This website is a testimony to the problems Canadian Student Loan borrowers experienced from approximately 1996 to 2008 and until their loans were paid off.

The privatization of the Student Loans system by the Chretien and Martin Liberal governments broke the system and defaulted thousands of borrowers who were trying to pay their loans. There were even stories of suicide due to the harassment of borrowers.

Read the report that I prepared back in 2007 here. Canada Student Loans-The Need for Change Fortunately the new Conservative government at the time revamped the program and fixed the system for new borrowers, but borrowers under the previous program were left with ruined credit and continued harassment from debt collectors.

I call on the Canadian Government to apologize to the borrowers affected by this fiasco and make amends.

Unfortunately the Liberal government is again clobbering the Education system with their upcoming changes to International Student Visas. Yes, there's a problem, but instead of a well thought out plan, they have pulled the emergency brake on the train causing a derailment. This has introduced unprecedented instability for both private and public education institutions who serve both international and local students.

Universities can't plan. I've heard of courses being cut because the government has no process in place for universities to send the newly required acceptance letters to the government.

This means that students who have been accepted can not attend courses that start in the summer 2024 semester. With cut sections, current Canadian students will have trouble getting courses, and may have to switch to part-time which changes their enrollment status and might trigger repayment of their loans or ineligibility for funding. I've seen this before. It wreaks havoc on the student loan borrowers.

Again, the Liberal government has messed up the education environment. Will the new system needed in a rush for the acceptance letters be the new Arrivecan scandal?

I call on the government to implement a slower phased in approach and delay the requirement of the acceptance letters until a process is in place to submit these letters.


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    Posted: 19/July/2012 at 8:39am
Hello,

I am having some difficulty with the BCSLSN and the NSLSC regarding my consumer proposal which was 
filed on May 20th, 2011. 

My trustee included my provincial and federal student loans in the proposal from my undergraduate education because it had been seven years since I received a student loan (undergrad). I went on to do graduate studies (masters and doctorate) all on my own dime, but I was told, the seven year rule would not re-set back to zero just because I was a full-time student again. In other words, because they were new degrees, and that I was paying for it myself, it would not make me ineligible.

Shortly after my proposal was filed, I received a letter from the BCSLSN citing section 1781(g) of the BIA, stating that they were not releasing my provincial loan because I was still a fulltime student. I responded with a letter asking them to reconsider, and referred them to the recent legal case (Ledoux, 2005 SKQB 75, 8 C.B.R. (5th) 225), which ruled that section 178 1(g) is too vague to be applicable in every instance, and therefore a student's final study date shall be henceforth calculated from the last year a student received student loans. They did not respond.

12 months later (yesterday) I received a letter from the NSLSC stating that my BCSLSB loan has been transfered to them and that the FULL amount is owing for BOTH my provincial and federal loans with interest is accruing. They did acknowledge my consumer proposal, but stated that my loan was still in repayment status, but payments were not required at this time. They also stated that interest is still accruing during the process! They concluded by stating that they will be collecting on the debt once they receive notification of my trustee's discharge from the Canada Revenue Agency! *sigh*

So, if I understand this - (and correct me if I am wrong) despite my not having a loan for 7 years, and pursuing further education on my own dime,  they are sticking to their guns and not letting me out under the vague seven year rule.

This seem wildly unfair to me, and I am at a loss at to my next course of action. I do not have the means to repay this loan. Can anyone offer any advise, or perhaps direct me to someone who can help me. I'd be willing to take them to court and fight this is needs be. 

  • Date of last time I received a student loan: April, 2004 (undergraduate studies- w/ student loans)
  • Date of end of fulltime student status: May, 2006. (masters studies - self-funded)
  • Date of end of fulltime student status: January, 2013. (doctoral studies - self-funded) 
  • Proposal date: May 20, 2011
  • Date of discharge: May 20, 2016
Any help is appreciated.

