Tag: student loan debt

CONSUMER PROPOSAL STUDENT LOANS STEP-BY-STEP DEBT RESCUE: HOW TO FIX YOUR STUDENT DEBT PROBLEMS

Post author By Brandon Smith
Post date December 13, 2021

As the COVID-19 pandemic continues, we hope that you, your family, and your friends are safe, healthy, and secure. Ira Smith Trustee & Receiver Inc. is fully operational, and both Ira and Brandon Smith are readily available for phone or video consultations.

Consumer proposal student loans: Student Loans and Consumer Proposals

In the event of student loan debt, you may be able to eliminate certain student loans through a bankruptcy or consumer proposals. Student loans are given special treatment under the Bankruptcy and Insolvency Act (Canada) (BIA). The seven-year waiting period is a requirement for consumer proposals related to student loans (by the way, the concept is similar in personal bankruptcy).

Throughout this Brandon Blog, when I refer to student loans, I am referring to loans issued under the Canada Student Loans Act, the Canada Student Financial Assistance Act, or any provincial act that provides loans or guarantees for student loans.

I am not talking about any loan debt not meeting this definition. A private loan or a loan from a financial institution that is not covered by the above-noted legislation would be examples, including other loans taken out for professional training.

Consumer proposal student loans: Filing a consumer proposal for student loan debt

In previous posts, I discussed consumer proposals and how they can be used as an alternative to bankruptcy and as a means to negotiate repayment terms of your entire debt with creditors. Canada’s only federally authorized debt settlement program is the consumer proposal. Only licensed insolvency trustees (formerly called bankruptcy trustee) can administer consumer proposal student loans or for any other kind of debt. By using consumer proposals, you can negotiate away the majority or all of your debt in return for making monthly payments for a fraction of that amount and over an extended period of time, not exceeding five years, without incurring any interest. The seven-year rule affects consumer proposal student loans under the student loan legislation.

When you submit a consumer proposal, one of the major benefits is a stay of proceedings, just as in bankruptcy. You will no longer be subject to collection efforts including collection calls, legal action and wage garnishments. Private or financial institution loans taken out while you were a student, not covered by student loan legislation, may be eliminated under the BIA without regard to the seven-year rule. Private student loan debt such as a line of credit or credit card debt incurred while you were a student would be examples.

consumer proposal student loans

Consumer proposal student loans: Think of insolvency waiting periods like a clock with a start date and an end date

In either personal bankruptcy or consumer proposals, student debt is treated differently under government student loan legislation than normal ordinary unsecured consumer debt. The 7-year waiting period is a mandatory waiting period set by the BIA. This is why it is so important.

Student loan debt relief under section 178(1)(g) of the BIA is not available to people who have filed for bankruptcy or a consumer proposal and have not yet ceased to be a full-time or part-time student or who are within 7 years of ceasing to be a full- or part-time student.

A consumer proposal or personal bankruptcy can be filed by insolvents after they stop being full-time or part-time students more than seven years after ceasing to be students. In that case, the student loans debt can either be discharged by bankruptcy or by consumer proposals.

Counting the 7 years may also not be as straightforward as it sounds. In most cases, students take out a series of loans for each year of college or university. Do the 7-year counts take place on a loan-by-loan basis individually, or is it treated collectively? If in doubt, group them together.

The person must consider all three aspects of the calculation in order to do the calculation correctly:

the date the personal bankruptcy or consumer proposal was filed;
When the insolvent person ceased to be a student;
After ceasing to be a full-time student or part-time student, the length of time the person must wait before a consumer proposal student loan compromises the debt or the loan is discharged through an absolute discharge from bankruptcy.

Consumer proposal student loans: Potential “Court-Ordered Discharge” under hardship provision where 5-year waiting period satisfied

Under section 178(1.1) of the BIA, there is a provision that only applies in bankruptcy. It does not apply for consumer proposal student loans. Since we are discussing student loan debt, I would be remiss if I did not mention it.

Under this section, the court can order that the 7-year waiting period does not apply to a bankrupt who has student loan debt under federal or provincial student loan legislation 5 years after ceasing to be a full-time or part-time student. It would then actually be only a five-year waiting period.

Only a five-year waiting period can be allowed by the court if these conditions are met:

the bankrupt acted in good faith in connection with its student loan debt; and
it is likely that the bankrupt will continue to face financial difficulties to such an extent that it is impossible for them to repay their student loan debts.

What does the compulsory waiting period entail? When should we choose between a 7-year and 5-year waiting period? The 7-year waiting period has already been discussed. In determining whether a bankrupt is entitled to the hardship reduction for the lower 5-Year waiting period, the court considers the following factors:

How was the money used? For the purpose, it was borrowed for?
Was the bankrupt honest in his or her attempt to complete the educational program?
Has the bankrupt gained employment in an area directly related to his or her education?
Did the bankrupt make reasonable efforts to make monthly payments or otherwise make student loan payments against the loan or did the bankrupt make an immediate assignment into bankruptcy?
Are there any repayment assistance programs options for student loan debt relief that the bankrupt can take advantage of concerning the outstanding student loans, such as interest relief or loan forgiveness and has the bankrupt applied for such repayment assistance programs?
Did the bankrupt overspend or behave irresponsibly with personal or family finances?
When the loan applications were made, was the person’s disclosure about his or her circumstances fair and accurate?

The court decisions on obtaining financial hardship relief show that it is not easily obtained. A bankrupt normally have to show that they have exhausted all efforts, their financial hardship is not a result of their actions or inaction and that their financial situation cannot reasonably be expected to improve without the undue hardship relief.

consumer proposal student loans

Consumer proposal student loans: Paying Student Loans During Your Bankruptcy or Consumer Proposal

What if:

Your financial circumstances are you have too many unsecured debts and your unsecured creditors are taking legal action against you?
You have a history of rolling over payday loans and are deep in financial trouble.
You have to go see one of the licensed insolvency trustees in your area and ultimately use one of the debt-relief tactics of bankruptcy or consumer proposal.

If you stopped being a student:

5 or 6 years ago but you know that you could not qualify for the financial hardship provision relief; or
the last time you went to school was less than 5 years ago; and
you need to start repaying your student loans.

To rebuild a solid foundation for a good financial future in such a situation, either bankruptcy or a consumer proposal would have to be filed. Despite the fact that you would not be able to eliminate or compromise your student loans, you would be able to escape the clutches of your otherwise crushing other unsecured debts.

In such a case, it may make sense to file for an insolvency process, even though you would be paying student loans during your bankruptcy or consumer proposal.

Consumer proposal student loans summary

I hope you found this consumer proposal student loans Brandon Blog informative. Are you or your company in financial distress and a debt crisis? Are you embroiled in costly litigation or a crushing debt load and need a time out in order to restructure? Do you not have adequate funds to pay your financial obligations as they come due? Are you worried about what will happen to you in retirement? Do you need to find out what your debt relief options and realistic debt relief solutions for your family debt are? Is your company in financial hot water?

