Lime,
1) Yes you can be sued by your lender. No one here can answer if or not you will be sued. That depends on your situation. every case is different.
2) Negotiate. If the debt is Fedral direct or guaranteed CSL, forget about it. Provincial guaranteed loans have different rules depending on which province is owed. Ontario has a blanket permission to accept 90% of the debt. The maritime provinces - forget about it. Alberta - it depends on your situation. Etc.Etc.Etc.
You asked:
"is there anyone here, or anyone that anyone here knows of that has been taken to court over a government student loan?"
If you shout a little louder, you will find a whole slew of people who have been sued by the governments and banks.
The process of litigation within the PCA is not the issue. It is what the collection agency does to convince their client that you are not acting in good faith and should be sued. In many cases people are sued in malfeasance. Collectors will recommend legal action if they feel it will prompt or scare you into finding all or a good portion of the debt to pay. In other cases, collectors will tellyout hat they can't accept arrangement - and actually threaten to send any cheques you submit back to you.
Most people give up trying to pay because they cannot work productively with a collector who is not willing to be flexible. As a result, people give up trying to negotiate and simply throw their hands up in the air and say "screw it ... if they are not going to accept my payments then I guess it isn't going to get paid." Once time has gone by, the collector can simply refer it for legal action because there are no payments being made - and there is an avenue of execution available. The lender will simply take the collector's word for it as to conclude that this is grounds for legal action. You have been offering payments all along but the collector kept refusing to accept. You did nothing wrong because you are willing to pay - and have clearly shown intent.
The collector's exit strategy and cover-up of any wrong-doing is so visible to you - but invisible to the ones making the decision. A collector will not enter notes into their client's account file that reflect that the collector refused any payments or arrangements you had offered. Instead, the notelines will reflect content that alludes to absolute fiction as to state: a) the debtor is not willing to pay or respect the terms of the debt, and; b) all attmepts to collect the debt have been exhausted - legal action is the only solution.
You wil appeal and say, "I NEVER FREFUSED TO PAY!!! The collector refused to accept my payment arrnagements - and stated that any attmept made by me to pay in increments will be fruitless. Why make payments and spend money on a stamp and chequing account charges if they are simply going to make my efforts look like a joke?"
The lender will say, "There is no indication in the history of your account that you had made any effort or attempt to repay. Instead, the collector working your file clearly indicated that all avenues to collect the debt were exhausted ...".
It is your word against the collectors. Who is your lender going to believe? If you can convince the lender otherwise, then you should have no problem negotiating a settlement by knowing "what to say".
You must also remember that third-party collectors have absolutely no power to sue Crown debt. That is done byt he department of justice. If the colelctor deems a CSL borrower as non0compliant to the terms and mandates of the CSLP, then they are required to refer the account back to HRDC for justice.
Lastly, you asked what the rights words to say would be regards to offering a settlement.
EVERY CASE is different - and unless you have 10 plus years of procedural knowledge - and some psychology background, you will have a difficult time working from advice only. Sorry to break it to ya, pal, but that is how it is.
Kwelmm said the exact same stuff - just in a shorter - more blunt statement. If you are not a good negotiator, you will have little to no success in achiveing this mark. Advice is not going to do it for you becuase you need the skill to compliment this advice.
John LeBlanc The Canadian Financial Wellness Group
Tel: (902) 464-8727
http://www.cfwgroup.ca/ - http://www.cfwgroup.ca
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