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Valkerian
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Joined: 12/November/2004
Location: Canada
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Topic: What happens now? Posted: 12/November/2004 at 10:34am |
Okay, here's my situation:
I'm just about to be discharged from my bankruptcy. I have about $36K combined in students loans that will not be discharged due to the 10 year rule. Fine by me. I haven't been making payments while in bankruptcy because I'm just trying to get on my feet again. I have one OSL through RBC, one CSL through RBC, and one CSL through the NSLSC.
Here are my questions: What happens now? Can I continue payments through the bank and the NSLSC as normal? Do they send them to collections? If so, which ones? What are my options? I'm willing to make payments at the previous rate, even a bit more.
Valkerian
Legend: OSL = Ontario Student Loan, CSL = Canada Student Loan, RBC= Royal Bank of Canada, NSLSC = National Student Loan Service Centre
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SolveStudentDebt
Moderator Group
Joined: 05/November/2003
Location: Canada
Points: 5996
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Posted: 12/November/2004 at 1:54pm |
You will be required to start making payments toward your student loans. Unfortunately, you will likley have to deal with the collection agencies for repayment. The thing is for the past nine months, you have been protected by bankruptcy. Now that you are due to be discharged, and no payment has been made towards your student loans, it is business (collection) as usual.
Were your loans in collection before you went bankrupt? If so, where were they assigned?
Johnny
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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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2Laural
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Joined: 29/August/2003
Location: Canada
Points: 42
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Posted: 12/November/2004 at 2:33pm |
It was great that you could continue to make payments on your SL while you were bankrupt.
I have been involved in one bankruptcy where the bankrupt continued to make her regular payments on her student loan while bankrupt, but then the bank sent her back all the payments, because they had written of the guaranteed portion and made a claim from the gov't. It was VERY confusing. So, I thought I would warn you about that.
Another point you should be aware of is technically, they shouldn't be pursuing you for payments until the Trustee closes their file (anytime between now and up to three years as they have to ensure all assets have been realized). The reason being, that the creditor does not yet know how much they will receive from the bankruptcy, so they shouldn't pursue you. Note, I said shouldn't.
Debtors I have dealt with in the past have written a letter to the creditor stating, I am now discharged and wish to make payments. This is my income, these are my expenses, and this is what I can afford to pay. I promise to pay $x/month on the xxth of each month. Here's my first payment. If you disagree with what I am offering, please return the payment, and we can discuss. I have yet to hear of the payment being returned and the offer not accepted.
Best of luck.
L
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SolveStudentDebt
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Joined: 05/November/2003
Location: Canada
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Posted: 12/November/2004 at 5:02pm |
Laural, Valk stated that no payments were being made throughout the duration of the bankruptcy.
You said:
"I have been involved in one bankruptcy where the bankrupt continued to make her regular payments on her student loan while bankrupt, but then the bank sent her back all the payments, because they had written of the guaranteed portion and made a claim from the gov't. It was VERY confusing. So, I thought I would warn you about that."
If a person is bankrupt, then they are bankrupt. This means that there are no means to repay debts unless it were a consumer proposal. If this were the case (Consumer Proposal), then it wouldn't be the bankrupt issuing the payment as you know. It would be the trustee issuing the payment to the creditor(s).
I find it rather strange that a bankrupt would be allowed to make payments to a creditor "outside" of the bankruptcy. The meaning of bankruptcy is "insolvency due to the fact that one is a unable to pay their debt". If a person is bankrupt but still paying the debt, then they shouldn 't be allowed to file such an assignment.
Such Irony.
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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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2Laural
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Joined: 29/August/2003
Location: Canada
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Posted: 12/November/2004 at 5:26pm |
Sorry. I misread.
As far as making payments during a bankruptcy, it is allowed for debts that survive a bankruptcy.
Being bankrupt does not mean that you can't afford to make the payments necessarily. It means that you generally cannot pay your liabilities as they become due.
Bankruptcy is meant to give an honest debtor a fresh start. Take the case of someone that is arrears for child support payments - why should the children suffer? The debtor should be able to make payments if they can afford to, and want to so as to relieve the pressure of making payments when they get out of bankruptcy, as well as to reduce the amount of interest they are required to pay.
