I retained was Deloitte Touche.  Afterwards I talked to the trustee and he said that HRDC accepted consumer proposals all the time for a smaller percentage of the debt.  I was told by a paralegal at consumer litigation in justice that they were prevented by law in accepting consumer proposals.  As I was not living in Canada I couldn’t proceed to bankruptcy to see how this might have been handled in court.  The judiciary is another branch of government though and if there were egregious errors in the handling of the case I imagine that there'd be some understanding by the judge. 

Not sure how they would rule on an extreme case of destitution.  Maybe the more humanitarian route would be to just create debtor prisons with a maximum stay of a year.  Of course conjugal visits and a full service pub would be mandatory.

Blah I don’ think you are going to find a more corrupt country masquerading as a democracy than Canada at the moment.  When Paul Martin goes on about this culture of corruption and cronyism in Ottawa he must be talking about something specific.  He would know as he was finance minister and he got lucrative government business and tax breaks for his company. Why is this not being covered by the press?  And then there is Jane Stewart at HRDC with her billion dollar grant scandal.  That is where my money was lost.  There is no accountability and no transparency or compliance with the rule of law in Canada. You have rogue civil servents and they do as they please. There is no oversight. 

Cheers

I hear the Charter challenge is being heard this month.  A decision will no doubt take several more months.  I would have thought that the "class" being discriminated against is students, but I guess that is not considered an enumerated ground under the Charter (whereas age clearly is).

I am waiting for the outcome and hope it is successful.  I have $50,000 + in student loans that I could quite literally be paying for the rest of my life since I can't afford the amounts that would reduce the principal. 

What do you call a system where a loan survives in perpetuity?  USURY.  To boot, the interest rates that students are charged for government loans are obscene.  The maximum we should be charged is prime rate.  But it's prime plus 2.5%.

 Blah,

 You will have a difficult time trying to locate a successful section 178. Hearsay is hearsay, yes. You will not find any statistics on this, unfortunately. People have tried to communicate witht he superintendant of bankruptcy office in ottawa and one of their repsonses  was "we don't know what you are talking about". Now, this office oversees the administration. How could they possibly not know what the people are talking about? It is a sensitive issue at both government and private sectors.

Finally, the courts say that a guy with 60K in student debt will be required to continue paying even if only earning 8 bucks an hour. Call around to the Superintendant of bankruptcy, or even try asking local bankruptcy administrators if they have these elusive satatistics. I will bet if you contact the supreme court youwill likely get no results either. No one really likes to even talk about it at those levels for some reason.

 niagara,

 I was refering to the battle to change the BIA only in this post.

The whole point of debt reform—and this should include student debt—is to ensure that there is a capability to recover from misfortune and to rehabilitate the debt in some way.  Bankruptcy has traditionally been that option.  If bankruptcy for student loans is simply a charade then the situation of student loans debtors is defined by a condition that has been described as inhumane by reformers over the last two hundred years.  It is cruel and unusual punishment. Even criminals are given a chance at a total pardon.  To hold a debt in perpetuity, collecting interest and amassing, when a person can obviously not pay is barbaric.  It’s a form of slavery where the debtor becomes an asset of the state to be milked eternally.

The thought that there is a cadre of “elite” lawyers representing CSL that have a special relationship with the courts and that justice is in fact stacked against the debtor is a direct affront to the Charter of Rights and Freedoms.  This is not a situation that is sustainable and eventually the student loan system will have to undergo real reform. 

If the period required for discharge is changed from 10 to 5 years then there may be a flood of new bankruptcy claimants.  If all claims are refused by the court then the sham being described in this thread will quickly be exposed and perhaps serve as a catalyst for reform.

What is needed are job created programs and work options for people who cannot afford to pay.  It could be some kind of public service program.

There is already a recognition in Ontario that lawyers need to start working on a contingency basis to help individuals whose rights have been trampled on by government agencies.  Right now there is no mechanism for aggrieved individuals to challenge the government if there is misconduct and over charter rights.  Lawyers are simply too expensive.  The CCLA  seems primarily interested in protecting group rights—“minority rights”—and not the individual rights of all Canadians.  That is fine but a more comprehensive and inclusive civil and human rights organization should exist as well in Canada. 

I think this forum is an excellent place for airing these views. Perhaps a brave reporter might look around here and expose the hypocrisy that exists in Canada.  If Canada is a country of compassion and enlightened human programs then it need to extend that philosophy to the student loan system. 

Cheers

information regarding new rules (budget 2003) for student loans and bankruptcy.  so i guess for those of us who are already bankrupt, no "relief" is available.

http://www.bankruptcycanada.com/studentloans1.htm#changes - http://www.bankruptcycanada.com/studentloans1.htm#changes

So let me get this right...

