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.

 

 

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!

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...

 

 

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