Sincerely,
Distressed




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Post Options Post Options   Thanks (1) Thanks(1)   Quote administrator Quote  Post ReplyReply Direct Link To This Post Posted: 20/July/2012 at 5:12am
There are a number of cases that support your position. You might try searching for more cases at http://www.canlii.org/en/index.html

Your trustee should be working on this....  
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Post Options Post Options   Thanks (1) Thanks(1)   Quote SolveStudentDebt Quote  Post ReplyReply Direct Link To This Post Posted: 21/July/2012 at 11:27am
They do not have to accept the proposal though. That is their position. They obviously opposed the discharge of the student loans in any event, like they do all of the time. You are not alone.
 
The law cites 7 years from the day you ceased to be a full or part time student. In my opinion, it should be from the day you ceased from studies whereas the student loans were attached. However, the system interprets things in the traditional self-serving way.
 
You are best to hire a good attorney and take the matter to up the hill to get a ruling.
 
The discharge opposition is always strong, more so now than ever before. The government shapes the BIA. Afterall, it is a federal program with it's own legislation. Due to the economic catastrophy that is affecting government and the financial industry, bankruptcy may soon become obsolete because of the heavy reliance on it from all three corners (consumers, students, and small businesses). Government and industry influence had reshaped the BIA before. Perhaps it is only a matter of time before they reshape it again so it does not interfere so much with their economic function and debt recovery mission.
 
 
 
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 vincentmusic Quote  Post ReplyReply Direct Link To This Post Posted: 23/July/2012 at 2:29am
I appreciate the advise. I don't think my trustee is able to do much, so I have decided to peruse a legal action.  Can anyone on the site recommend a a bankruptcy/insolvency attorney in the GTA?

Thanks!
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Post Options Post Options   Thanks (1) Thanks(1)   Quote SolveStudentDebt Quote  Post ReplyReply Direct Link To This Post Posted: 24/July/2012 at 4:49am
Oh man, there are so many! JUst go online and google attorneys in that particular designation.You will find many.
Solve Student Debt specializes in solutions for students and graduates in student loan default, and those at risk of defaulting.

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Post Options Post Options   Thanks (0) Thanks(0)   Quote vincentmusic Quote  Post ReplyReply Direct Link To This Post Posted: 24/July/2012 at 6:31am
I know there are lots of lawyers, but I am looking for a recommendation for a GOOD one. If anyone can recommend someone, do let me know :P 

Thanks!
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Post Options Post Options   Thanks (1) Thanks(1)   Quote footloose Quote  Post ReplyReply Direct Link To This Post Posted: 24/July/2012 at 11:56am

Paragraph 178(1)(g) of the Bankruptcy and Insolvency Act states that the following debts are NOT discharged when you declare bankruptcy in Canada, which also includes a Consumer Proposal.

(g) any debt or obligation in respect of a loan made under the Canada Student Loans Act, the Canada Student Financial Assistance Act or any enactment of a province that provides for loans or guarantees of loans to students where the date of bankruptcy ( or Consumer Proposal ) of the bankrupt occurred

(i) before the date on which the bankrupt ceased to be a full-or part-time student, as the case may be, under the applicable Act or enactment, or

(ii) within seven years after the date on which the bankrupt ceased to be a full-or part-time student.

A strict reading of this Paragraph would seem to indicate that there is no direct connection between the "end of study date" and the student loan which was received that pertains to that particular "end of study date". Also, a strict reading of the legislation would seem to indicate that it is ceasing to be a student that is the critical date.

In fact, government guaranteed student loans are only automatically discharged if you have "ceased to be a student" for more than seven years prior to making an Assignment in Bankruptcy or filing a Consumer Proposal.

So what does "ceased to be a student" mean? It means that once you leave school, you have ceased to be a student.

In your original post, you made specific reference to a case, namely, ( Re Ledoux, 2005, SKQB 75, 8 C.B.R. (5th) 225 ) which specifically addressed this issue. In this case, the bankrupt left school in 1989 ( her education was funded in part by Canada Student Loans ). She then returned to school between 1992 and 2000, but did not receive any student loans to return to school. She then went bankrupt in 2004.

