Archive for Category 'student loan'

Question: I have not been a student for more than 4 years. The last time I went to college it was for one year and I flunked out but I didn’t use OSAP.
From that time I have gone bankrupt. I got discharged this year from my bankruptcy. I can’t apply for any loans at any banks because of my situation. I’m starting university this is my second year and I need some sort of financial help or else I’m going to have to drop out. I did really well in my grades last year so OSAP doesn’t have a problem with that. They rejected me last year and I just want to know what I can do if they do reject me and what my other options might be. I am completely desperate.

Answer: Your best option is to talk to OSAP.  It is quite common for someone to go bankrupt and still qualify for a student loan again in the future.  Your other option is to discuss your situation with the admissions department at your school.  They will be fully familiar with all forms of student aid, and can advise you fully on your options.

Question: My case is a bit particular. I’ve started my studies in 1992 at a college, got OSAP (Ontario and Canada Portions) loans, everything was fine until 2 yrs after in 1994 that I had to leave my studies due to a family emergency. I was away for college, after 1 year the collection letters started to come asking for $ 500/month pymts that I could not really have afforded at that time, I did not pay.

My credit history suffered a lot, but I still wanted to finish my degree some day. I was working all these years at bad paying jobs and really struggling. By late 1999, I decided to take some part time courses at my college, so they could count towards my diploma and degree (I had the option to get both). I kept studying part time throughout 2000, 2001, 2002 and finally in 2003 I received my College Diploma. Please note, that it was in 1994 where I received the last dollar from OSAP loans. All courses after that, I paid from my pocket either by using my little savings and using my credit cards.

Since I wanted to get a Bachelors Degree, I kept studying part time and took some courses at Seneca, Humber, Centennial College so I can get transfer credits for DeVry (which no longer exists in ON). In 2006, I went to Calgary, Alberta and Finally finished my Bachelor’s Degree in Business which is recognized by the Govt of Alberta.

Since OSAP stopped helping me in 1994, could I ask the courts to discharge my debts ??
- Or will they take 2006 as my final study date ??
- The Canada Student Loan portion $ 15,799.10 is being handled by Human Resources Dev. Canada,,,will they settle for less ?

-The Ont portion $ 12,663.51 Balance is handled by a collection agency working on the Gov’ts behalf, tehy say they can accept 90% of that in full and close the account. – Can they accept less ?

I owe $ 28,000 b/w Canada and Ontario Student Loans, about 10,000 or more is interest accumulated. My Tax refunds are being seized by C.R.A.

Please advice.
Thanks.

C.J.

Answer: If you go bankrupt in Canada, government guaranteed student loans are automatically discharged if you file bankruptcy more than seven years after you ceased to be a student.  The date you received the loans is not relevant.  Since you graduated in 2006, that’s the date the “seven year clock” starts, so your student loans would not be automatically discharged in a bankruptcy unless you wait until 2013 to go bankrupt.

It is possible to go bankrupt and then apply to court after 5 years in cases of extreme hardship if you are unable to repay your student loans.

In your case, you should contact OSAP and confirm your end of study date, and then your best option may be to simply work with them to make a reasonable repayment plan.  Since the federal government is already taking your tax refunds it is unlikely that they will take any further action.  You could also consult a credit counsellor, trustee or lawyer for further advice on your specific information.  The Canada Student Loans in Bankruptcy web site also contains more information.

Question: I graduate this coming April…which is great…but also brings on reality where I must begin my debt repayment.

I was as worried before, but with the current state of our economy, I am really beginning to get worried!

My debt is approximately as follows:

Student loan: $20,000
Line of Credit: $15,000
Vehicle: $20,000

Being in the position, currently, not knowing what pay rate I will be getting when I get a job upon graduation….

Is there anything I could do now to start planning how I can pay off my debt as quick as I can?

Answer:  You ask and excellent question, and it is good to see that you are being pro-active in dealing with your situation.  Ultimately, until you know what pay rate you will earn at your new job, it is difficult to accurately plan your future.  However, there are some steps you can take.

First, you should make a household budget so that you can see exactly where you spend money each month.   By starting the budgeting process now, you will have a head start once you are working. You should also read our budgeting tips article for more information.

