Newsflash everyone!
Listen up ex-students, current students, student unions, and political parties especially.... here's some food for thought!!!!!!!!!!!!!!!
I know this sounds rather wordy ... but I wanted to make sure that all the angles as much as possible was covered. Let's face it, to have the BIA put back to the pre-1997 days does not solve the problem because abusers of the system would be able to get back into exploiting the BIA without even giving Interest Relief the chance to give them the time needed to gain meaningful employment. Isn't that what Interest Relief is for? Someone who went bankrupt before exercising this rather generous option of Interest Relief has made it bad on the rest of us with good intentions. However, on the flip side of the coin, having this 10 year bankrupcy law in place shuts out not only the abusers, but makes it difficult on the rest of honest and hard working people to avail to bankruptcy as a very last resort to start over again.
Without further delay, here is my solution to the whole BIA problem pertaining to Student Loans:
First: Place up to 45 months of Interest Relief on Canada Student Loans and make it mandatory that Provincial and Territorial governments grant the same amount of Interest Relief time for their student loan programmes as well (See Note #2). This would make the Interest Relief time uniform across the country. That amount of time is 4 years less three months. Those three months come into play in a moment here.
Second: The amount of time that a Canada and Provincial/Territorial Student Loan be non-dischargeable through bankruptcy should be equivalent to the maximum amount of time that a student has Interest Relief available, plus 3 months or 90 days after the maximum amount of Interest Relief runs out. Of course after three months or 90 days after a loan has defaulted, then it almost always goes into third party collections.
In other words, a Student Loan borrower would have to exhaust all 45 months of Interest Relief, plus 90 days, before the loans reach "Dischargeable" eligibility.
This reform measure would make Student Loans non-dischargeable for an even 4 Year period. This would accomplish two things:
- It would force the "bad apples", who would prior to 1997 exploit the BIA and get the loans erased virtually immediately after ceasing studies, to take the Interest Relief route (assuming they are not making too much money --> See Note #1 below) before they can go bankrupt. This would create the incentive to make an honest effort to gain employment.
(NOTE #1) However, the methods of assessing Interest Relief eligibility should be contingent on two things: the amount of loans owing and the amount of income the borrower is earning. The criteria should be set up such that someone who has a low income and a high student loan debt be granted further Interest Relief (up to the maximum of 45 months) until such an income level is reached to allow for a realistically sound standard of living and the ability simultaneously to make the required payments.
Put it another way, this would keep out the abusers of the BIA. These are the bad apples, combined with the Federal government's bogus programmes that are of no use to loan borrowers, that caused this 10 year be legislated in.
Furthermore, the wasted and mismanaged money that was and still is going into programmes that are complete failures such as the Millenium Scholarship should be put into an effective Interest Relief programme.
- This system would allow for the honest people like myself, the overwhelming majority of us hard working tax payers, to have Interest Relief available up to 45 months if needed to gain suitable employment. Many socio-economic factors can slow down a graduate's progress to gaining employment and having interest relief like this would be great peace of mind.
Conclusion: Only after Interest Relief is totally exhausted and a loan borrower still either hasn't found meaningful employment and/or does not have the income suitable enough to have both the necessities of life (a roof, transportation, food, clothing, health care, etc.) and to meet the financial obligations of paying Student Loans, then the borrower should be granted bankruptcy protection and therefore have these debts discharged.
(Note #2) If the provinces and territories do not adapt to such mandatory Interest Relief measures exactly the same as with the Canada Student Loans, then ALL Provincial/Territorial Student Loans should be deemed dischargeable through bankruptcy 90 days after a loan has defaulted and then sent to collections. Should that happen before a Canada Student Loan's maximum Interest Relief time is exhausted, then this particular relief should continue until all the time is exhausted AND IF suitable employment is not achieved, then at the discretion of the courts the earlier bankruptcy on the Provincial and Territorial Student Loans be immediately applied to the Canada Student Loans.
This combined Interest Relief measures, seriously reformed for the better mind you, and the BIA amended as such would keep a borrower's credit rating intact and in good standing while searching for meaningful employment. Should a Bankruptcy take place, then a borrower has to worry about 6 years of bad credit before the Bankruptcy is wiped off the record ... and not potentially 16 + years of bad credit as a result of the current 10 year ban.
So folks, that is my solution to the whole mess that would make the Bankruptcy and Insolvency Act fair on everyone including us student loan borrowers. All feedback on this idea is greatly appreciated, but please no pessimism. Pessimism is a major step backwards from achieving our goals and does not accomplish anything.
Take care and lets keep up the fight!
Blue_Thunder