Call the Ira Smith Team today. We have decades and generations of experience assisting people looking for life-changing debt solutions through a debt settlement plan and AVOID the bankruptcy process.

As licensed insolvency professionals, we are the only people accredited, acknowledged and supervised by the federal government to provide insolvency advice and to implement approaches to help you remain out of personal bankruptcy while eliminating your debts. A consumer proposal is a government-approved debt settlement plan to do that. It is an alternative to bankruptcy. We will help you decide on what is best for you between a consumer proposal vs bankruptcy.

Call the Ira Smith Team today so you can eliminate the stress, anxiety, and pain from your life that your financial problems have caused. With the one-of-a-kind roadmap, we develop just for you, we will immediately return you right into a healthy and balanced problem-free life.

You can have a no-cost analysis so we can help you fix your troubles.

Call the Ira Smith Team today. This will allow you to go back to a new healthy and balanced life, Starting Over Starting Now.

Brandon Blog Post

CANADA STUDENT LOAN FORGIVENESS: BANKRUPTCY TREATS STUDENT LOANS FAIRLY

Post author By Brandon Smith
Post date September 4, 2019

UPDATE OCTOBER 30, 2019: On September 27, 2019, the Court of Queen’s Bench of Alberta issued its decision on the appeal of this case. The decision described in this Brandon’s Blog was reversed. You can read about it in our new blog:

STUDENT LOAN BANKRUPTCY DISCHARGE CANADA: REGISTRAR DECISION REVERSED

“Forgiveness does not change the past, but it does enlarge the future.” Paul Boose

Introduction

In my last Brandon’s Blog, I talked about the balance between a debtor and the creditors the Canadian insolvency system strives for. I just read today a decision of the Registrar in Bankruptcy sitting in the Court of Queen’s Bench of Alberta in Edmonton. In this case, Morrison (Re), 2019 ABQB 521, highlights this balance in this case dealing with Canada student loan forgiveness.

Can Canada student loans be forgiven in bankruptcy?

This is an application according to s. 178( 1.1) of the Bankruptcy and Insolvency Act (R.S.C., 1985, c. B-3) (BIA). As I have previously written in several of my Brandon’s Blogs, in general, student loans cannot be discharged by a bankruptcy where the date of bankruptcy occurred within seven years after the date on which the bankrupt discontinued to be a full-time or part-time student.

Section 178(1.1) of the BIA, allows for after five years after the day on which a bankrupt with student loan debt ceases to be a full-time or part-time student, the Court may, on an application, order that the financial debt will be discharged. For such Canada student loan forgiveness, the Court has to be satisfied that:

the bankrupt person has actually acted in good faith about their obligations under the student loan debt; and also
the bankrupt has and will continue to experience economic trouble to such an extent that the bankrupt will certainly be not able to pay that financial debt.

So it is possible for student loans to be forgiven in bankruptcy. In this case, if the bankrupt’s application for student loan forgiveness succeeds, the student loan debt will not survive after her discharge. The application was opposed by both Canada Student Loans and the Ontario Student Assistance Program (the government).

Is the forgiveness all or none?

Before getting into the unusual details of this case, the Registrar’s decision dealt with one of the issues that came up over the course of the application. The issue was whether the choice to forgive student loans is all or none. That is, whether it is open to a Registrar hearing this application to find that only a part of the financial obligation needs to survive, in contrast to releasing all of it.

Based on the case law, the Registrar was satisfied that this was an all or none proposition. The Registrar stated that he was somewhat let down that it had to be that way. If the decision is that these financial debts are extinguished by the bankrupt’s discharge, the government could object to the bankrupt receiving an absolute discharge.

Like any other creditor, they could ask that a financial condition be enforced as a condition of discharge. In other words, the bankrupt would have to pay a portion of the student loan amount into the estate to be distributed by the licensed insolvency trustee (formerly called a bankruptcy trustee) (Trustee) as a condition of getting a discharge. This frequently occurs with high tax obligation debtors.

As it turns out, the government did not oppose the discharge application that was heard following this student loan application. They also did not ask that a monetary condition be applied to the terms of the conditional Order that was given.

So, it had to be all or none.

The vital facts

In 2015 Ms. Morrison was in financial hardship. At the time, she estimated her overall unsecured financial obligations were $71,501.00. Of that amount, about $50,000.00 was student loan debt. She sought the guidance of a Trustee and then assigned herself into bankruptcy. Ms. Morrison’s stated intent was to have all her unsecured debt on an equal footing to make sure that she can take care of everything via the insolvency process. She told her Trustee that she wanted her student loan debt to be included in her unsecured debt that would be eliminated by her discharge from bankruptcy. She clearly wanted Canada student loan forgiveness.

Ms. Morrison was last a full-time student in April 2008. Her last day of classes was on April 18, 2008. She had been a full-time student up until that day. So, arguably, she discontinued being either a full-time or part-time student on April 19, 2008. Unfortunately for her, she assigned herself to bankruptcy on February 27, 2015. Her personal bankruptcy in February 2015 was just a bit too early.

This somewhat defeated her stated reason for going bankrupt. So this is why she made this application to try to have her student loan debt forgiven by her discharge from bankruptcy. Depending on how you do the calculation, Ms. Morrison’s date of bankruptcy was about 60 days or so too soon.

If she had actually waited until April 19, 2015, to become bankrupt, rather than February 27, 2015, as she did, her student loan debt would be eliminated by her bankruptcy discharge.

The government tried to argue that under the student loan legislation, you calculate the time that she ceased being a full-time or part-time student begins on the 1st day of the month following the month she finished her studies. The Registrar was not having any of that.

He said that the student loan treatment he was asked to consider was based on the terms of the BIA. Therefore, he was going to use the more practical conclusion that for BIA purposes, the day you ceased being the student is the day after classes ended. I guess you could quibble that the day after you finish writing your last exam was really the date you ceased being a student, but nobody raised that issue.

The considerations

The Registrar considered cases from both Alberta and other provinces laying out the factors that relate to the discretion the Court had in such a forgiveness application. As I stated above, the Registrar had to determine if:

the bankrupt person has actually acted in good faith about their obligations under the student loan debt; and also
the bankrupt has and will continue to experience economic trouble to such an extent that the bankrupt will certainly be not able to pay that financial debt.

The Registrar laid out his understanding of the factors he needed to consider based on previous decisions. His list was:

Whether the student loan funds were utilized for the purpose it was loaned for.
If the person finished their education.
Did the applicant obtain financial gain from education?
Whether the applicant has actually made reasonable initiatives to repay the financial debts.
If the applicant has made use of the option of applying for interest rate relief.
The timing of the bankruptcy.
Do the student loans form a significant percentage of the total debt?
Whether the applicant had an adequate job and therefore income to be expected to make payments against the student debt.
The applicant’s lifestyle.
Did the applicant had sufficient earnings for there to be surplus income in bankruptcy under the Superintendent’s Directive.
What approaches the applicant made to the government for debt relief and what the government’s response was.
Whether the applicant went to at any time was unable to work due to medical issues or disability.