The Bankruptcy Registrar ( the judge ) in this case decided that, for the purposes of the student loans, she ceased to be a student in 1989. This was the last year she was a student for which she received student loans. So, in her case, the student loans were discharged in the bankruptcy.

This case seems to indicate that once you cease to be a student funded by government guaranteed student loans, the seven year period begins. If you return to school but don't get any further government guaranteed student loans, the seven year period does not restart.

Please note that at the time when this case was presented to the Bankruptcy Registrar, a student had to have ceased to be a full-or part-time student for ten years. The legislation was subsequently amended in 2008 to reduce the ten year period to seven years.

A word of caution is in order. This case was presented in the Saskatchewan Court of Queen's Bench which is similiar to a Supreme Court or a Superior Court in other jurisdictions. Decisions of the Saskatchewan Court are not necessarily binding in any other Province or Territory. Courts of other jurisdictions will typically consider decisions of other courts but they are NOT legally bound by them.

Both the BCSLSN and the NSLSC have chosen to ignore this case and that is their perogative. They are interpreting the provisions of Paragraph 178(1)(g) strictly as it has been provided for in the legislation.

If you reside in the Greater Toronto Area ( GTA ), as indicated in your last post, I would suggest that you contact the Law Society of Upper Canada and ask for their Lawyer Referral Service. Ask for the names and phone numbers of at least two insolvency lawyers who are very familiar with the discharge of student loans both in a Bankruptcy and in a Consumer Proposal. When you have a consultation with either or both of these lawyers, be sure that you have with you a complete copy of the Ledoux case. They may not be familiar with this case and if so, they wil want to study it before they advise you further.

You can reach the Law Society of Upper Canada, Lawyer Referral Service by calling 416-947-3330 or 1-800-268-8326.

Their website address is..........lsuc.on.ca.

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Post Options Post Options   Thanks (0) Thanks(0)   Quote SolveStudentDebt Quote  Post ReplyReply Direct Link To This Post Posted: 30/July/2012 at 9:57am
Most laws don't make sense. That is a problem in Canada.
 
Cessation of studies as it associates with the student loan is how I see it. The spirit of the law is what counts.
 
 Why would there ever be a law that says a student can't file bankruptcy and include his or her debts in it even though no student loans were taken out? That is because section 178 applies to borrowers and the prescribed period of time that a borrower must wait to claim Canada or provincial student loans. What is missing here is:
 
 "...from the day the student ceased to be a full or part-time student, and the student loans associated with that period of study."    
  
 
Solve Student Debt specializes in solutions for students and graduates in student loan default, and those at risk of defaulting.

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Post Options Post Options   Thanks (0) Thanks(0)   Quote footloose Quote  Post ReplyReply Direct Link To This Post Posted: 31/July/2012 at 3:16pm

As a follow-up to my original post on July 24, 2012, I have taken the opportunity to perform additional research and study regarding the discharge of student loans in a Division II Consumer Proposal under the Bankruptcy and Insolvency Act ( BIA ).

But before I begin, I shall make two technical corrections to the original post of "vincentmusic". First, a Trustee in Bankruptcy or a Consumer Proposal Administrator must make an application to the Bankruptcy Court for an Order of Discharge from the administration of a Consumer Proposal. An Order of Discharge is NOT issued by the Canada Revenue Agency ( CRA ). Second, you stated " Date of Discharge: May 20, 2016". It should have read "Date of Completion of Proposal: May 20, 2016. A debtor cannot be Discharged from a Consumer Proposal. Either it is completed as agreed to under the terms and conditions of the Proposal or it is annulled. A debtor can only be Discharged from a Bankruptcy. In addition, in my opinion, you were given faulty or incorrect information from your Trustee regarding the Discharge of your student loans and the seven year rule. I will explain later in this post.

I have consulted with several Trustees in Bankruptcy as well as Consumer Proposal Administrators regarding the requirements that must be met to Discharge a student loan issued under the Canada Student Loans Act, the Canada Student Financial Assistance Act or an enactment of a province in a Division II Consumer Proposal. Without one exception, they all agreed that 2 conditions must be met before a student loan can be Discharged in a Consumer Proposal.

