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RAP while living abroad?

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    Posted: 28/March/2017 at 2:41am
Hi there. In a bit of a nightmare here. I've been reading a lot of posts on this forum. Some of them frighten me; some of them comfort me. I think I'd like to have Johnny and CFWG take a look at my case, but before I go ahead and spend the money, I wanted to get some feedback here. Because maybe I'm beyond salvation. Or maybe I have nothing to worry about, and I'm just being paranoid. I hope it's the latter!

I moved to Germany in 2008 to pursue my studies, with the intention of staying in the country indefinitely. In about a year, I'll have my German citizenship - which will mean being forced to renounce my Canadian citizenship. I may move to a different country within the EU sometime in the next few years, but I never plan on living in Canada again. I have no financial ties to the country other than the (empty) TD account that was used to deposit my loans.

Which brings be to my loans... As a very, very, very silly 20-year-old, I took out my first one in 2011 without thinking too much about the ramifications. I've managed to rack up $90,000, reaching my lifetime maximum. I genuinely needed part of the money, but I also relied on it to pay my living expenses for a few years, because I had debilitating anxieties which prevented me from taking up a job. Don't get me wrong. I could have worked more, even in that condition, but I decided at the time that spending the loan and dealing with the consequences later would be easier than confronting my psychological issues. (Eventually, I started seeing a phychoanalyst a couple years ago and am doing much better now.)

My loan is a Canada-BC integrated student loan. My study period ends in October 2017. This has got me thinking again about my awful self-inflicted predicament and how I'm going to extricate myself from it. These people are going to be expecting payments by April 2018. That's not for another year, but I want to start planning now to avoid getting myself into a total sh*tstorm like some of the stories I've read here.

The monthly payments will be about $1,000. There is absolutely no way in hell I can afford that. $300 or $400 I could probably manage. I've been doing freelance work since last autumn (in something totally unrelated to my degree). Things are going quite well, and I'm making enough to live a comfortable but modest life in Europe. I'm currently netting about €1,300 a month, but I have to use most of that to pay rent and feed and clothe myself.

The thing is, I've known for some time about the Repayment Assistance Plan and assumed until yesterday that I would be eligble for it. I knew about the residency stipulation, but I assumed, it seems wrongly, that I would still be a Canadian resident for 'student loans purposes'. I assumed this because the loans application form had a box that I had to tick confirming that I was still a 'BC resident' for their purposes. I think they defined this as having lived in BC for a certain period of time before starting uni, which was always the case.

I do not want to default on this debt.

If I were eligible for the RAP, it would be a godsend. The residency stipulation seems stupid and arbitrary. The UK has a similar scheme, but they allow you to pay a reduced amount based on your income no matter where you live. Why can't Canada implement this? Does anyone know if there's any legislation in the works that might get this changed?

It seems that my only other option would be to default. I really don't want to live in constant fear of collectors. But what would be the worst-case scenario if I did default? What if I ignore the inevitable phone calls and letters and hope that the debt gets statutes-barred after six years? What are the chances of Canadian collectors getting a judgment enforced in Germany? Would they even bother? It is a high sum, which makes me afraid that they might... Or Italy or Spain or France for that matter, if I happen to be living there in a few years? Should I make token payments for the rest of my life to prevent they from being able to go to court? I don't really care if my credit rating in Canada is ruined. I just don't want anything following me to Europe. And I don't want collectors abusing me or my mother who still lives in Canada.

Thanks for reading this! Any help would be appreciated! Like I say, I'm more than willing to spend the money to have CFWG look at my case, but before I do so, I'd like to know if doing so even makes sense.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote verzweifelt Quote  Post ReplyReply Direct Link To This Post Posted: 28/March/2017 at 10:05am
So, I've gone and done a bit more research.

It seems that I could apply for a revision of terms to have the amortisation period extended to 14.5 years. This looks straightforward, and neither the ESDC nor the StudentAid BC websites say anything about a residency requirement. Is that accurate? Although I wouldn't be 'free' until I'm 42... it would bring my payments down to about $740 (€510 for me). Also, interest on student debt is a tax write-off in Germany, which would effectively lower my payments to about €450. Not at all a walk in the park, but I might just be able to make it work.

Still, the best solution would be the RAP. If they got rid of the residency requirement, I would be saved. Any word on this changing?

I'd also like to ask about interest-free status. The rates are absolutely criminal. If there were none at all (theoretically), my payments for the 14.5-year amortisation period would drop from $740 to $520 (€360 for me). Also not nice, but definitely manageable. It's quite easy to just stay enrolled at German universities. If I did so, I would theoretically be able to maintain interest-free status for a little longer, right? But StudentAid BC says that there is a 340-week lifetime limit for interest-free status. My big question here is: do these 340 weeks include the time spent at uni receiving loans? Because if they do, I can forget about that option.

What about interest in general? This is probably a hopeless question, but assuming that I'm willing to make regular payments, is there any possible way to get it fully or partially waived? Can NSLSC be negotiated with?

For the absolute worst-case scenario that my payments do go into default, I've also done some research on bankruptcy in Germany. I have no assets aside from furniture, books and some basic electronics, so I'm safe there, but six years of garnished wages and a liquidator breathing down my neck doesn't sound too appealing. I don't want to go down that road unless I absolutely have to.

A final option that I might explore is private debt consolidation in Germany. I would likely get a much better interest rate and I wouldn't have to worry about exchange rate fluctuations. But... I'd be bringing the debt close to home. The advantages of keeping it in Canada, should I go into default, seem to be that the collectors might have not necessarily bigger, but closer fish to fry; that it's unlikely (?) to effect my financial health in Germany; and that if I'm lucky, it might become statutes-barred after six years.

Once again, thanks for reading and thanks in advance for any guidance anyone can give me!
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Johnny Quote  Post ReplyReply Direct Link To This Post Posted: 28/March/2017 at 12:00pm
You are on the hook for interest no matter how long the journey is, unless you negotiate terms and compromise somehow.  What's even worse for borrowers is the capitalization of back interest. The program will "add" the back interest to the loan and then your interest paid goes up too.  The government loves to do that because it puts you further in debt, which is what they want. 

If you are benefiting from the education, or know you will be - professionally and economically, and can pay without trouble or incident, then that is what you should do. In a case like this, the CSLP has fulfilled it's mission to you - and you should do so in return. 

If you will not or cannot benefit from it professionally, economically, or socially then that is when you come to us (CFWG INC).  





 
The Canadian Financial Wellness Group (CFWG)



www.cfwgroup.ca
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Post Options Post Options   Thanks (0) Thanks(0)   Quote verzweifelt Quote  Post ReplyReply Direct Link To This Post Posted: 03/April/2017 at 3:25am
Thanks for your response! As for my ethical responsibilities, I agree with you. If I can pay, I should, and I do intend to. The problem is that if things continue as they are now, the lowest repayments possible would eat up over a third of my gross income, leaving me in an extremely precarious position.

Having the payments adjusted in proportion to my income would be the perfect solution.

Which is why my main question is about RAP. Not living in Canada, is there any possible way to get around the residency requirement? Does anyone here have any experience negotiating with NSLSC on this?
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Johnny Quote  Post ReplyReply Direct Link To This Post Posted: 03/April/2017 at 7:36am
NSLSC is not the government. It is a private company. Was DH Ltd, and now recently bought by a huge US company based out of Austin, Texas (Vista). The government is who you appeal to. The Canada Student Loans Program is based out of Ottawa, and if you are not satisfied with what the private company is doing, take the issue to the office of the minister for Social Development Canada. 


The Canadian Financial Wellness Group (CFWG)



www.cfwgroup.ca
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