What can I do if I cannot make my student loan payments?

bankruptcy-150x150What can I do if I cannot make my student loan payments?

Thousands of Canadians cannot afford to pay their student loans. The law in Canada punishes anyone making a consumer proposal or filing for personal bankruptcy if they recently stopped being a full-time student. Student loans are not forgiven unless a person can satisfy the 7-year waiting period or the discretionary 5-year waiting period based on financial hardship.

If you cannot make your monthly student loan payments then you do have a number of options:

Firstly, your lender might offer a number of debt relief options. Secondly, it might be to your advantage to make small token monthly payments. Thirdly, if you have not made a payment on your student loan for a minimum of six months you can explore negotiating a one-time lump sum payment as settlement in full—sourcing funds from family members or the sale of an asset.

Finally, you might want to consider credit counselling as a “bridging strategy”. Credit counselling might help you reduce your monthly payments on your unsecured consumer debt—but not your student loan -which might significantly improve your cash flow situation. Some Canadians seeking personal bankruptcy or a consumer proposal will use credit counselling until they satisfy the all-important 7-year waiting period.

If you want to make a consumer proposal or file for personal bankruptcy and you have ceased attending school a minimum of 5 years—but not 7 years–then you can bring a motion before a judge who has a discretion to grant you a discharge on the grounds of financial hardship.

 

Contact Rumanek & Company Ltd. for more information on bankruptcy and debt solutions. Or please fill out the free bankruptcy evaluation form. To learn more please visit our YouTube Channel. Rumanek & Company have been helping individuals and families overcome debt for more than 25 years.

How Can I Avoid Collection Calls?

Bankruptcy PeopleHow can I avoid Collection Calls

Many Canadians are very uncomfortable receiving a collection call from a bill collector. In some instances it can be a major headache for an Ontario resident to get a collection call at the workplace. There are three basic strategies for avoiding collection calls:

  1. Reduce the likelihood that a bill collector can find your phone number

You might want to get a new phone number if you are getting phone calls or you anticipate receiving collection calls. If you have a landline you should consider getting an unlisted number—and advising friends and family not to give out this unlisted number to anyone. Furthermore, you should avoid having your name mentioned on your voicemail greeting.

  1. Effectively screening potential phone calls from bill collectors

There are a substantial number of tactics you might employ to screen your calls:

  • Letting all incoming calls go to voicemail
  • Using the call display feature on your phone to screen your calls
  • Have someone else answer your phone
  • Decline to give out your name to callers unless they first identify the name of their employer
  1. Dealing with a bill collector who does get you on the phone

If a bill collector does get you on the phone then you have every right to hang up on the bill collector—or simply put the phone down on the table, or let them talk to your dog—at any time! You are under no legal obligation whatsoever to speak to a bill collector.

 

Contact Rumanek & Company Ltd. for more information on bankruptcy and debt solutions. Or please fill out the free bankruptcy evaluation form. To learn more please visit our YouTube Channel. Rumanek & Company have been helping individuals and families overcome debt for more than 25 years.

Creditors Must Vote to Accept

Bankruptcy Credit ScoreCreditors Must Vote to Accept

If you have filed a proposal, you should have been told by your trustee that the creditors must vote to accept your offer. The creditors can vote “yes” or “no” or ask for an adjournment of the vote while they consider their position or ask you to supply them with more information. What do they consider when looking at your proposal? You spend hours putting together information and signing papers at the trustee’s office and – guess what – the creditor reviews proposals at the average rate of five (5) per hour. Not much time for you to convince them to accept your offer.

The first thing they look at is the amount that you are offering – obviously, the more you offer, the better your chance of success. The reason why you are in a financial difficulty is very important. Is your problem long term (e.g. medical, psychological, etc.) or short term (e.g. unemployment, divorce, separation, short-term injury, etc.) or somewhere in between. The creditor will review your history of payments.   You will not get much sympathy if you stopped making payments two (2) years ago but only became unemployed four (4) months ago. Some creditors such as Canada Revenue Agency (CRA) have information on their computer system such as the purchase of RRSP’s, RESP’s, investments that the average creditor does not have access to. A quick note regarding Canada Revenue Agency. If you are filing a proposal and Canada Revenue Agency is a creditor, please make sure that all of your tax returns have been filed up to date. CRA wants to know how much you owe (with interest and penalties) before they decide on whether or not to vote “yes” on the proposal.

One final thought. The size of your proposal and the amount of your debt to each creditor does matter. If you owe $100,000 total but it is split between 50 creditors @ $2,000 each, no individual creditor is going to spend too much time to evaluate your proposal. The next person could owe the same total of $100,000 debt but owes $20,000 to each of five (5) creditors. Each of these creditors will, of course, spend extra time to review your proposal simply on the basis of the size of your debt.

When putting together a successful proposal or debt consolidation offer to your creditors, everything is important. There is your current status, history with your creditors, future prospects, family situation, value and type of your assets and whether or not you lose any assets in your bankruptcy, all of which must be considered when preparing and submitting your proposal to your creditors. The skill an reputation of your trustee has been earned over many years of experience in dealing with creditors. Take advantage of that experience and knowledge when you are putting together your proposal. The trustee usually has a good idea of which creditors will vote “for” your proposal and which creditors will vote “against” the proposal. Remember, the creditors have no animosity against you personally. It is all about the money that they will lose in accepting your offer to settle.

Contact Rumanek & Company Ltd. for more information on bankruptcy and debt solutions. Or please fill out the free bankruptcy evaluation form. To learn more please visit our YouTube Channel. Rumanek & Company have been helping individuals and families overcome debt for more than 25 years.

 

Bankruptcy and Student Loans in Canada

BankruptcyBankruptcy and Student Loans in Canada.

We have written many articles over the years about student loans. We recently found the enclosed article which details the history of student loans and bankruptcy in Canada. It is reproduced in its entirety:

pdf_logo The History of Bankruptcy and Student Loans in Canada

pdf_logo Treatment of Student Loans Under Canadian Bankruptcy Law

 

Contact Rumanek & Company Ltd. for more information on bankruptcy and debt solutions. Or please fill out the free bankruptcy evaluation form. To learn more please visit our YouTube Channel. Rumanek & Company have been helping individuals and families overcome debt for more than 25 years.