BC Court – Student Loans, Single Date
BC Court confirms single date approach to discharging Student Loans through a consumer proposal or bankruptcy.
A recent decision by the BC Supreme Court confirmed that BC will continue to follow the single date approach when considering whether or not a Student Loan is dischargeable through either a consumer proposal or a bankruptcy.
In the recent decision of Re: Piekut (2021 BCSC 1883) the Court declined to change the single date approach to a multiple date approach when considering if Student Loans are discharged in ether a consumer proposal or bankruptcy and continued to follow the current jurisprudence that was established in 2015 in the BC Decision of Re: Mallory (2015 BCSC 5).
The current legislation provides that if a student loan is more than seven years old at the date of a bankrupt’s filing, or the filing of a Consumer Proposal, it is dischargeable as a debt under the Bankruptcy and Insolvency Act. If it isn’t greater than seven years old then the debt is not dischargeable.
It may be discharged if the student makes a “hardship” application once it is more than five years post-study but less than seven years of the filing of the bankruptcy or consumer proposal (more on that later in a subsequent paper).
We understand that Student Loans considers the End of Study date as the date when an individual ceased or ceases to be a student. This date doesn’t mean the last day you attended school. It is the date that the government considers to be the last date of the program you were last enrolled in. It also includes both full-time and part time attendance.
The applicant raised the issue of whether the BC Court should continue to use the “single date” approach as decided in Mallory or “multiple date” method of determining whether a student loan is discharged under s. 178(2) of the BIA which has been used in other jurisdictions.
Does a student who is in-and-out of school, with or without student loans for each (or any) session, reset the clock each time they enroll, or does the clock stop each time they cease study? In BC the answer is the clock resets as decided in Mallory and confirmed in Peikut. The end result is that the student loan survived the proposal and was not discharged under the BIA.
Different jurisdictions have taken a “multiple date” approach. However, in BC that has been rejected.
We understand the decision is being appealed.
If you have Student Loan debt that is unmanageable, contact us today. We offer a free no-obligation consultation where we will look at all your debts with you and help you decide if a bankruptcy or consumer proposal makes sense to deal with your student debt.
A virtual meeting is available via Zoom or Microsoft Teams. Or we can chat on the phone or by email. If you would like an in-person consultation, we can arrange that as well. We have offices in Vancouver and Surrey.
Call us. Its not too late!
Comparing Consumer Proposal to a Debt Management Program
In Canada, one of the most common, if not the most common, debt relief program is a Consumer Proposal.
Other debt relief programs, commonly referred to as Debt Management Programs, (“DMP”) or Debt Consolidation Programs, typically do not reduce debt.
To help understand the difference between the two, Boale Wood has posted detailed information on the differences. See this page for more.
A message regarding COVID-19
Dear clients and friends of Boale, Wood & Company Ltd. As you all are aware, the World Health Organization (“WHO”) recently declared the coronavirus (COVID-19) a global pandemic. This evolving situation is affecting our firm, our clients and our communities in rapidly changing ways. The health and well-being of our firm members, colleagues and clients is paramount and will guide us as we collectively respond to the developing COVID-19 outbreak. We will continue to closely monitor relevant WHO, Public Health Agency of Canada, and local governmental/health institutions, for guidance on travel, staff exposure, premises and preventative measures to ensure our plans and response aligns with the latest recommendations and best practices. As part of our initial response plan, we have instituted the following for debtors until further notice: 1. Counselling Sessions – will be held via telephone or video conference. There will be no need to attend our offices in person. 2. Meetings of Creditors – recently updated Directive 22R2 encourages the Chair of a meeting of creditors to make every reasonable effort to hold creditor meetings by electronic or digital means of communication. The chair of the meeting may rely on representations by attendees to confirm their identification. 3. Initial Assessments - Directive 6R3 provides for the use of methods other than in-person assessments in extraordinary circumstances. In our firm, we are able to do almost everything via email or fax or by telephone. 4. Documents that require signature can be exchanged via email, or other electronic means, and we can provide debtors the necessary support to explain the documents via videoconference or over the phone or as otherwise required. We are exploring legal methods for the witnessing of signatures and swearing of oaths. This will be assessed on a case by case basis. There is no disruption in service. We are available to assist debtors in need and all our current clients. We have also instituted a number of internal measures for our staff for their health and safety: 1. Encouraged our staff to work remotely from home to avoid public gathering on transit or other areas; 2. Requested that firm members refrain from attending large business events outside the office; 3. Requested our landlords to have implemented enhanced cleaning and disinfecting protocols in our offices; 4. Implemented and are regularly updating policies for personnel who become ill or are concerned that they may have been exposed to the virus; and, 5. Encouraged our staff to turn to reputable sources of information, rather than rumours and unfounded speculation. If you have any questions regarding the firm’s response to COVID-19 or resources we can provide, please contact me at (604) 605-3335. We wish you and your loved ones good health and safety in these challenging times. Yours very truly, Boale, Wood & Company Ltd. Licensed Insolvency Trustee Per: David S. Wood, CIRP PresidentContinue reading »
I Owe CRA a Lot of Money and I Can’t Pay
Continue reading »
Now What?When you owe the government money, it can be overwhelmingly stressful. It doesn’t matter if it is for taxes, student loans or even Medical Service premiums. Most consumers assume that the government has an endless means available to them to collect the debt. The Government of Canada, through its various departments of the Canada Revenue Agency (CRA), are responsible for the issuance of income tax refunds, pension and old age security, GST/HST and provincial credits and other government issued income sources. When you owe the CRA money, there is concern that any collection action will result in loss of income and will leave an individual without sufficient resources to meet their basic living expenses let alone any other debt payments. What Can They Do to Me? CRA has the right to proceed with collection action without a Court Order. It can be as simple as issuing a Requirement to Pay to your employer (garnishee) or a Set Off Notice to the department that issues CPP benefits. In essence the government can:
- Garnishee your wages up to 50 percent of gross earnings of employment income (usually it’s at least 30%);
- Garnishee up to 100 percent of self-employed income (especially if you owe GST or payroll deductions);
- Put a freeze on your bank account and seize the funds on deposit and continue to seize subsequent deposits;
- Withhold certain tax credits such as GST/HST refund cheques and set those credits off against the debt;
- Arbitrarily assess any unfiled income tax returns and apply penalties and interest to the debt owing; and
- If you are a homeowner, file a lien on your property that would ensure the debt is paid if the property is sold.