Please forgive my naivity.....

I finished school in 1994

bankrupt in 1999

discharged in 2000

I have been discharged 4 years, out of school for 10, but I will always owe my Student loan?

WOW_

i think that since you have been out of school for 10 years then you have options (i.e. apply to have you SL's included in your bankruptcy or go bankrupt all over again)  i was referring to those of us who are still students or those who have not reached the 10 year mark as far as being out of school.

maybe there is a light at the end of your tunnel after all.

I'd sure like some clarification on this issue...

After reading through this tread my understanding is that, once I'm in a position to claim bankruptcy (after 10 years according to the current law), I will likely not be discharged of my student loan debt - that it is a common practice of the courts to deny discharge. Is this correct?

When I read this I was shocked and dismayed. I've been struggling for over 7 years to make monthly payments on my student loans in the hope that, once I am discharged of my debt through bankruptcy, I will be free to start rebuilding my life financially. My debt is enormous (undergrad and graduate school, borrowing twice as much because I am a single-parent) and has grown to more than $85,000 because of interest over the years. Until recently I was only paying $150/month (total to all creditors) but recently increased payments to total $225. Not much - and it hardly touches the interest. After years in underpaid employment I'm finally building a career in my field and earning a reasonable wage - but it's barely enough to make ends meet (cost of living in Vancouver!). So... even though I struggle to feed, clothe and house my family, some judge is going to look at my situation and say, "I believe you're in a position to pay off this debt"???  Come on!!!

I didn't intend on being in this position, but I am and I'm keeping my fingers crossed for a successful ruling on the Charter Challenge. I have to remain positive that changes will occur that will help each and every one of us. I'm a fighter and will attempt bankruptcy even if the odds are against me!

Tangotori

 Hi Tang,

 The reality is that it is extremely difficult to have student loans discharged after the limitation period has expired. The courts look at a section 178 (motion for discharge) very carefully in these types of cases. Is it common for the courts to deny a section 178? Yes, unfortunately, it is a common occurence.

 Everyone who is involved in bankruptcy proceedings, and owes student loans, has the right to excercise a section 178. This is why it is in the BIA. It is hard to say whether or not your debt(s) will be discharged. All I can tell you is that the courts will review the following:

 1) Your present financial situation, income, and employment

 2) The reason why you filed an assignment into bankruptcy (was it because of student loans only, or a combined weight of consumer debt also?)

 3) The level of education you have received (to determine if your education gives you a higher probability (market) of finding suitable employment)

 4) The severity of your financial crisis - and history.

 5) Your family financial make-up

 If they determine that you can pay, or will be able to one given day, then the liklihood of having student loans discharged is slim to none.

so, say you had to go bankrupt due to consumer debt and not you SL's because say they were not in default at the time of your bankruptcy.  and say you couldn't find suitable employment for 1,2,3,4....etc. years and thus couldn't pay.  and then say you got lucky after those years and got a decent paying job say around $50K per year and could finally begin paying.  this would mean that your debt has grown considerably due to interest during the years you couldn't pay.  so instead of owing say $60000 you owe $80000 at the time you could begin making payments.  then your decent paying job will still leave you living near the poverty line once your SL payments are made especially if you have children.  so that means that for the rest of your working life (literally for those of us who are 40+ years old) you will be paying on your student loans with no chance of ever paying them off.  not to mention the fact that you can do nothing for your children in terms of helping them to have a better start in life.

what is really killing me is the interest since i don't qualify for interest relief because i filed bankruptcy before may 11, 2004.  when i filed bankruptcy, it was not due to my student loans.  in fact i did not even list them on my bankruptcy as i was well aware of the 10 year rule and i was also still in school at the time.

i have no problem paying back my loans when i find suitable employment.  i just don't like the idea of my loans growing and growing during my years of inability to pay.

so what should someone in my situation do?  what do you do when you fall through the cracks and any implementation of relief doesn't apply to you.

 The governments should not be able to charge interest on student loans. The interest is what wieghs people down alongwith the high costs attached to education in Canada. The government makes a good penny from interest so why would they want to stop charging it? THeir third party collection agencies receive a 17.5% for every collected CSL dollar so the government has to find ways to pay them - and ensure that they themselves receive maximum return.

 Look at the statutory set-off issue. The government receives ooooodles of  money from those who lose their income tax and GST rebates due to defaulted Canada student loans. Where does it go? These rebates arew applied to the debt's back and current interest accumulation first - then the principle if interest is covered. That isn't right. The government tends to think they are a bank - and an insurance company.

 Back to the issue...