The debtor must have ceased to be a full-or part-time student AND there must be at least 7 years between the student's "end-of-study-date" and the date when the Consumer Proposal is filed. Unless these conditions are met, the student loan WILL survive the Consumer Proposal. Also, the student loan will continue to accrue interest during the Consumer Proposal.

To further support my research, I have read and studied the applicable portions of "The 2012 Annotated Bankruptcy and Insolvency Act" published by Carswell and authored by The Honourable L. W. Holden, formerly a Judge of the Court of Appeal for Ontario, The Honourable Geoffrey P. Morawetz, of the Superior Court of Justice and Dr.Janis P. Sarra, of the University of British Columbia, Faculty of Law and the Ontario Bar.

I have studied all the cases that they have cited in regards to the Discharge of student loans in a Consumer Proposal and the theme that runs through all these cases is the 2 conditions that must be met in order to Discharge a student loan in a Consumer Proposal. It is also interesting to note that of all the cases cited of which I read and studied, not one made any reference to the Ledoux case in support of the pleadings of the debtor attempting to Discharge their student loan.

In the Ledoux case, the Trustee in Bankruptcy, Carol Hayward of Deloitte and Touche Inc. issued a 170 Report at the end of the 8th month recommending that the Registrar Discharge the bankrupt, Patricia Ann Ledoux after 9 months in bankruptcy. The issuer of the student debt, the Canada Student Loan Program objected to the recommended Discharge of the bankrupt by the Trustee which meant that the matter was then referred to the Registrar ( Bankruptcy Judge ) for a hearing.

The outstanding amount of the student loan was $28, 403.29 of which the Attorney General of Canada had otained a judgment for in 1994. The debtor had completed her studies in 1989 for which she had obtained a loan under the Canada Student Loans Act. She returned to school in 1992 and finished in 2000 with funding provided by a third party.

The Registrar had to consider two issues.

1. Does Section 178(1)(g) operate in favour of CSL, so that the debt in question is not dischargeable for a period of 10 years ( now 7 years ) from 2000?

2. If the answer to question 1 is NO, what is the appropriate Discharge Order?

The submission of the CSL with respect to both issues was fairly simple. With respect to the first issue, counsel for CSL submits that the purpose of the legislation is to provide an individual with an opportunity to enter the workforce and make efforts to pay down the debt. Bearing the purpose in mind, counsel contends that even though the CSL debt is over ten years old, the date the bankrupt ceased her studies is the relevant date. Therefore, the student loan debt is not dischargable for a period of ten years from 2000. As a result, the discharge of the bankrupt will not affect the Canada Student Loan.

Counsel also submits that the legislation could easily have read that the ten year waiting period operates from the date each loan is granted. Since it did not, it must be intended to operate 10 years from the date the individual ceased to be a full-or part-time student.

If issue 2 is relevant, CSL requests that a conditional order be made as the bankrupt has surplus income and received some benefit from the course of studies she undertook as a result of student loan funding.

Unfortunately, the bankrupt was unrepresented and did not make any submissions with regards to the first issue. With respect to the second issue, the bankrupt contends that she has high expenses which would preclude any type of payment. She contends that she does not live an extravagant lifestyle, that a review of her monthly income and expense statements confirm this.

The bankrupt also contends that the certificate in Early Childhood Development as a result of student loan funding did not result in any significant employment opportunities and is the reason she sought additional education.

After weighing all the evidence placed before the Registrar, an Order was issued requiring the bankrupt to pay $6,000.00 to the Trustee for the benefit of the unsecured creditors. The bankrupt must pay this amount by monthly instalments of $200 per month commencing on March 1, 2005 and continuing on the first of each succeeding month thereafter until paid in full. Judgment interest will accrue to any payment in arrears. The option of prepayment exists. Upon payment of this sum, an Absolute Order of Discharge will be issued to the bankrupt. The objecting creditor was awarded costs of $400.00 payable out of the estate.

