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I DECLARED BANKRUPTCY .... MY STUDENT LOANS ARE STILL A PROBLEM!!

WHAT CAN I DO? 

One of the biggest problems facing former bankrupts or consumer debtors, like you, are their student loans not discharged in their earlier bankruptcy. In many cases, the cause of your bankruptcy or consumer proposal was your inability to deal with unsecured debt including your student loans.  You made an assignment or a proposal before the seven (7) or ten (10) year limitation period set out in s. s 178 1(g) had expired.  As a result, upon the discharge of your trustee, your student loans of both principal and accumulated interest were revived.   You may have found yourself facing the same financial problems you had experienced prior to making your assignment or proposal.  Collection agencies began to call.  Your income tax refunds and G.S.T. entitlements were being seized by your student loan creditors.  You may have been sued.  You may begin to think that you might have to make a second assignment or proposal once the seven (7) or ten (10) year period had finally expires.  You may have been misinformed or simply do not understand your rights with respect to your student loans and your first bankruptcy or proposal.

IF YOU MEET THE FOLLOWING CRITERIA ...

 MY BANKRUPTCY IS DISCHARGED or CONSUMER PROPOSAL WAS SUCCESSFULLY COMPLETED ... and

MY STUDENT LOANS WERE NOT DISCHARGED IN MY BANKRUPTCY OR CONSUMER PROPOSAL ... and 

 FIVE YEARS HAS ELAPSED FROM MY END OF STUDY DATE ... and

  I HAVE ACTED IN GOOD FAITH WITH RESPECT TO MY LIABILITIES UNDER MY STUDENT LOANS ... and 

I AM EXPERIENCING CURRENT AND ONGOING FINANCIAL DIFFICULTY WITH RESPECT TO MY LIABILITIES UNDER THE STUDENT LOANS

YOUR STUDENT LOANS MAY BE ELIGIBLE FOR DISCHARGE IN YOUR EARLIER BANKRUPTCY OR PROPOSAL 

WHAT DOES THIS MEAN?  The Bankruptcy and Insolvency Act includes a process under s. 178 1.1 that allows student loan debtors who meet the criteria set out above to have their student loans rendered (made applicable) to their earlier discharge from bankruptcy.  In order to be granted this form of relief, the debtor must prove to the Bankruptcy Court, on the balance of probability that they have acted in good faith with respect to their liabilities under the loans and are experiencing and will continue to experience financial difficulty with respect to their liabilities under their loans.  Upon application to the Bankruptcy Court, your student loan creditors may consent to the relief or the Bankruptcy Court may grant the relief is the criteria has been met.  If relief is granted, the Order made by the Bankruptcy applies to all of your student loans.

WHAT CAN WE DO FOR YOU?  We can assess your individual financial circumstances and determine if you qualify for "hardship relief" and your likelihood of success in such an application.  If you chose to proceed, we will contact your student loan creditors, their solicitors or collections agencies and advise them that you are making this application.  We can prepare all of the documentation necessary for you to make an application to the Bankruptcy Court.  We can appear (if you live in Southwestern Ontario) for you in Bankruptcy Court.  If you live in some other jurisdiction (all provinces except Quebec), we can provide you with instructions about how represent yourself.   The documentation would include the Notice of Motion (which includes the the nature of the relief requested and the time / date / and location of the Court), an affidavit made in support of your motion for hardship relief, supplementary information including case law in support of your motion for hardship relief, a financial statement (including proof of income and a statement of income / expenses and assets and liabilities) and analysis of your financial circumstances in relation to the the good faith / financial difficulty test set out in s. 178 1.1 of the Bankruptcy and Insolvency Act.  We can also serve you student loan creditors with the motion or provide you with information on how to serve them yourself.   

WHAT IS GOOD FAITH?  You have acted in good faith if you used the student loans for their intended purpose, attended school, did not receive a substantial economic benefit from the education, made reasonable efforts to pay your student loans based on your ability to pay and have applied for interest relief or loan forgiveness if applicable.  

WHAT IS FINANCIAL DIFFICULTY?  The objective test for financial difficulty is found by completing the surplus income test set out in Directive 11R of the Act and the determination of ability to pay.  The subjective test is the applicant's actual Statement of Income and Expenses.  

UNDERSTAND?   This process is not an easy way out ... you have already made the most difficult financial decision of your life when you decided to make an assignment in bankruptcy or a consumer proposal AND you have successfully completed that process.  This application under s. 178 1.1 of the Bankruptcy and Insolvency Act is simply a belated completion of your earlier bankruptcy or proposal.  A successful application will remove any liens on income tax refunds / G.S.T benefits.  The student loans will be removed from your credit file at the same time as the other debts included in your bankruptcy or proposal.  The collection calls will cease.  This process is an OPPORTUNITY to take control of your financial future. 

