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"After bankruptcy your loan doesn't just go away."

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    Posted: 12/December/2012 at 9:36pm
Hi, this is my first post.

I finished school in May 2005, and declared bankruptcy in Aug 2012. That is 7 years plus a couple of months. I had national student loans (NSLSC), and provincial student loans (BCSL), as well as some old federal and provincial loans with CIBC.

Prior to that, I had been on the Repayment Assistance program with the NSLSC, pretty much since it began (and Interest Relief before that, until they changed it). I had applied for a new period of interest relief just a few weeks prior to my bankruptcy.

So after I declared bankruptcy, I received a letter from NSLSC acknowledging my bankruptcy, but saying that interest would still accrue and that I could continue to be on Repayment Assisstance during my bankruptcy. I forwarded this to my trustee to find out what this meant, and she said that is a letter they normally send to people whose loans are less than 7 years old and she would contact them to get this straightened out. I never heard back.

Then yesterday, I got another letter frpm NSLSC reminding me that my repayment assistance period was ending, and to reapply. I decided to call NSLSC myself to see what was up.

The agent on the phone told me that I don't have to make payments while in bankruptcy but that after my bankrupcty ends, I will be expected to resume payments and I should apply for repayment assistance now so that the current payments don't get tacked on at the end.

I questioned this and was told, "After your bankruptcy ends, you still have to make payments. Your loan doesn't just go away." (This was said i
n a stern, snotty voice).

Why would I declare bankruptcy if it wasn't going to make my loans go away? That's the whole point! I emailed my trustee and told her this, and she replied,

"So long as your last date of study was more than 7 years prior to the date of bankruptcy, your loans will be written off in the bankruptcy.  I've received claims from CIBC student loans and from BCSL, but not the National Loan. BCSL indicates your last date of study was May, 2005.  I will get someone to send another package to them so we can get something in writing from them for your records."

This is the third time she has told me she was trying to contact them on this matter. I thought perhaps the NSLSC had the wrong study end date in their files, so I called back a little later to find out. Nope, they said it shows I finished school May 2005. When I explained to the agent my problem, she said, "Wait - - you were told your loan would be discharged after 7 years?I said no, I was told that if you declare bankruptcy, and your loans are over 7 years old, they are discharged in the bankruptcy. She said, 'I've never HEARD of that! Student loans are usually for 15 years!"

Confused

Seems some people at NSLSC have never heard of bankruptcy.

So, my questions to you.

1) What the bleep? Can they make me keep paying after my bankruptcy?
2) Should I apply for repayment assistance again now while they sort it out?  Or ignore it?
3) Is this common? Have others had this problem with them?

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administrator View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote administrator Quote  Post ReplyReply Direct Link To This Post Posted: 12/December/2012 at 11:18pm
I would contact your trustee or the superintendant of bankrupcty to inform this of the Student Loan people's behaviour and see what they say you should do.
1.  They will try.
2. I dont really know. Your loans should have been discharged.
3. Yes its common. They ignore the bankrupcty laws.

Anyone else with suggestions?
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Post Options Post Options   Thanks (0) Thanks(0)   Quote AnonymousMe05 Quote  Post ReplyReply Direct Link To This Post Posted: 13/December/2012 at 12:47am
Thanks. I have contacted my trustee but I am also going to contact the superintendant office. My trustee usually replies to queries pretty quickly but this is the third time I've heard from her "Oh, I'll get in touch with them and get it set straight."

The problem with calling the NSLSC is that you get the people who are the lowest rung on the ladder and they are only reciting what's in your file. The first person I spoke to seemed to think that bankruptcy was only a temporary suspension of payments; the second one never seemed to have heard of it at all.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote administrator Quote  Post ReplyReply Direct Link To This Post Posted: 13/December/2012 at 10:47am
There are two possible scenarios.... 
1) Your loans were discharged by the bankruptcy, in which case you owe nothing.
2) The loans were not discharged - in this case the NSLSC must wait until the trustee is discharged before they start collections on the loans. 

Even if the loans are discharged, the NSLSC has tended to ignore the fact and still try to collect. You can try to escalate your case to a supervisor at NSLSC...  You are absolutely right that the front end people are poorly trained.
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Radagast View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Radagast Quote  Post ReplyReply Direct Link To This Post Posted: 13/December/2012 at 6:58pm
Seems weird... is there really no penalty for this kind of behaviour, where someone tries to collect on a loan that they have been informed was discharged?

Or is there a penalty that simply doesn't apply to NSLSC and CRA?
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Johnny Quote  Post ReplyReply Direct Link To This Post Posted: 15/December/2012 at 11:20am
There is no guarantee your loans will just go away. The government of Canada can oppose your discharge if they want to. If the balance is large then there is good incentive for them to do that. CRA and Justice Canada have a goal and that is to secure debt owed to the Crown, and to take whatever measures at their disposal to do that.
 