The Registrar’s findings

Registrar’s findings reveal the following:

The student loans were used for the purpose the funds were loaned.
Ms. Morrison completed her education.
She acquired a financial advantage from her education as she currently works in the area she studied for, or a related one.
She made some effort to settle the student loan debt. She entered into a contract with the government but her financial condition prevented her from making good on that plan. She apparently made some repayment.
The bankrupt’s initiatives at getting to a practical arrangement were not trivial. However, it appears that she required the framework of an insolvency process for her to come to terms with all her debts.
The applicant got interest-free standing for a period of time.
The student loans developed by far and away made up the best part of the bankrupt’s general indebtedness.
The applicant is (and was) for the most part a single parent of one. She committed a significant percentage of her income to her child (now a teen).
She lived a modest way of life.
She now has full-time employment and surplus income.

The decision

The Registrar found that the timing in connection with the seven-year cut-off was extremely close. The bankrupt’s primary interest and her shared intent at the time of meeting with the Trustee were to deal with all of her creditors on equal ground. Ms. Morrison did not look for bankruptcy to avoid her student loan debt but rather to deal with all of her financial problems.

There was obviously miscommunication between Ms. Morrison and her Trustee. The trouble was that the miscommunication aggravated her stated goal, which was the entire point of her insolvency proceeding.

When the matter was heard, it was approximately eleven years after her education was finished. The Registrar stated that in these extremely uncommon conditions he is completely satisfied that it remains in the interest of justice that an order goes pursuant to s. 178(1.1).

The government did not otherwise oppose the discharge. The Registrar made a conditional order of discharge taking all circumstances, including her surplus income, into consideration.

In this way, the Registrar balanced the right of this honest but unfortunate debtor to get her fresh start, with the rights of her creditors.

“True forgiveness is when you can say Thank You for that experience.” Oprah Winfrey

Canada student loan forgiveness summary

Are you or your company in need of debt forgiveness. Have you tried your best to balance your financial survival with those of your creditors but you just cannot keep up?

The stress you are under because of your money challenges is huge. I understand your pain. At no cost to you, I will look at your whole set of circumstances and develop a plan that is as special as your issues. I know that I can help you through this.

There is no “one solution fits all” approach with the Ira Smith Team. That is why I can develop a debt settlement plan for you as unique as the financial problems and pain you are facing. If any of this sounds familiar to you and you are serious in finding a solution, contact the Ira Smith Trustee & Receiver Inc. team today.

Call us now for a free consultation. We will get your company back on the road to healthy stress-free operations and recover from the pain points in your life, Starting Over, Starting Now.

Tags bankrupt person, Bankruptcy, Bankruptcy and Insolvency Act, bankruptcy trustee, BIA, can canada student loans be forgiven, canada student loan forgiveness, canada student loans, condition of discharge, financial hardship, Ira Smith Trustee, licensed insolvency trustee, student, student loan debt, student loan debt forgiveness, student loans, surplus income

Brandon Blog Post

OSAP BANKRUPTCY IS NOT AS SIMPLE AS YOU MIGHT THINK

Post author By Brandon Smith
Post date May 29, 2019

OSAP bankruptcy Introduction

I have written before on the issue of the difficulty in discharging student loans through bankruptcy. Bankruptcy will certainly not release your student loans debt until you’ve been out of full or part-time studies for 7 years. It is also question and answer #8 in our TOP 20 PERSONAL BANKRUPTCY FAQS found on our main website. In Brandon’s Blog, I want to drill down into the issue of an OSAP bankruptcy.

What is OSAP?

The Ontario Student Assistance Program (OSAP) is a financial assistance program that can assist students in spending for college or university.

OSAP provides money via:

Grant: cash you do not need to repay
Loan: a loan you are required to pay off when you’re done college or university

OSAP can assist your spending for:

tuition
books and supplies/equipment
student fees billed by an institution
living expenditures
childcare

Amongst the various categories of people who are not eligible for OSAP, one is those people who have filed for either personal bankruptcy or a consumer proposal. As you might imagine, the rules surrounding OSAP bankruptcy are not simple. Let’s do some drilling down now!

Students that did not get student loans before the day they declared bankruptcy or filed a consumer proposal

If the student has been discharged from bankruptcy or fully completed a consumer proposal, she or he does not require to offer any type of supporting paperwork in order for their OSAP application to be reviewed.

If the student is an undischarged bankrupt or has not completed the consumer proposal, the student must supply a letter from their licensed insolvency trustee (formerly called a bankruptcy trustee) or consumer proposal administrator. The document must show the day the student filed for either bankruptcy or the consumer proposal and that these 2 matters have actually been or will be satisfied:

Ontario and Canada is not a creditor in the bankruptcy or consumer proposal as an outcome of monetary help provided via OSAP; and
no monetary help offered to the student via OSAP during the current OSAP year will be taken in the insolvency proceedings to pay back the creditors

Discharged and the student is not presently enrolled in studies

If the student is discharged from bankruptcy or has successfully completed a consumer proposal, his/her OSAP application will not be decided upon until the student gives evidence that they have no amount owing on any student loans.

Alternatively, if applicable, the student can show that he/she received relief in their bankruptcy by way of a court order stating that section 178(1)(g) of the Bankruptcy and Insolvency Act (Canada) (BIA) no longer applies to the student loans.

In this situation, the student needs to supply:

evidence that an order of discharge or full completion of the consumer proposal has been achieved and that 3 years have expired since that date
a copy of the notice of bankruptcy/consumer proposal
letter from the student’s bank and/or the National Student Loans Service Centre confirming there is no outstanding balance
any relevant court order

Discharged and continuing a program of study

Alternatively, if applicable, the student can show that he/she received relief in their bankruptcy by way of a court order stating that section 178(1)(g) of the BIA no longer applies to the student loans.

In this situation, the student needs to prove that he/she meets all of the following criteria:

at the time the student declared bankruptcy or filed the consumer proposal, they were enrolled in an accepted program of study at an accepted school and taking the minimum called for course load
the student remains in the same accepted program they were in on the date of bankruptcy/consumer proposal filing date
the student has not had a break in studies longer than 6 months since the date of bankruptcy/consumer proposal filing date
it has not been greater than 3 fiscal years since the date of bankruptcy/consumer proposal filing date

In this situation, the student needs to supply:

evidence that an order of discharge or full completion of the consumer proposal has been achieved and that 3 years have expired since that date
a copy of the notice of bankruptcy/consumer proposal
letter from the student’s bank and/or the National Student Loans Service Centre confirming there is no outstanding balance
any relevant court order
letter from the student’s Financial Aid Office verifying that the program of study in which the student was registered at the time of the bankruptcy/consumer proposal filing, is the same as the program the student is now applying for

Undischarged bankrupt or has not yet fully completed the consumer proposal

If the student is an undischarged bankrupt or has not successfully completed a consumer proposal, the processing of the student’s OSAP application will not be completed until the student gives evidence that they have no amount owing on any student loans.