Next, you should understand all of your options, including a debt management plan, consumer proposal and bankruptcy.  If you get a good job none of those strategies may be necessary, but you should understand them now in the event that they do become necessary in the future.

Finally, based on this research, you may want to have a meeting with a credit counsellor or bankruptcy trustee to review your options in detail, so that once you are working you already understand your options.

Question: I’ve recently received a letter requesting payment on my past due student loan.
I’ve gone to the bank for assistance but was denied. I don’t want to file for bankruptcy. What are my options?

Answer: You have three options.  First, you could simply make payments on your own.  If you can’t pay the full amount, you could pay them whatever you can afford.  It is possible that the student loan lender will continue to pursue you.

You could attempt a debt management plan through a credit counsellor.   Whether or not this will be successful will depend on the amount of money you have to contribute to the plan each month.

Finally, you could offer a consumer proposal, the success of which will depend again on the funds you have to offer each month.  If these options fail, a bankruptcy may be your final option.

Question: Dear Sir, I have a question about Canada student loan forgiveness rules.

According to the proposed changes to the Bankruptcy & Insolvency Act, a bankrupt person who has been out of school for five or more years may apply to a court to be discharged from their student loans.

I am a Canadian citizen and an Ontario resident, and have attended university in 3 different periods, with intervals of one or two years in between. I completed the first 2 programs over 5 years ago. Then was out of school for a year, and then attended another university from 2003 to 2005.

When the proposed changes come into effect, will I be eligible for loan forgiveness for the portion of my student loans that I received over five years ago, or would my application be rejected, because I have been out of school for less than 5 years?

Thanks in advance for your attention.

Answer: First, the changes you describe came into effect on July 7, 2008.   Full details can be found on the student loan bankruptcy Canada web site.

The period for the discharging of student loans in a bankruptcy starts when you cease to be a student.  In your case, you ceased to be a student in 2005, so if you were to go bankrupt now, in 2008, your student loans would not be automatically discharged.  After bankruptcy, you could apply to court in 2010 and ask for forgiveness of the student loans; the court may or may not grant your request, depending on your financial circumstances.  If you waited seven years (ie. until 2012) and filed bankruptcy, your student loans would be automatically discharged in the bankruptcy.

These rules are complicated, so for more details, contact a licensed bankruptcy trustee.

Question: I currently have Collection Agencies calling me off the hook demanding money after defaulting on my student loan.

Most recently I gave birth to what I thought would be a healthy baby boy but I found out differently.

He was born with a very severe bleeding disorder and requires constant care and infusions. As you know caring for a sick child consumes all your time not to mention the stress involved. I found out that I am a carrier for this bleeding disorder and have a mild form of it as well. Hence ongoing bleeding after giving birth and dibilitating menstrations.

My question for you is what are my options. I am not working and do not plan on returning to work for a while. All this stress coupled with creditors constantly calling is an enormous weight to carry.

My fiance currently supports me and my son and also pays child support for 2 other children.

Please any advice would be truly appreciated.

Answer:  You have a number of options.

First, you could simply ignore the calls.  When they call, you simply tell them that you are not working and are not able to make payments, and then you hang up the phone.  They may call back, but again, you tell them you are not working and hang up the phone.  By hanging up, you reduce the stress of actually having a discussion with the collection agents.

Another alternative would be to go bankrupt.  However, in Canada there are very specific rules regarding student loans and bankruptcy.   Unless you have been out of school for a certain amount of time your loans will not be discharged.

For a review of your specific options, consult a licensed bankruptcy trustee.

Question: It seems my wife’s student loan will not be accepted because subsequent to taking her loan she went to ESL and did a biology 12 course to upgrade her english 3 years later.
I have suffered 2 strokes in the past 4 years leaving me disabled with no job and we have 4 boys still at home. The new bankruptcy law would have alllowed her to claim extreme hardship, but I gather that portion did not pass.
Any ideas????
Answer: It is possible to use the hardship provision to request a discharge of a student loan after five years, provided the bankruptcy has been completed.  More information can be found on the student loan bankruptcy canada web site.