- The tax debtor has ignored their obligation to pay the taxes owing;
- The tax debtor has ignored all phone calls and letters from CRA requesting contact;
- The tax debtor is non-compliant in their tax filings leading to arbitrary assessments;
A Closer Look at November 2018 Insolvency Stats
Consumer insolvencies in BC increased in November 2018 overall by 1.0 percent from November 2017. Consumer proposals increased 6.7 percent while bankruptcies decreased 7.7 percent. Consumer insolvencies in all of Canada increased 5.1 percent over the same period last year. BC accounted for 7.92 percent of all insolvencies in Canada in November 2018. The proportion of proposals in consumer insolvencies in BC accounted for 63.73 percent during November 2018 while they accounted for 58.93 percent for all insolvencies across Canada for the same period. The proportion of proposals in consumer insolvencies in BC was 59.68 percent during the 12-month period ending November, 2018, up from 57.99 percent during the 12-month period ending November 2017. It indicates the popularity of consumer proposals as a way for consumers to deal with their debt and with dealing with a Licensed Insolvency Trustee over other unregulated service providers. While insolvencies across Canada are down overall by 5.1 percent, bankruptcies are down 3.6 percent, but proposals are up by 12.1 percent. Proposals also make up 55.67 of all insolvencies in Canada in 2018 up from 52.4 percent in the previous twelve months. The insolvency statistics indicate the increasing benefits of the protections provided to consumers under the Bankruptcy and Insolvency Act over other non-legislated options, whether that is a consumer proposal or a bankruptcy. It also indicates that consumers are seeing the benefits of seeking the professional advice of a Licensed Insolvency Trustee rather than those of other non regulated service providers. If you would like to know exact details of how a consumer proposal or a bankruptcy would benefit you in dealing with debt, call us at (604) 605-3335 to schedule a free consultation. Call us. It’s not too late. For more on the the all Canada statistics, see this page.Continue reading »
Canadian Insolvency Stats for November 2018
The latest numbers from the office of the Superintendent of Bankruptcy Canada shows a 2.5% percent decrease in the total number of insolvencies in Canada in November 2018 compared to the previous month. Bankruptcies decreased by 8.2% percent and proposals increased by 2.1% percent. Compared to a year earlier, insolvencies increased by 2.0% Other stats: For the 12 month period ending November 30, 2018, the total number of insolvencies increased 2.0 percent compared with the 12-month period ending November 30, 2017. You can read the summary and full report here.Continue reading »
What are my Options? Do any of these situations seem familiar?Continue reading »
- You’re being faced with ongoing telephone calls from your creditors harassing you;
- You’re considering cashing in your RRSP to pay your ongoing credit card payments;
- You’re selling your personal assets to get enough money to make minimum payments;
- You’re borrowing money from pay day loan companies to make your minimum payments;
- You’re making the minimum payments only on your credit card debts and don’t seem to be getting ahead;
- You’re borrowing from a cash advance from a line of credit or a cash advance from one credit card to other credit cards; or
- Your debt load continues to increase with no change in sight.
- Communicate with your creditors to find a plan to pay everybody in full. We can provide you with suggestions to communicate with your creditors;
- Budgeting assistance,
- Refinancing your current debt or Debt Consolidation,
- A Debt Management Program (“DMP”), provided by accredited credit counsellors,
- A formal proposal to your creditors (Consumer proposal or a Division 1/Commercial proposal), or
Financial Options Explained
- Communicate with your creditors and find a plan to pay everybody in full.
- Refinancing/ Debt Consolidation,
- A Debt Management Program, (“DMP”)
- A formal proposal to your creditors (Consumer Proposal or a Division 1/Commercial Proposal),
- Consumer Proposals—available to individuals who owe less than $250,000, excluding the mortgage on your primary residence; and
- Commercial Proposals—there is no limit regarding how much money is owed.
Albertans Deepest in Debt
Headline: 'People are still having a very hard time': Survey shows Albertans deepest in debt, despite highest incomes Via: CBC NewsContinue reading »