In this situation, the student needs to prove that he/she meets all of the following criteria:

at the time the student declared bankruptcy or filed the consumer proposal, they were enrolled in an accepted program of study at an accepted school and taking the minimum called for course load
the student remains in the same accepted program the were in on the date of bankruptcy/consumer proposal filing date
the student has not had a break in studies longer than 6 months since the date of bankruptcy/consumer proposal filing date
it has not been greater than 3 fiscal years since the date of bankruptcy/consumer proposal filing date

In this situation, the student needs to supply a letter from their licensed insolvency trustee or consumer proposal administrator. The document must show the day the student filed for either bankruptcy or the consumer proposal and that these 2 matters have actually been or will be satisfied:

Ontario and Canada is not a creditor in the bankruptcy or consumer proposal as an outcome of monetary help provided via OSAP; and
no monetary help offered to the student via OSAP during the current OSAP year will be taken in the insolvency proceedings to pay back the creditors

The student will also need to supply a:

letter from the student’s bank and/or the National Student Loans Service Centre confirming there is no outstanding balance
any relevant court order
letter from the student’s Financial Aid Office verifying that the program of study in which the student was registered at the time of the bankruptcy/consumer proposal filing, is the same as the program the student is now applying for

Summary

I hope you now understand that the whole area of OSAP bankruptcy and student loans in either a bankruptcy or consumer proposal is not as simple as you might have originally thought. This is especially the case if the student is continuing his or her studies.

Do you have too much debt? Are you in financial distress? Do you not have adequate funds to pay your financial obligations as they come due?

If so, call the Ira Smith Team today. We have decades and generations of experience assisting people looking for financial restructuring, a debt settlement plan and to AVOID bankruptcy.

As a licensed insolvency trustee (formerly called a bankruptcy trustee), we are the only professionals accredited, acknowledged and supervised by the federal government to provide insolvency advice and to implement approaches to help you remain out of personal bankruptcy while eliminating your debts. A consumer proposal is a government approved debt settlement plan to do that. We will help you decide on what is best for you between a consumer proposal vs bankruptcy.

You can have a no-cost analysis so we can help you fix your troubles. Call the Ira Smith Team today. This will allow you to go back to a new healthy and balanced life, Starting Over Starting Now.

Tags bankrupt, Bankruptcy and Insolvency Act, bankruptcy trustee, BIA, Consumer Proposal, consumer proposal administrator, date of bankruptcy, discharged from bankruptcy, filing date, Ira Smith Trustee, licensed insolvency trustee, national student loans service centre, osap, osap bankruptcy, student loan, student loan debt, student loans, student loans debt, undischarged bankrupt

Brandon Blog Post

REPAYMENT OF STUDENT LOANS CANADA: STUDENTS’ #1 WORRY-STUDENT LOANS DEBT

Post author By Brandon Smith
Post date July 9, 2018

August 30, 2018 – NEW BONUS VIDEO AT THE BOTTOM OF THIS BLOG

Introduction

Although I can’t now fathom a world without the Internet, there are some reasons to wax nostalgic about the good old days. Most notably, many families lived nicely on one income and people retired from their jobs with a defined pension plan. They did not have to worry about repayment of student loans Canada. It was commonplace for students to put themselves through college working summers and weekends during the school year.

There is a new reality

Those days are gone! Two incomes are now an absolute necessity for most families and defined pensions have all but disappeared. To pay for university, even with working summers and weekends, students are saddled with enormous loans. In the 2015-16 school year, 497,000 students enrolled in the Canada Student Loans Program.

Students #1 worry

Dan Allan, Director of the Student Budget Consultation Program, states:

“While students are concerned about unemployment after school, their biggest worry is about their university debt and the cost of education being a huge hurdle going forward”

Why is there so much student loans debt?

Government funding dropped from over 77% in 1992 to less than 55% in 2012. To make up the difference, post-secondary institutions turned to students. Tuition fees began to rise – 115% between 1980 and 1995 (Glenn Burley, Canadian Centre for Policy Alternatives)
By 2016-17, the average Canadian university tuition was about 40% higher than it had been in 2006. (Fred Lum/Globe and Mail)
Tuition fees increased by 3.1% per cent for undergraduate programs in the 2017-18 academic years (Statistics Canada)
The average tuition cost for a Canadian university — before the cost of books, travel and supplies — is $6,500 per year (Statistics Canada)
The average amount owing for both bachelor and master’s graduates is $26,000 and $41,100 for doctorate graduates (Statistics Canada)

What happens when students can’t repay their student loans?

According to Dan Allan, the current Liberal government wrote off $200 million dollars in outstanding student loans on which it will never be able to collect. This is the third time in the past four years that the government has had to write off outstanding loans for reasons that include bankruptcy. There is a six-year legal limit on collection and debtors who can no longer be found. This results in direct student loans loan forgiveness.

How can young people get ahead when student loans are holding them back? As a society, we must increase our investment in education. Instead of the government writing off hundreds of millions of dollars in uncollectable student loan debt, wouldn’t that money be better spent on funding education?

Repayment of student loans Canada: What to do if you have too much debt

You can certainly contact Canada student loans to find out about their program for those having trouble repaying their student loan debt. If you’re a graduate with student loan debt that you can’t repay, and you were not able to work out an arrangement with Canada student loans then you are in a student loans debt crisis. If you are struggling with student loan debt, or debt for any other reason, you need professional help and you need it now. We understand your pain points and we know how to relieve you of the stress and pain.

The Ira Smith Trustee Team can help you manage your debt and set you on a path to debt free living Starting Over, Starting Now. We’re only a phone call away.

Tags average tuition, Bankruptcy, canada student loans contact, canada student loans program, defined pension plan, direct student loans loan forgiveness, Director of the Student Budget Consultation Program, Ira Smith Trustee, outstanding student loans, repayment of student loans canada, student loan debt, student loans, student loans debt, student loans debt crisis, tuition fees, university tuition

Brandon Blog Post

BANKRUPTCY DISCHARGE: MY CHEAT-SHEET OF THE TOP 8 THINGS THE BANKRUPTCY COURT CONSIDERS

Post author By Brandon Smith
Post date September 13, 2017

Bankruptcy discharge introduction

A bankruptcy discharge is when the bankrupt is released under Canadian bankruptcy law from his or her debts as part of the bankruptcy process. Some people think that it is the act of filing bankruptcy that releases the bankrupt from liability. This is not the case. It is the discharge from bankruptcy process that “discharges” the bankrupt’s debts.

We explain in this vlog the procedure when a bankrupt’s outright discharge is opposed. We discuss the top 8 things that the Bankruptcy Court will consider in determining just what outcome the bankrupt could expect.