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BigFatherA
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Joined: 21/September/2003
Location: Canada
Points: 253
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Posted: 14/November/2004 at 1:59pm |
It should be pointed out that those loans might not even be with RBC
anymore. The bank risk portion for your CSL will be (or at their
collection agency). HRDC will handle the government guaranteed
portion of your CSL (and will move to hoover your tax returns as well
as send your loan to collections). Your provincial loan should be
with your province (In Ontario, it's with the Ministry of Education and
Training) and they will have their own collectors). It wasn't
until my trustee was discharged that I started repaying. You will
get a discharge document with all your creditors and who got paid what
(if anything). It will also list who is holding what portion of
what loan.
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BigFatherA
Priest & Teacher
non carborundum illegitemi est
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Valkerian
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Joined: 12/November/2004
Location: Canada
Points: 3
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Posted: 15/November/2004 at 2:27am |
Thank you all for your replies!
I was not able to make payments during the bankruptcy and now I'm just waiting. I'm not worried about the government hovering over my tax return or wage garnishments because I'm an independent contractor. I can only hope, though, at this point the collections agencies are willing to take the payments and be bloody nice about it.
But I know my rights, and reading here will definitely help with that.
Valk
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Niagara_man
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Joined: 23/October/2003
Location: Canada
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Posted: 15/November/2004 at 10:15am |
Valk,
Though Johnny and 2Laurel are certainly your best sources of information on this site, please allow me to offer one piece of information you might find helpful.
The Senate Committee which ultimately produced a report advocating changes to the BIA heard, during the course of the hearings, from a New Brunswick-based trustee who brought along a client who perfectly illustrated why the BIA needs to be reformed. But here is the part you might find interesting: the trustee stated, for the record, that he was doing everything in his power to delay his own discharge related to the client's bankruptcy. Remember that there are two "discharges": the bankrupt's and the trustee's.
I bring this up not because I am suggesting that a trustee's discharge can or even should be unreasonably delayed, but rather to let you know that at least one trustee has and continues to use this tactic to protect a client from student loan collectors/harrassment.
Perhaps 2laurel can offer some clarification?
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pmwattshui
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Joined: 01/March/2004
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Posted: 15/November/2004 at 12:08pm |
I wonder why it's deemed so important that you pay the student loan even if it means that you can't buy food, pay rent, or do anything else. I was forced into bankruptsy for that very reason. My trustee tells me they will keep my file open for 3 years in order to give me the best chance to take advantage of any new changes to the BIA. I AM 108,000 hole so there is nothing I could do
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Big Cat
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Valkerian
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Joined: 12/November/2004
Location: Canada
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Posted: 23/November/2004 at 7:12am |
Okay, I've been discharged from my bankruptcy and I called the Royal Bank and I was able to start making regular payments on the Canada Student Loans like nothing had ever happened. Yay!
However.... The Ontario portion of my student loans got sent to a collections agency and they will be contacting me within 6-8 weeks to ask for a lump sum payment (not bloody likely). What's dissappointing about this is that after the bankruptcy the first thing on my credit report will be about $20K in collections. Not good for a guy who wants to eventually own a home.
Would you suggest me talking to my trustee once the collections agency starts their monkey business and maybe file a proposal or something?
Valk
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Staretz
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Joined: 20/November/2004
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Posted: 07/December/2004 at 12:30pm |
Sometimes a trustee cannot close a file till years afterward. I was discharged from my bankruptcy in early 2001, but my trustee still hasnt been. One of the things I went bankrupt on was a Term Certain Annuity that was set to pay out until March 2005. That has turned out to be fortuitous for me as I have had a chance to build up a bit of savings. But those savings will be gone by year end 2005. Then what? I'll probably have to default again and wait until I can include my $60,000 or so in student loans in my bankruptcy. That will be June 28, 2007. Not that I am counting down the days or anything . Its only somewhat over twice my annual salary. Not as bad as some of the ratios I have seen around here.
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