WHAT ARE THE BENEFITS OF MAKING THIS APPLICATION?  An application under s. 178 1.1 is not a second bankruptcy or proposal.  A successful application will result in your student loan being discharged effective the date of your earlier discharge.  This will have a positive effect on your credit rating.  All unsecured debt are removed from your credit file six years after the date of your discharge.  A successful application will result in your student loans being subject to the same six year period.  Under the new BIA rules, a second time bankrupt could be in bankruptcy for 2-3 years and the second bankruptcy reported for 14 years on their credit file.  This process is consistent with the fresh start provisions of the Act and the debtor's financial rehabilitation. A second bankruptcy would seriously hinder that rehabilitation.  The debtor would also have the lien removed from their income tax refunds and G.S.T. entitlement.   

EXCEPTION:  On June 18, 1998, the Bankruptcy and Insolvency Act was amended to create a 10 year limitation period.  This meant that anyone making an assignment or proposal after that date would find their student loans were not subject to their discharge if they had not ceased to be a full of part time student for 10 years.   Upon the discharge of their trustee, the rights of the student creditors would be revived and the debtor was again responsible for payment of principal and accumulated interest.  The debtor would be permitted to make a hardship application under s. 178 1.1, as noted above, upon the eventual expiration of the ten year period.  The Act was again amended on July 7, 2008.  The limitation period of 10 years was reduced to 7 years and the time period to wait to apply for hardship relief was reduced to 5 years.  There were a substantial number of bankrupts or consumer debtors who had made an assignment or proposal  prior to July 7, 2008 who had been out of school for more than 7 years at the date of that bankruptcy or proposal.  If any of those bankrupts of consumer debtors were eventually discharged after July 7, 2008, there student loans would be discharged under the new 7 year rule.  The debtor who went bankrupt under the 10 year would be able to take advantage of the 7 year rule if they were discharged after July 7, 2008.  No court application is required. 

THE FLOW CHART OF THE S. 178 1.1 APPLICATION:

ASSESS ELIGIBILITY >> NOTIFY CREDITORS THAT YOU ARE MAKING THE APPLICATION >> COLLECT INFORMATION FROM STUDENT LOAN DEBTOR >> PREPARE DOCUMENTATION >> REVIEW DOCUMENTATION WITH DEBTOR FOR ACCURACY >> HAVE AFFIDAVIT SWORN >> SERVE STUDENT LOAN CREDITORS >> BANKRUPTCY COURT HEARING >> ORDER GRANTED BY BANKRUPTCY COURT FOR HARDSHIP RELIEF IF THE STUDENT LOAN CREDITORS AGREE TO THE APPLICATION ON CONSENT OR THE COURT FINDS THAT THE STUDENT LOAN DEBTOR HAS MET THE CRITERIA >> ORDER SENT CREDITORS >> COPY OF NOTICE SENT TO EQUIFAX / TRANS UNION TO UPDATE CREDIT FILE >> LIEN REMOVED FROM INCOME TAX REFUNDS / G.S.T.  

COST:  The cost of our services is nominal relative to the amount of your outstanding student loans.  The average student loan debt of those student loan debtors who have declared bankruptcy or made a consumer proposal is between $20000.00.  The cost of the assessment is $50.00 (and is part of any additional fees should the debtor decide to proceed).  Our fees range from $350.00 to $550.00 plus disbursements (court fees, cost of service).  The fee is 2% of your total student loan debt with a minimum fee of $525.00 and a maximum fee of $1000.00.  

THE BATHURST GROUP INC.  is fee-for-service debt management and insolvency consulting organization. We provide the very best in professional counselling, advocacy, insolvency consulting, consumer education, referral and paralegal services to individuals and families anticipating or experiencing acute financial difficulty.  Our primary area of service is Bankruptcy and Insolvency.  We specialize in assisting former bankrupts and consumer debtors who have Government / Bank Risk Student Loan issues.  We can assist the student loan debtor in having their student loans rendered subject to the discharge in their earlier bankruptcy.  We can also assist those bankrupts who have not obtained their discharge.  We can assist those bankrupts whose discharge has been opposed by their creditors.  More information regarding the discharging of student loans can be found under the "Consumer Information" section of this site.    

If you have any questions concerning your student loans and your bankruptcy / consumer proposal, contact us at thebathurstgroup@gmail.com and we will send you a FREE reply.  You have nothing to lose and everything to gain by sending us a brief outline of your student loan problems and your present financial circumstances. We will let you know what your options are.