The primary benefit of the bankruptcy process for the insolvent person

The bankruptcy discharge is among the primary benefits of relief under the Bankruptcy and Insolvency Act (Canada) (BIA). The discharge is vital to the bankruptcy process. Debtors, after bankruptcy, can wipe the slate clean and start over, which is a central principle under the BIA statute.

Not all debts may be released

A bankruptcy discharge offers the discharge of many unsecured debts. Credit card debts, personal income tax debt, unsecured personal loans and under certain conditions, some student loan debt are all dischargeable debts. Financial debts, which will not be discharged include:

support payments to a previous spouse or to children;
fines or financial charges imposed by the Court;
debts emerging from fraudulent behaviour;
student loans if fewer than seven years have passed considering that the bankrupt quit being a full or part-time student.
bankruptcy discharge

It can be opposed

An insolvent’s bankruptcy discharge application may be opposed by one or more unsecured creditors or the Licensed Insolvency Trustee (formerly called a bankruptcy trustee) (LIT). A creditor opposition is created when the creditor files the required notice of opposition, setting out the reasons for opposing.

This happens if the insolvent has not met all of his/her responsibilities under the BIA. Making full disclosure, attending the required two financial counselling sessions and making all necessary surplus income payments are all duties of the bankrupt that must be fulfilled if a discharge is to be considered.

It can also happen if the individual bankrupt has actually committed a bankruptcy offence. Those are acts listed in section 173 (1) of the BIA. In this case, there needs to be a bankruptcy discharge hearing in Court and the Court will after that evaluate the LIT or creditor opposition as well as give its decision on the discharge from personal bankruptcy.

There are four types of discharges possible

There are 4 types of discharges:

Absolute discharge— The bankrupt is launched from the legal obligation to pay off financial obligations that existed on the day of bankruptcy, except for certain types of debt identified above.

Conditional discharge— The bankrupt must fulfill certain conditions, additional payments into the bankruptcy estate, to get an absolute discharge. Once all conditions have been fulfilled, an absolute discharge will certainly be granted.

Suspended discharge— An absolute discharge that will be granted at later on a specific date determined by the Court.

Refused discharge— The Court has the right to decline a discharge.

If there is no opposition to the discharge from bankruptcy of the bankrupt by a creditor or the LIT, then the LIT is able to provide an automatic discharge by issuing the appropriate certificate. There is no need for attendance in Court.

bankruptcy discharge

The opposition process

When a debtor’s bankruptcy discharge application is opposed by either an unsecured creditor or the LIT, the Trustee needs to secure a Court day. This will be for a Court hearing on the insolvent’s application for discharge. The LIT must then tell all creditors who have filed a proof of claim of the opposition. Details are also provided about the date, time as well as place of the Court hearing.

The Trustee needs to also file a report with the Court on the conduct of the bankrupt both prior to as well as after applying for bankruptcy. The report will as well give a summary of the financial results of the bankruptcy administration. If a creditor has opposed the bankrupt’s discharge, then that creditor likewise needed to send a notice of opposition.

Does the bankrupt need a lawyer on an opposed discharge?

When going to Court for his/her discharge application hearing, a bankrupt would be well advised to come with a skilled bankruptcy lawyer to represent his or her interests. Sometimes the discharge hearing is less formal than various other types of Court hearings.

However, the Court follows all the proper regulations of civil procedure. It is sometimes tough for nonprofessionals to put their best foot forward without an attorney’s aid.

There have been many Court cases on applications for discharge. A Court decision released recently from the Queen’s Bench of Saskatchewan supplies an exceptional walk-through of the points the Court will take into consideration. For those interested, the reference is Hertz Bankruptcy (Re), 2017 SKQB 224 (CanLII).

bankruptcy discharge

The top 8 things the Bankruptcy Court will consider

The concerns the Court thought about, in determining what type of bankruptcy discharge certificate to issue, which is the same in all bankruptcy discharge hearings, were:

Do the conditions of the bankruptcy filing and the bankrupt’s conduct sustain an order discharging the Bankrupt’s unsecured debts?
The Court’s problem is to make sure that within a choice the policy purposes of the BIA are fulfilled. The bankruptcy, including the insolvent’s discharge, should act as a deterrence for the person not to duplicate the very same behaviour.
If the circumstances of the bankruptcy support an order discharging the bankrupt, what terms of discharge are proper under the distinct circumstances of the bankruptcy?
What were the conditions of the insolvent when the debts were sustained?
What efforts did the insolvent make to pay the creditors?
Did the bankrupt pay in respect of certain other debts but not all of them and particularly not the debt of the opposing creditor?
Exactly what are the insolvent’s monetary opportunities for the future?
Is there any other conduct or reality that needs to be factored into with the regard to discharge?

The Court will take lots of variables into account. The conduct, previous income, education and age of the bankrupt are all important factors. The Court will certainly likewise trust the Trustee’s report to Court on the bankrupt’s application for discharge. The Trustee’s report assists in determining facts about the conduct of the insolvent and his or her future prospects.

bankruptcy discharge

Is the bankrupt young or old?

Prevention is always a consideration. It is however very important to remember that Courts tend to be extra conventional when dealing with older bankrupts. A more youthful bankrupt with years of income-making opportunities could be needed to make an extra significant repayment. Less respect is given to the instant ability to pay.

An older bankrupt with some surplus income but fewer working years might be needed to pay less surplus income obligations into the bankruptcy estate.

Bankruptcy discharge: Is my bankruptcy case over when I get a discharge?

You should by this point in my Brandon Blog realize that when you receive an absolute discharge from your bankruptcy, at that point, you are discharged from your unsecured debts.

A discharge shows that you have finished with your bankruptcy legal process and your personal liability for unsecured debts has ceased. It’s not a separate thing from bankruptcy; it happens either automatically or by an Order of the Court, as I have described above.

At that point, the LIT still has some duties to fulfill. They include:

if there is going to be a dividend paid to the creditors, making sure that all proofs of claim have been reviewed and allowed for dividend purposes;
resolve any uncertainties the LIT may have concerning certain filed bankruptcy claims, including the issuance of Notices of Disallowance if any;
preparing the bankruptcy administration Final Statement of Receipts and Disbursements;
getting approval from the Office of the Superintendent of Bankruptcy to the Final Statement
getting the Final Statement, including the LIT’s fee and disbursements, approved by the Court;
issuing the dividend bankruptcy payments, if any
getting the discharge of the LIT

It is then that your bankruptcy case is closed.

Bankruptcy discharge: Do you have too much debt and want to avoid bankruptcy?

Do you have too many debt obligations and debt payments and have no idea how to deal with them? Act before you find yourself in the throes of an emergency financial situation. Ira Smith Trustee & Receiver Inc. has assisted many Canadian businesses and people throughout the Greater Toronto Area (GTA) in dealing with debts that need a plan for Starting Over, Starting Now. Don’t postpone. Give us a call today. Financial problems can be solved while avoiding bankruptcy with timely activity as well as our excellent strategy tailored just for you.