Question: Can a collection agency legally insist on full payment of a student loan instead of monthly payments? Even the money for a monthly payment will be /impossible to difficult to arrange, let alone full payment. This is the old ‘you can’t get water out of a stone’ scenario, but something has to be done somehow. Ontario Canada

Answer: A collection agency can ask for whatever they want; whether or not they get what they want is another matter.  If the collection agency can’t collect from you, their only alternative may be to take you to court, sue you, and attempt to collect the money by garnisheeing your wages.  If you don’t earn a lot, they cannot garnishee a lot.

The rules regarding student loans are somewhat complex, particularly as it relates to bankruptcy.  In fact, the rules are in the process of being changed (more information is available on the student loan bankruptcy Canada web site).

If you owe money on student loans and are unable to pay, we suggest you speak with a trustee to investigate your options.

Question: I’m sure this is nowhere near as complicated as it seems to me:

I am the owner of a small corporation that earns about 125K annually. I am currently running the business out of my apartment and so the phones / internet that I need for business are in my home. Through the corporation, I lease a car.

The corporation has one major loan (approx 15K left to pay to American Express Bank by end of August 2008. We have never been late with that payment). Other than that, it owes some small debt (approx 10K). Some of that is to Revenue Canada. Some is to a business MasterCard. Unfortunately, half of that amount is owed to an accountant who filed my 2005 taxes and who has been patiently waiting since. Just to complicate this, I have not filed my 2006 taxes (corporate or personal) because I can’t ask for more service from someone who hasn’t been paid for the last service he provided (and I don’t know how to do it myself). At present, Revenue Canada is demanding I file….or else.

Personally, I owe about 10K in Student Loans (6500 of which is in collections). I also have about 60K in credit card debt. And, Revenue Canada would like 3000 from me in back taxes.

I currently am overdrawn at the bank (900) and have only $200 left in RRSPs.

I have reservations about declaring bankruptcy for debt I incurred; it’s no one else’s fault. As well, I understand that, as the director of a corporation, I cannot be bankrupt.

On the positive front, although the summer months are tough on us historically, the business is picking up and doing all right. I just moved the business to the city in which I currently reside 22 months ago and started “fresh”. So, I have no doubt I can make this work.

Here’s the problem I don’t know how to solve:

1) I need the car and phones to do the only work I know how to do (on the road consulting).

2) I need the point of sale machine to ensure cash flow regularity so I can pay bills, the consultants who subcontract, and occasionally, myself.

3) I am currently heading into the second month of delinquency on all personal credit card debt and the business MasterCard.

4) If I file a credit proposal, must I include the business debt since, as director, I am co-signer on those accounts?

5) I need some time. And I need some relief from the interest on personal credit card debt. How can I buy time / reduce payments etc. on the personal debt without compromising the business and my ability to make an income from it?

Thanks, firstly, for the investment of your time to read this long description. And then thanks, in advance, for any wisdom you might impart.

Answer: Your situation is complicated, because you have both personal and corporate debts.

If you believe the business is viable, then there are a number of strategies to keep the business active.  If you end up filing personal bankruptcy, it may be necessary to have a friend or relative start a business that you would then operate on their behalf while bankrupt.

The timing makes your situation more complicated.  If you believe the business will show rapidly increasing cash flow, then “hanging in there” for the next few months may be your best option.  However, given your debt levels, you may not be able to earn your way out of debt.

Since there are many variables to consider, we strongly recommend that you consult a bankruptcy trustee and have them walk you through all possible resolutions to your situation, so that you can make an informed decision as to which course of action is best for you in the long term.

Question: I have already been paying the minimum payments ($156/month – mostly interest very little principle) on my student line of credit since January. The LOC was for $17 300. In October I will begin repaying my government student loan($286/month). I’ve done the math and there is no way I will be able to cover basic living expenses and pay back both loans. Is there anyway I can negotiate a lower monthy payment with either agency and how?

Answer: Without seeing your student loan documents it is impossible to give you an accurate answer.  It would appear that your student line of credit is not a government guaranteed loan; you are paying the bank directly; you may be able to talk to them and negotiate lower payments, although that is never easy with a bank.

As your your government student loan, you can apply for an interest free period, but it is also difficult to make a deal with them.  However, it doesn’t hurt to ask, so talking to them directly is a good starting point.  A credit counsellor may also be able to help you negotiate on your behalf.