While this is an interesting case, it is not precedent-setting. The fact that there has been no references made to this case since 2005 in a Bankruptcy Court regarding the Discharge of student loans in a Consumer Proposal would seem to indicate the relevant insignificance of this case.

While I definitely agree with the position taken by Johnny as to how the legislation should read regarding the matching of student loans to the time period for which a debtor has ceased being a full-or part-time student, unfortunately, that is not how the current legislation reads.

Based upon my intensive research, it is very clear to me that unless a debtor has "ceased to be a full- or part-time student" AND seven or more years has elapsed between the "end of study date" and the date a Consumer Proposal is filed, the student loan WILL survive a Consumer Proposal.

However, during my research, I discovered two additional items which should be noted.

1. Under Subsection 66.38(2.1) of the BIA, it states as follows:

A Consumer Proposal accepted, or deemed accepted by the creditors and approved, or deemed approved by the court does not release the consumer debtor from any particular debt or liability referred to subsection 178(1) ( which includes student loans in paragraph 178(1)(g) ), unless the Consumer Proposal explicitly provides for the compromise of that debt or liability and the creditor in relation to that debt or liability, voted for the acceptance of that Consumer Proposal.

Aside from all the legal "mumbo jumbo", this is what it means. If a debtor has included a student loan in a Consumer Proposal but the student loan did not satisfy the two requirements noted above, the student loan may still be Discharged providing a separate clause is inserted within the Consumer Proposal noting the student loan and stating that the student loan issuer is willing to accept a lesser amount owing on the student loan and so states the lesser amount that the student loan issuer will accept AND also votes in favour of the Consumer Proposal, the student loan will be Discharged when the Consumer Proposal has been completed. How likely this will happen is anyone's guess.

2. If a student loan has survived a Consumer Proposal, It is still possible to make a Subsection 178(1.1) (hardship) application even though the debtor has never made an Assignment in Bankruptcy, providing the debtor meets the requirements as stated in Subsection 178(1.1).

I trust that these comments will help to clarify the rules regarding students loans included in a Consumer Proposal.

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Post Options Post Options   Thanks (0) Thanks(0)   Quote SolveStudentDebt Quote  Post ReplyReply Direct Link To This Post Posted: 01/August/2012 at 10:57am
The letter of the law and the spirit of the law carry different meaning. The brown cow is a white cow by definition basically.
I am confident that any court would match the cessation of studies with the student loans, and rule on that premise.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote LtClout Quote  Post ReplyReply Direct Link To This Post Posted: 21/November/2012 at 5:42am
I see no need to debate the "spirit of the law," as the language in the BIA is, in fact, quite clear and specific.

That is: The BIA refers to: "a loan" -- not "all loans" -- as noted by the Bankruptcy Registrar (judge) in the Hildebrand (Re), 2010 SKQB 321 case.


Also: The language of "ceased to be a student" follows from the language of "a loan." Logically, then, "ceased to be a student" is relative to the specific loan that was issued.

This particular court ruling is the best I've seen so far. It also cites a number of other relevant cases.

bankruptcy - Canada Student Loans - return to school - ceased to be a student - ruling - judgment - judgement - debt - discharge
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Post Options Post Options   Thanks (0) Thanks(0)   Quote administrator Quote  Post ReplyReply Direct Link To This Post Posted: 21/November/2012 at 3:39pm
Thanks LtClout.... very helpful for providing this link..... and adding the search keywords!

PS: I edited your post to make the link active....
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Post Options Post Options   Thanks (0) Thanks(0)   Quote SolveStudentDebt Quote  Post ReplyReply Direct Link To This Post Posted: 22/November/2012 at 3:38am
Yes, language is clear. However, sometimes when law professionals read it they create their own interpretation and that creates trouble.
 
I always was of the opinion that the cessation of studies applies to the period in which the loans apply to.
 
Solve Student Debt specializes in solutions for students and graduates in student loan default, and those at risk of defaulting.

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