Brandon Blog Post

#VIDEO-STUDENT DEBT: HOW TUITION COSTS AND DEBT NEGATIVELY AFFECTS US#

Post author By Brandon Smith
Post date September 7, 2016

STUDENT DEBT: HOW TUITION COSTS AND DEBT NEGATIVELY AFFECTS US

Student debt: The times have changed already!

Times have changed so much for university graduates and unfortunately, student debt counselling has not kept pace with today’s reality. Students graduate with various student loans and varying amounts of debt. The theory is that graduates will get a well-paying job in their chosen field upon graduation, allowing them to work and to repay their student loan debt.

Our previous student debt counselling and student loans blogs and vlogs

Student loan debt is such a serious issue that we’ve written a series of blogs and vlogs on the subject:

Student debt: What can today’s graduates expect?

However, in today’s world, their job searching may result in them not getting immediately into their field at the salary they anticipated. It may be the case that graduates may have to do a couple of different part-time jobs, may start being underemployed and in some cases, starting out interning and being in their chosen field but not being paid at all. This will put immense pressure on the new graduate who needs to start repaying debt in addition to normal living expenses.

Student debt: How much of a problem is it really?

Post-secondary education is effectively a need to succeed in today’s labour market. Unfortunately, while the demand for education has increased, public funding has failed to keep up.

According to the Canadian Federation of Students, public funding shortfalls have resulted in a significant growth of costs that students must now bear, namely in the form of high tuition fees. From 1990 to 2014, national average tuition fees have seen an inflation-adjusted increase of over 155%. In Ontario, tuition fees have increased over 180%.

They also state that students who receive funding through the Canada Student Loans Program (CSLP) are graduating with an average student loan debt of $28,495. This is only student loan debt and doesn’t include any other borrowings for living expenses if the student is living away from home. The impact of Canada student loan debt is that today’s students are the most indebted generation in Canadian history. They can certainly use student debt counselling.

Student debt: We need more than just counselling

Although financial counselling should begin at home at a very young age, and be reinforced through teachings at the high school level, more than debt management lessons are required. We need our provincial and federal governments to take the lead. There needs to be an easing of the burden on graduates. Graduates with high student loan debt show signs of poor mental health in early adulthood. This certainly must impact their work performance and is not healthy for Canadian society.

Our governments need to look seriously at the public funding model for post-secondary school education. It is not helping Canadians to allow them to incur high student debt for fields of study where the job prospects, and the prospect of being able to repay the loans, are dim. It does not help Canadian graduates to have them under so much pressure to repay loans after graduation – perhaps there needs to be federal government intervention to ease the repayment program. In this way graduates can have the necessary time to get their employment, contribute to Canadian society, pay income taxes AND repay student loans.

These are just but a few simple ideas. I am sure that you can come up with many more and I would love to hear about them.

Are you in need of student debt counselling or credit or debt counselling in general?

No matter the cause of your serious debt issues, The Ira Smith Team is here to help. Debt is not insurmountable; there are always options. With proper counselling, immediate action and a solid plan, we can help get your life back on track Starting Over, Starting Now. Our trustees are also certified in credit counselling. Give us a call today.

THIS VLOG WAS INSPIRED IN PART BY OUR eBOOK – PERSONAL BANKRUPTCY CANADA: Not because you are a dummy, because you need to get your life back on track

Tags average student loan debt, canada student loans program, canadian federation of students, CSLP, debt counselling, debt management lessons, financial counselling, Ira Smith Trustee, student debt, student debt counselling, student loan debt, student loans debt

Brandon Blog Post

STUDENT DEBT COUNSELLING: ARE WE DOING ENOUGH TO REDUCE THE COST OF STUDENT LOANS?

Post author By Brandon Smith
Post date August 8, 2016

Amazon Prime getting into the US student loan business but not student debt counselling

As you will see from this blog, there is a huge need for student debt counselling, as new entrants into the student loan business are enticing students with new offers. The financial services industry in the United States is changing rapidly with many non-traditional companies getting into the game. The latest is Amazon Prime. They’re now offering discounted student loans to Amazon Prime Student customers through a partnership with Wells Fargo.

Although this type of program is now only available in the U.S., and while we typically discuss things that affect Canadians, we felt that anything that could cut the cost of a student loan was worth reporting. However, keep in mind that this does nothing for student debt counselling so that students are better able to handle debt. It is merely a financial opportunity with little risk as further described below.

Our previous student debt counselling and student loans blogs and vlogs

Student loan debt is such a serious issue that we’ve written a series of blogs and vlogs on the subject.

Canadian Federation of Students study

According to the Canadian Federation of Students (CFS), the impact of Canada student loan debt is that today’s students are the most indebted generation in Canadian history. They can certainly use student debt counselling.

The average student graduates with over $28,000 of debt. Tuition fees and living costs continue to rise, and there’s no solution in sight. The CFS has been lobbying the federal government for students, to no avail. And it’s not better south of the border where tuitions and the student loan debt is proportionally greater.

Perhaps CFS should also lobby the provincial governments to include student debt counselling as a mandatory grade 12 subject in high school!

Is Student Debt Counselling Being Offered to Amazon Prime Student customers?

Through the partnership, Wells Fargo is not offering any student debt counselling, but is offering student loans Amazon Prime Student Customers (not students whose parents have a Prime membership of their own):

A 0.50% interest rate discount
This can be added on top of a 0.25% interest rate reduction for enrolling in an automatic monthly loan repayment plan
In addition, any interest rate discount tied to another Wells Fargo global promotion

Students can apply for a new student loan or refinance existing student loans.

Why would Amazon Prime want to get into the student loan business

Of course this partnership benefits Amazon and Wells Fargo financially. However, it does not give any education to college students through student debt counselling. Amazon Prime will no doubt have many more sign ups and Wells Fargo will have access to many more potential borrowers. But the bottom line is that the student will benefit by having access to discounted student loans. Hopefully someone in Canada will also find a way to help lighten the student loan debt load.

However, there is even a greater reason. In Canada, a bankruptcy discharge will only end student loans if you’ve ceased to be a full or part-time student for more than seven years and either declare personal bankruptcy or make a debt proposal to your creditors, most likely through a consumer proposal. The only other option is to attempt to seek from the Court relief because of undue hardship, but this is very difficult, if not impossible.

If you think it is difficult under Canadian law to end student loans, it really is impossible under the US Bankruptcy Code. The leading case in the US, which subsequent decisions have followed, is, Marie Brunner v. New York State Higher Education Services Corp. (October 14, 1987, #41, Docket 87-5013). This case set a precedent for defining the concept “undue hardship” in bankruptcy discharges of student loans.

Suffice to say that if a bankrupt in the US is seeking a discharge of all of his or her debts, including student loan debt, the mere fact that they can afford to hire and pay an attorney can be used as evidence that if they have funds to pay legal counsel, then there is no undue hardship for them to agree to a repayment plan on account of the student loan debt after they get their discharge from bankruptcy and their non-student loan debts.