 If you are bankrupt and want to excercise your right to a section 178, there are two outcomes:

 2) Absolute (the debt is wiped out)

 3) Rejection (speaks for itself)

 The government will not forgive student debt. The courts have their directives also when it involves student debt discharge requests (section 178). It is hard to say if evena third possibility could arise out of a section 178 which is a conditional discharge. The debtor would be responsible for a portion of the debt once ordered by the court. The CSLP and Provincial governments don't like to compromise at all and there are no cases of success that i am aware of.

i have a friend who owed $70000 in back child support payments.  he went to court and showed that his income was under $12000 for each of those years and this was why he was unable to pay.  the court reduced his amount owing to $10000 and when he's done paying that, he's done.  no interest, no ongoing payments.  ok, ok, maybe you don't believe me so i'll come clean.  the reason that i know this for a fact is that this friend is actually my brother. 

during the years he couldn't pay, the government kicked in in the form of mother's allowance.  so essentually, the government LOST money.  this is no different than SL's.

so if the government is willing to reduce child support payments in the event of "low/no income"  why are they so adverse to reducing SL's.  or are dead beat parents lessor "criminals" than student loan holders? 

and by the way, my brother is no "deadbeat".  he did everything he could and acted in good faith, he was simply unfortunate in that he was a factory worker who had no education and got laid off with no job prospects.

the point is that people find themselves in difficult situations just by luck of the draw. not on purpose.  and they shouldn't be punished for situations to which they have no control.

I'm now more discourged then ever.

Like in Peewee's example, I AM 40 and I'm looking at a lifetime of debt. The principle of my debt is so enormous that interest charged is also large - and like I said in my previous post, my monthly payment doesn't come close to touching the principle. Unlike Peewee's example, my annual salary is NOT 50K - and I can't see it being close to 50K for another 5 years or so. I can see the future... I will never be able to pay off this debt.

Johnny - I truely appreciate your frank and honest answers. I'm glad to have the information. It's great to have a resource like you on this forum.

But where's the hope? Up until now I've been placing hope in the Charter Challenge; should I still? If the Ontario Supreme Count finds that the 10 year rule is discriminatory, so what?! What difference will it make?! From what I'm reading and learning, my hope has been misplaced. In fact, I'm finding that there is little to be hopeful for. Sad but true. I will be dealing with my creditors for the rest of my life (won't that be fun... a lifetime of financial reports and hassling phone calls). I'll never be able to afford to send my children to university (can't even afford to get my growing son new shoes today). I won't be able to save for my retirement (closer than I'd like to think). I'll never be able to open a bank account, build credit, own a car or a purchase a home - all things that the average Canadian can take for granted.

I'm usually a pretty up-beat person... but I'm feeling very glum today.

Thanks, Blah... I re-read my posting above and I do sound very doom-and-gloom, don't I?! Don't worry about me, folks! Sure I'm struggling a bit with the idea that I may never be able to get this anvil off of my back, but I'm a fighter; as soon as I can I'll be filing for bankruptcy and preparing myself for any challenge! I may have lost a little hope, but I'm definitely determined to find an answer.

I agree with you that it would be great to hear personal stories of people that have attempted to include their P and CSLs in bancruptcy. What kinds of challenges did they have to contend with/overcome? And what were the results? I suspect that most of us participating in this forum haven't had this experience (some, like Peewee, have claimed bankruptcy but didn't include their student loans) and so won't be able to share personal anecdotes. Others, like you Blah, have had friends/collegues that have been successful. So come on, everyone... lets dig around a little, do a little research, and then get what information we find back to the group!

Blah... as an aside - a couple of years ago I left beautiful BC to work in South Korea (some city near Pusan). I lasted 7 months! It was a great experience and I'd love to return (vacation), but I missed home very much. Got hooked on kimchi, though! Best of luck to you there!

Tangotori

 Blah,

No offense taken. I am not a doctor nor am I a lawyer. Never said I was. I would appreciate it if you would keep the comments "above the belt" in the future though.

 Now, the issue about discharge....

 I am not trying to do anything but inform people of the ways that the system works. When the courts are in session for a section 178 hearing, they look at several factors as I had stated.

 The big question is "will the student loans be discharged?"

 ... I will simplify this to make those who feel bad a little bit better.

 The courts will hear anyone who motions a section 178. The CSLP/HRDC is the one who would either opose or not.

 Here is a case example:

 A fifty year old man with a heart condition owed CSL from a long time ago. He went bankrupt as a result of severe consumer debt and other financial woes. His case was heard and the HRDC did not opose so therefore the case was discharged. His education was a BSC.

 The courts review these motions on an individual basis, of course. They look at the reasons behind the bankruptcy as a rule. If they feel that the bankrupt has not acted in good faith - or is "frustrating" the system, then the chances are that the discharge would be oposed. If the individual has acted in good faith and is suffering from hardship that is harsh or debilitating in any way, then the odds are in the bankrupt's favor.