""So long as your last date of study was more than 7 years prior to the date of bankruptcy, your loans will be written off in the bankruptcy. I've received claims from CIBC student loans and from BCSL, but not the National Loan. BCSL indicates your last date of study was May, 2005. I will get someone to send another package to them so we can get something in writing from them for your records."
 
Your loans "can" be written off. There is no guarantee that they will be written off. If there is I'd get that in writing if I were you.  Pretty soon the system is going to catch up to the bankruptcy program once again like they did back in early to mid 2000's  and make more crazy changes  concerning bad bankruptcy practices and Crown exemptions.  The private sector that administers bankruptcy in Canada dominates this particlar market and they want to bankrupt everyone they can, and will tell you all kinds of junk to get you signed in. It is ridiculous and a HUGE ding for healthy consumerism, and of course the system fights that stuff in due process and time.
 
Anyway, the issue here is that you do not have to pay the loan while under the protection of bankruptcy, and you will have to wait it out until the discharge hearing to see if they actually do oppose it.
Solve Student Debt specializes in solutions for students and graduates in student loan default, and those at risk of defaulting.

solvestudentdebt.com
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Post Options Post Options   Thanks (0) Thanks(0)   Quote AnonymousMe05 Quote  Post ReplyReply Direct Link To This Post Posted: 15/December/2012 at 11:28pm
Interesting, thanks for the comments.

It sounds like I should apply for a new period of Repayment Assistance, just in case. I would like to ask my trustee if the NSLSC loan is guaranteed to be written off in the bankruptcy. It doesn't sound like it, since they've completely ignored the whole thing so far, except to send me letters saying, "We've been advised of your bankrupcty; just so you know, you can still apply for Repayment Assistance while in bankruptcy so that when your bankruptcy ends, your payments won't be too high" or something to that effect.

So has anyone here ever had their discharge opposed by them, and if so, can you fight it somehow? It's just that I haven't a chance in hell of ever paying this. Unforeseen circumstances.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Johnny Quote  Post ReplyReply Direct Link To This Post Posted: 16/December/2012 at 2:07pm

You may be examined in some way at the end to determine if your bankruptcy was done in good faith, and that you are unable to contribute towards your student loans.  If they do not oppose then you will be discharged as per the application outlined in the BIA.

 
If you happen to be examined and your discharge opposed then you have to demonstrate that your bankruptcy was done so in good faith and that you are in hardship that prevents you from paying the student loan. 
 
Bankruptcy is costly gamble for those who are experiencing financial and credit-related trouble but are really not bankrupt. The bankruptcy sector will make it look so if they can somehow get away with that. BAnkruptcy trustees, to this date, have no been held accountable for any wrong-doing to the consumer population and I suspect it is because of the power that controls them - and also protects them.  
Solve Student Debt specializes in solutions for students and graduates in student loan default, and those at risk of defaulting.

solvestudentdebt.com
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Post Options Post Options   Thanks (0) Thanks(0)   Quote AnonymousMe05 Quote  Post ReplyReply Direct Link To This Post Posted: 17/December/2012 at 10:35am
Ah I see. I think I would surely qualify as having acted in good faith. My payments would be more than my income. I've struggled for 7 years to make a living at the profession I trained in. I could go work at Starbucks but that would not give me the income I need to pay these loans. And for the past two years I've been the caregiver for my elderly father, which is a full time job in itself. 
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Johnny Quote  Post ReplyReply Direct Link To This Post Posted: 18/December/2012 at 8:21am
The way the system examines and grades "good faith" is based on what you have done to solve the problem in respect of the debt, attempted to make any payment,  if you communicated with them at all, and if you adhered to the government's rules and regs.
Solve Student Debt specializes in solutions for students and graduates in student loan default, and those at risk of defaulting.

solvestudentdebt.com
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Post Options Post Options   Thanks (0) Thanks(0)   Quote AnonymousMe05 Quote  Post ReplyReply Direct Link To This Post Posted: 18/December/2012 at 11:21am
I see. Well, I kept up to date with interest relief, repayment assistance, and so forth. I made some payments on my BCSL and kept those up to date after my interest relief with them expired. So I was not behind on any payments at the time of my bankruptcy. I kept working and tried my best to make an income but there was always nothing left after student loan payments and business expenses. I moved in with my elderly father, for three reasons: 1) he became unable to look after himself, he needed help getting his house sold, 2) there was a creepy younger woman in his life acting as his "girlfriend" and paid housekeeper and it was obvious to everyone but him that she was out to exploit him financially; 3) I wasn't making enough money to pay my own living expenses and it made sense to move in with him and take on the role of caregiver, thereby eliminating housing costs for myself.