Since the debt will in almost every case always be owing and payable, it is a safe bet for Amazon Prime.

Are you in need of student debt counselling or credit counselling?

Tags Amazon Prime, Amazon Prime Student, canada student loan, discounted student loans, Ira Smith Trustee, marie brunner, starting over starting now, student debt, student debt counselling, student loan debt, student loan repayment, student loans, the impact of student debt

Brandon Blog Post

STUDENT LOANS DEBT: WILL BANKRUPTCY ELIMINATE IT IF YOU ARE NOT THE STUDENT?

Post author By Brandon Smith
Post date April 25, 2016

An interesting American case about student loans debt

Student loans debt is nearly impossible to get rid of in bankruptcy. A case winding its way through the US court system has piqued our intellectual interest. A father, who is a discharged bankrupt, is taking the lender who HE borrowed funds from for his child’s education to Court. The lender is continuing to pursue collection efforts against the father on the basis that the provisions of the Bankruptcy Reform Act of 1978, as amended, codified in Title 11 of the United States Code and commonly called the “Bankruptcy Code” (“Code”), does not release the father from what is in reality student loans debt. The father is taking the lender to Court for a ruling that by virtue of his discharge, he is released from that debt like all his other debts. It has raised the question whether the same student loans debt rules should apply in that case.

The Canadian perspective

We are not qualified to express any opinion on the US legal case before the US Court, but we are qualified to discuss the issue from the Canadian perspective. We started thinking whether this same situation could arise in Canada for student loans.

Last week we discussed student debt bankruptcy from the perspective of the student. Previously, we have written blogs and created a vlog about student loan debt, including:

So this week, we’re discussing student loan debt and bankruptcy from a very different and interesting angle. Could a Canadian lender take the position against a Canadian parent borrower who on the loan application described the purpose of the loans for the funding of his or her child’s Canadian post-secondary education, that the loans qualify as student loans under the applicable Canadian statutes, including, the Bankruptcy and Insolvency Act (Canada) (BIA). Stated otherwise, are such loans the same as student loans under Canadian law and can bankruptcy cut such loans if you’re not the student?

Are student loans necessary?

Many young Canadians need student loans to get a post-secondary education. To qualify as Canadian student loan debt, the loans must be issued under a specific Canadian student loan statute: the (i) Canada Student Loans Act; (ii) Canada Student Financial Assistance Act; (iii) Apprentice Loans Act; or (iv) any enactment of a province that provides for loans or guarantees of loans to students.

All students need financial help to be full-time university students. The only real places that such assistance can come from is either the parents, if they are willing and able to do so, student loans, or both. Many Canadian parents pay a hefty part of students’ tuition fees, even if it means sacrificing their financial stability, to help their children avoid a post-graduation life burdened by tens of thousands of dollars of student debt. Others may wish to, but they cannot afford to do so.

So are student loans and the resultant debt necessary? In most cases, yes.

Can a parent co-sign for or guarantee their child’s student loans?

The short answer is no. As I have already stated, to qualify as a student loan, the loan has to be made under the provisions of one of the Federal loan statutes mentioned above, or any such similar Provincial legislation. Nowhere in those student loans statutes is there a place for either a guarantor or cosigner. In fact, the Federal statutes all have similar language stating that upon the death of the borrower, the Federal government will repay the outstanding part of the loan. In addition to there not being any sections that allow for a guarantor or cosigner, the specific section dealing with the death of the borrower does not limit the government’s guarantee by using words like “….and if the lender is unable to collect in full from any guarantor or cosigner”. The reason is simple, student loans cannot be guaranteed or otherwise borrowed by anyone other than the student.

Will bankruptcy eliminate student loans debt?

Student loans are nearly impossible to get rid of in bankruptcy. Section 178(1) of the BIA states:

“(g) any debt or obligation in respect of a loan made under the Canada Student Loans Act, the Canada Student Financial Assistance Act or any enactment of a province that provides for loans or guarantees of loans to students where the date of bankruptcy of the bankrupt occurred:

(i) before the date on which the bankrupt ceased to be a full- or part-time student, as the case may be, under the applicable Act or enactment, or

(ii) within seven years after the date on which the bankrupt ceased to be a full- or part-time student;

(g.1) any debt or obligation in respect of a loan made under the Apprentice Loans Act where the date of bankruptcy of the bankrupt occurred

(i) before the date on which the bankrupt ceased, under that Act, to be an eligible apprentice within the meaning of that Act, or

(ii) within seven years after the date on which the bankrupt ceased to be an eligible apprentice;”

So if you’re a student, bankruptcy will only end student loans if you’ve ceased to be a full or part-time student for more than seven years and either declare personal bankruptcy or make a debt proposal to your creditors, most likely through a consumer proposal. The only other option is to attempt to seek from the Court relief because of undue hardship, but this is very difficult, if not impossible.

What is required to meet the burden of undue hardship?

If the Court is satisfied that you meet the two-pronged test, you’ll be discharged from your student loans obligations in bankruptcy only if the :

acted in good faith in connection with your obligation to repay your student loan debt; and (emphasis added)
have experienced, and will continue to experience, financial difficulty that will prevent you from repaying this debt

It’s then up to the bankruptcy court to decide whether they forgive your loans, either in full or in part. One of the difficulties in trying to prove undue hardship is that there is no clear definition for what makes up hardship; each bankruptcy court across Canada may use a slightly different interpretation. The only thing that’s clear is that you must prove that having to continue to pay the student loans after bankruptcy would be a financial hardship for you. If you try this route, the Court will look at ALL of your income and expenses.

The Court may decide you are not trying hard enough, or, may look at things like your small car you use to get to work, which you purchased used (instead of taking public transit), your cell phone and your internet expenses, and decide that these are luxuries you do not need. If you are a smoker, the Court may very well decide that if you were not addicted to tobacco, you could start to repay some part of your student loans.

If you think my examples are picayune or silly, just look up the case of Fournier (Re), 2009 CanLII 31606 (ON SC).

Will bankruptcy eliminate student loan debt if you are not the student?

I don’t know what the eventual disposition of the US case which I mentioned at the beginning of this blog will be, but based on all the above, in my view in the Canadian context, a parent, relative or friend cannot guarantee, cosign or borrow for a loan that qualifies as a Canadian student loan. If you borrow to fund your child’s education, then you are borrowing under an ordinary commercial transaction and the applicable student loan sections of the BIA do not apply.

So if you have borrowed for this purpose, only the normal provisions of the BIA apply, and you will get a discharge from that and your other debts upon your discharge from bankruptcy. However, if you pledged any of your assets in support of such borrowings, such as your home, the lender does have the right to enforce its security against such assets if you cannot repay, whether you are bankrupt or not.

What should you do if you have too much debt?