 So, again, ... will a student loan be discharged? The only way to know is schedule a section 178 and go for it. Each case is reviewed individually.

Tang,

When i said that i didn't include my student loans in my bankruptcy, that was a niiave idea of mine that they would remain in interest free status (i was a student at the time) if i didn't list them in my bankruptcy debt.  however, a week after i filed, RBC included them for me and they automatically went into default.  and under the current rules, my SL's have survived my bankruptcy and i am no longer eligible for any type of interest releif or debt reduction program regardless of how low my income may be.  in my hypothetical example above i mentioned an income of $50K.  this was just a number i threw out there.  i am unemployed rite now.

had i done my homework, i would've known that this would happen. it's in the canada student loans regulations clear as day.  as well, i also got bad advise from my trustee who said if i didn't list them then RBC wouldn't find out.  trust me, as soon as i found out that RBC had defaulted my loans, i tried to reverse my bankruptcy but it was too late.

so....to be clear....even though it was not my intention to default/go bankrupt on my SL's, that is what happened anyways.  i will have to wait 10 years from the date of my discharge  i.e. sept 2014 to apply to have them dissolved under the 10 year rule and that is if i am careful not to enrol in classes of any kind that could be regarded as "education"  because apparently i will reset the 10 year rule clock if i do.  .  I will be 50 years old at that time. 

my bankruptcy is not discharged yet as i am awaiting the outcome of the charter challenge, just in case.......

 I am happy that you have come and added to this, Laurel. Thank you very much. You know the system well enough to see where I am coming from.

 Good to see you again.

 Johnny

 Blah and Peewee,

 The HRDC is very protective of their investments. Interest accrual is one of them. Blah, you say that these issues are of my opinion. Don't assume things like this. I am more than just educated in this field. I was part of it at one time.

 You will find no statistics on how many have been discharged and how many haven't. If you have friends who have had student loans discharged back in the days when the limitation period was only 2 years, the system was more flexible back then. The doors and windows started to close up in the year 1997. Things are not the same now as they were then.

 2Laurel knows bankruptcy. You should direct your questions about this to her. This is her profession. If you want to know how the HRDC and Provinces respond to - and addresses these matters, then by all means, ask away.

 From the oposition's perspective, the HRDC will opose if they determine if a bankrupt has not acted in good faith, or is frustrating the system. You could be donnie Trump or down and out in Beverley Hills, it is not an issue.

 Johnny  

here's an article that gives a pretty good history about the CSLP.  its a bit dated, jan 2001 but an interesting and informative read nonetheless. the link is:  http://www.insolvency.ca/papers/PICReport.html - www.insolvency.ca/papers/PICReport.html

and it is entitled :

Report of the Personal Insolvency Committee of the Insolvency Institute of Canada

Recommendations for Reform and Further Amendments to the Bankruptcy and Insolvency Act

It was my understanding that if you did not recieve an absolute discharge (after bankruptcy) that you would only be required to pay a lesser amount for say a few years. Does anyone know about this?

I am also wondering about consumer proposals (after the now 10 year period)??

Myself: i am in major debt but am fortunate to have a fairly decent paying job (teacher 53, 000/year with wife and one child), however i am fedup of paying over 700 month in student loans. i have been out of university for 5 years and have made little (if any) dent in my loans which total close to $60, 000!

With my wife's student loans (after she's finished her doctorate) we will owe well over 100, 000! Yikes.

We have been married over 10 years and have not once been able to take a vacation or buy things that this education was supposed to bring. If not for her parents we would still be living in poverty as after loans are paid, rent... there is not a cent left at the end of the month. I will be near retirement by the time i pay off these damn loans--maybe then i'll get my vacation (or sweet death)

What ticks me off is that i have a friend who had no student debt (parents paid) but tallied up 10's of thousands of dollars in credit card debt. This guy took vacations, dressed to the nines... He ended up decaring bankrupcy and was discharged having to pay a very reduced amount for 2 years (i think). What ticks me off about this is that these kinds of bankruptcies are discharged and student loans (with morgage sized debts) are not even considered. Education is not a privilege it's a right.

For the record i am considering making a proposal after the 10 year period (or if the period changes). As a child grew up in poverty.There have been many times that i wished i had just stayed in my old neighbourhood and went on welfare. School is the ticket out but it comes at a very high, very stressful price. Students should not be racked with this kind of debt. It is not right.

My RANT--very cathartic

It was my understanding that while student loans are not usually discharged they can be CONDITIONALLY DISCHARGED (after the ten year period of course). This means that you would pay a set amount per month for 2 or 3 years. After this you are completely discharged.

Does anyone have information on this?