But all this time, I was making payments on my BCSL, in Repayment Assistance with NSL, and also making payments on a private Scotiabank student loan. I wasn't behind on anything.
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Post Options Post Options   Thanks (1) Thanks(1)   Quote AnonymousMe05 Quote  Post ReplyReply Direct Link To This Post Posted: 02/September/2013 at 12:10am
Thought I'd update you all.

After bankruptcy, my load DID just go away. Turns out the people you talk to when you call up and discuss your loan don't see any changes in your file until after your discharge and "the government updates it" or something. I thought they WERE "the government" ie, it was a government loan.

They had me all freaked out because they were sending me letters saying I still needed to apply for interest relief (or the new "repayment assistance") so that I wouldn't be responsible for that interest "once my payments resumed after bankruptcy." And I was saying "what the....? The whole idea of bankruptcy, I thought, was that there would BE no more payments. Then that employee on the phone saying in a snotty "well duh" tone, "After bankruptcy, your loan doesn't just go away." She was seriously condescending. And another one, when I said something about the 7-year rule, said, "Wait...you were told that after 7 years your loan would be forgiven? I've never HEARD of that!!!" (Clearly not listening to what I was telling her, because that is not what I said).

Anyway, my bankruptcy trustee told me "not to sign anything" including a repayment assistance form, so I didn't, and my bankruptcy ended without fanfare or problems.  It was the best thing I could have done for myself, for although my income is still very low, at least now it's not being eaten up by loan payments and there's hope.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Johnny Quote  Post ReplyReply Direct Link To This Post Posted: 02/September/2013 at 11:26am
Esach case is unique. If the government chooses to opose the discharge and is successful then the loan is still collectable. BEst thing to do is contact CRA Non-tax directorate and get the form letter that cites account closure and that they are satisfied with the terms of your bankruptcy.
 
 
Solve Student Debt specializes in solutions for students and graduates in student loan default, and those at risk of defaulting.

solvestudentdebt.com
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Post Options Post Options   Thanks (0) Thanks(0)   Quote AnonymousMe05 Quote  Post ReplyReply Direct Link To This Post Posted: 02/September/2013 at 12:51pm
Thanks for the advice; I will do that. 
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Post Options Post Options   Thanks (0) Thanks(0)   Quote murat6562 Quote  Post ReplyReply Direct Link To This Post Posted: 15/August/2016 at 11:53am
I have the same problem. I was in school between 2003-2005 and bankrupted in 2012. I tought my loans with bankruptcy.  I want to go back to school and osap told me I cannot unless I pay my loans in full amount.I told them I bankrupted in 2012 and told me Iam not eligible.I dont know what to do.Help
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Johnny Quote  Post ReplyReply Direct Link To This Post Posted: 16/August/2016 at 9:17am
You have to rehabilitate the old unpaid loans and apply for further funding after that, or pay it all out in order to apply for more funding. The danger here is there is no guarantee you will receive further funding in either action here. It is best to get the NSLSC to advise you - and if they say you will qualify get it in writing. 
Solve Student Debt specializes in solutions for students and graduates in student loan default, and those at risk of defaulting.

solvestudentdebt.com
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Post Options Post Options   Thanks (0) Thanks(0)   Quote murat6562 Quote  Post ReplyReply Direct Link To This Post Posted: 18/August/2016 at 1:32pm
I found about that I bankrupted 6 years and 8 months after I was done with school.Should not my trustee advise me to file a motion for Student Loan when I bankrupted? I never knew I still owe my student loan. If I knew I would have file a motion 4 years ago .stupid trustee. I contacted my trustee about it he said he has to file a motion and there will be cost for it. My student loans are now with Revenue CAnada. Revenue Canada has taken my income tax return this year. Do I have to have my trustee to file a motion or Can I do it? If I can do it where do I get the form ? I just dont want to deal with same trustee and contacted others trustees.Other trustees told me to contact my trustee who filed my bankruptcy. 
Please let me know how to file a motion ?
Thanks
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Post Options Post Options   Thanks (0) Thanks(0)   Quote murat6562 Quote  Post ReplyReply Direct Link To This Post Posted: 18/August/2016 at 1:35pm
have you sorted out your student loan?Iam same situation and found out I still owe even though I bankrupted.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Johnny Quote  Post ReplyReply Direct Link To This Post Posted: 21/August/2016 at 6:33pm
Trustees are in the business of promoting bankruptcy as a fresh start and solution. For many though it is not. Bankruptcy trustees fail to tell you certain things, or down play certain things to make their product more of a value and solution than it really is. The costs for this are HUGE in dollars spent and the toll on social and economic relationship development. Bankruptcy is just a another antiquated broken system unfortunately. 
Solve Student Debt specializes in solutions for students and graduates in student loan default, and those at risk of defaulting.

solvestudentdebt.com
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