If you’re drowning because of your finances, we know we can help you. Although many people believe that bankruptcy is the only way of out serious debt, that’s not always the case. Ira Smith Trustee & Receiver Inc.can discuss other bankruptcy alternatives with you which include credit counselling, debt consolidation and consumer proposals.

If we get to see you early enough, at the first sign of trouble, you can use and carry out one of the bankruptcy alternatives, to free you from the burden of your financial challenges to go on to be a productive, contributing member of society and not be plagued by debt problems.

Bankruptcy law is very complicated and requires the expertise of a professional licensed insolvency trustee. Ira Smith Trustee & Receiver Inc. is here to help. With a cumulative 50+ years of experience dealing with diverse issues and complex files, we can get you back on your feet Starting Over, Starting Now. We can help. Call us today.

People consider us bankruptcy experts because we wrote the eBook which is sold on Amazon.ca, explaining the Canadian personal insolvency and bankruptcy system, specifically directed to the person stressed out with too much debt.

Brandon Blog Post

STUDENT DEBT BANKRUPTCY: NEW SECRET TACTIC TO AVOID BANKRUPTCY

Post author By Brandon Smith
Post date April 18, 2016

Student debt bankruptcy inquiries on the rise

Student debt bankruptcy is a very serious issue in our country. We’ve looked at the problem from different angles in a series of blogs and like you, are left with more questions than answers.

Cases on the rise

Unfortunately, regardless of which government is in power, there’s been no solution or improvement regarding this kind of debt and student debt bankruptcy. In fact, university and college debt have now taken on epic proportions. According to the Canadian Federation of Students (the largest organization for post-secondary students in Canada), last year the number of student debt bankruptcy files of those who received student loans hit a 10-year high as more than 6,000 students declared bankruptcy in 2015, more than double the number in 2014.

We don’t have a level playing field nationally

The costs of post-secondary education have become prohibitive. Firstly, we don’t have a level playing field. The cost of tuition varies greatly from province to province, from city to city and from college to university (where the same program is offered). According to a study by the Canadian Centre for Policy Alternatives the cost of tuition alone (not including books, living expenses, transportation, entertainment, etc.) is:

$8,756 in Ontario
$6,969 in Nova Scotia
$2,655 in our easternmost province
$2,350 for the police foundations program at Georgian College
$4,466 for the police foundations program at Laurentian University in the same buildings with the same teachers as Georgian College

Some Provinces are coming up with a new secret tactic

Newfoundland and Labrador have replaced student loans with needs-based grants, essentially wiping out tuition costs. Prince Edward Island and Nova Scotia don’t charge interest on these loans but there are still too many people who are being crushed by a mountain of student debt. Recently, the Ontario Liberal government announced in its recent budget that it is combining existing programs to create an Ontario Student Grant, which would pay for average college or university tuition for students from families with incomes of $50,000 or less.

The Canadian Federation of Students has called on the federal government to make tuition at university and college free for all students but that’s not going to happen.

So the new secret tactic is free university tuition? It may be a nice idea but who’s going to pay for it?

What to do if you have too much debt

Unfortunately, we can’t solve the student debt issue where during studies, or after graduation, (former) students have debt they cannot afford to repay. However, we are experts in dealing with debt.

If you’re a student loan recipient who’s thinking of declaring bankruptcy or you’re being strangled by general financial obligations that you can’t meet, contact Ira Smith Trustee & Receiver Inc. Given immediate action and the right financial plan, we can have you on your way to a debt free life Starting Over, Starting Now. Watch for our blog next Tuesday when we’ll be discussing Student Loan Debt: Will Bankruptcy Eliminate It If You Are Not The Student?

Tags Bankruptcy, financial plan, free tuition, Ira Smith Trustee, starting over starting now, student debt, student debt bankruptcy, student loan, student loan debt, trustee

Brandon Blog Post

#VIDEO: AVERAGE STUDENT LOAN DEBT: REASONS WHY WE PITY YOU#

Post author By Brandon Smith
Post date December 23, 2015

The rise of average student loan debt

<<average -student-loan-debt

Average student loan debt is getting out of control. Post-secondary education is effectively a need for today’s labour market. According to the Canadian Federation of Students in its paper titled: “The Impact of Student Debt”, unfortunately, since the demand for education has inflated, public funding did not keep up. Public funding shortfalls have resulted in the increased cost of post-secondary education being borne by students.

The growth in average tuition fees

From 1990 to 2014, the national average tuition fees have seen an inflation adjusted increase of over one hundred and fifty per cent (150%). In Ontario, tuition fees have grown over one hundred and eighty percent (180%). For most students—often having spent very little time active within the workforce, other than for part-time work—funding their education has become more and more troublesome.

Students now taking on higher levels of average student loan debt

Many students are now taking on increased levels of debt for their education. Students requiring a Canada Student Loan currently graduate with an average student loan debt of over $28,000. Keep in mind that this is an average, with the costs of graduate education resulting in higher debt levels. Relying on debt to finance education suggests that there is a delay in the full impact of high tuition fees till after graduation—when interest begins to be charged.

Societal issues caused by rising average student loan debt statistics

This impact is now exacerbated by the effects of the most recent recession and the rising trend of precarious, and even unpaid, employment. The broader effects of high levels of student debt on both the person and the general economy are now resulting in various issues:

Young Canadians (15-24) accounted for over half of job losses over the last 5 years;
Un and under-employment can cost the Canadian economy over $22 billion by 2031;
In 2014, youth un and under-employment was twenty-seven per cent (27%);
Thirty per cent (30%) of medical students expect to graduate with over $100,000 in student debt;
Under-employment and work outside one’s field of study results in talent degradation, falling behind in ability, and lost networking opportunities;
Canada has seen a fifteen per cent (15%) growth in Canadians under the age of 30 who still live in their parent’s home since 1981;
Those with student debt have a fewer assets, savings or investments compared to debt-free peers.

Average student loan debt causes affect the Canadian economy

Starting out with huge debt and facing a weak labour market, this prevents graduates to fully take part within the Canadian economy. Student debt impacts career selections, even among professional school graduates in medicine and law. An estimate of unpaid internships is in the range of 300,000 graduates working with no pay.

Do you have too much debt? Then contact us now

If you are an individual or company who needs to free themselves from the stress and strain of too much debt, and especially if you have been told your situation is hopeless, Ira Smith Trustee & Receiver Inc. can prepare and carry out the plan made just for you, to free you from the burden of your financial challenges to go on to live a productive, stress-free, financially sound life.

Student loan debt has its own set of unique rules and complexities within the Canadian insolvency scheme. If you’re experiencing serious debt issues, contact a professional trustee for a free, no obligation consultation. The Ira Smith Team does not try to write new insolvency law or tax law. Rather, we will evaluate your situation within the existing statutes, and help you to arrive at the best possible solution for your problems, whether that solution is a bankruptcy alternative like credit counselling, debt consolidation or a consumer proposal or bankruptcy. Starting Over, Starting Now you can be debt free with the help of a professional, licensed trustee in bankruptcy. Contact us today.