Do my student loans still have to be paid even if I go bankrupt?

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Larry Crandall, Licensed Insolvency Trustee

Yes, but with some exceptions.

If you ceased to be a full-time or part-time student more than seven years before declaring bankruptcy, your student loans will be extinguished when you are discharged from bankruptcy.

If the period between your termination of studies and bankruptcy is less than seven years a student loan guaranteed under a federal or provincial program will survive your discharge from bankruptcy. You continue making payments.

After five years, however, the Bankruptcy and Insolvency Act permits an application to the Court for waiver of your obligation if you experience, and will continue to experience, financial difficulty. The Trustee can help you with the application to the Court.

As well as proving this level of hardship to the Court, you will be required to show that you acted in good faith in connection with your student loan. You may be asked how you used student loan money, how you have used your education, how diligently you have tried to repay the loans and whether you have stayed in touch with the lender and appropriate government agencies, availing yourself of interest relief plans and other repayment programs.

New Repayment Assistance Plan 

As of November 1, 2016, the Canadian government put new measures in place to help recent post-secondary graduates manage their student debt. Canadians don’t have to repay their Canada Student Loan until they’re earning at least $25,000 a year.  Learn more…

If you have questions or would like to have a free consultation with one of our trustees, contact one at our location nearest you.

Some people are driven to deliver quality. Fortunately, some are awarded for it.

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Frank Fabiano, CPA, CA, CIRP Licensed Insolvency Trustee Partner and Vice President

 

A strong commitment to quality is core to everything we do at Grant Thornton. It is foundational to our success as a firm.

Frank was recently presented with our National Professional Excellence Award recognizing him as a partner who exemplifies the commitment to professional excellence to which the entire Grant Thornton team aspires.

Frank services Thunder Bay and Northwestern Ontario.  If you, your company or your client is experiencing financial difficulty, give Frank a call. Not only is he the right professional to consult, he’s understanding, respectful and here to help.

Learn more about Frank and book your free consultation.

 

 

What is a reasonable amount of debt to have?

Henry Francheville, LIT

Henry Francheville, LIT

A reasonable amount of debt allows you to make your monthly payments on time and in full while allowing you to maintain your other expenses.

You should be in relatively good shape if:

  • you’re able to pay your credit card balance in full each month;
  • your housing costs do not exceed 30% of your monthly income;
  • you’re not using payday loans or living in your overdraft; and
  • you’re able to put some money into your savings account.

For a large number of Canadians this is not always possible due to various reasons such as illness, job loss, separation/divorce, helping family members or simply the lack of a workable income.

We are pleased to offer a free consultation to discuss your situation.

Should I use my RRSP to pay debts?

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Larry Crandall, Licensed Insolvency Trustee

Larry Crandall, Licensed Insolvency Trustee with our Saint John, New Brunswick office, shares what you should consider before withdrawing money from your RRSP:

  • RRSPs are intended to save for retirement. Every dollar you withdraw today is a dollar that won’t be available when you retire.
  • Funds taken from an RRSP will be considered income in the year in which it is withdrawn. The institution will withhold income tax based on a sliding scale, but depending on your income, they may not withhold sufficient tax. This could leave you with a large tax bill at the end of the year.
  • Depending on the amount that is withdrawn from the RRSP, your increased “income” for the year may bump you into a higher tax bracket, which would increase your overall amount of income tax.
  • RRSPs are exempt in a proposal or bankruptcy (except for contributions made in the last 12 months). This means that if you file a proposal or go bankrupt, your RRSP will not be affected. If you have already withdrawn RRSP funds to pay debts and later file a proposal or go bankrupt, those funds are gone – your Trustee cannot get them back. However, the Trustee could help take care of the income tax liability created by the RRSP withdrawal.

Grant Thornton Limited provides advice and solutions to individuals and businesses experiencing financial difficulty.

Advice for Canadians facing housing foreclosure


Given recent news that nearly 1 million Canadians would be unable to keep up with their monthly payments if interest rateshouse-icon_purple  increased by only 1%, Freida Richer, Licensed Insolvency Trustee with Grant Thornton’s consumer insolvency team in Edmonton, warns that consumers who are unable to continue their mortgage payments may be facing a housing foreclosure.

She’s worked with consumers in a variety of financial situations and offered her advice for consumers in this situation:

  • Approach the situation earlier rather than later: A housing foreclosure can be more damaging to a consumer than filling bankruptcy. While facing financial worries can be daunting, approaching these situations earlier rather than later allows more time to find a solution that works for both the lender and the borrower.
  • Work with the bank: Banks don’t want to see a house sitting empty, if you work with your bank you may be able to live in the property until it is sold, granting you much more time to find alternative options.
  • Know your equity: More equity in a home often means a longer redemption period for a homeowner. Having more equity in a home could mean the difference between one day and six months in that home.
  • Resolving your exposure when foreclosure occurs: A mortgage deficiency judgment obtained against you as a result of the foreclosure is treated as an unsecured claim which can be resolved through a Consumer Proposal or Bankruptcy.

To learn more from Freida, visit www.gt.alger.ca

If I go bankrupt, how long before my creditors stop calling me?

Blaire MacNeil, Licensed Insolvency Trustee Sydney, Nova Scotia

Filing for bankruptcy creates a “Stay of Proceedings,” which prohibits creditors from taking any collection activity, including phone calls. This “Stay of Proceedings” is sent to all your creditors when you sign your bankruptcy papers.

In our experience, most creditors respect the bankruptcy process and stop calling. But, if you find otherwise, let your Trustee know and they can call the creditor, explain the process to them, and get the calls stopped.

We are pleased to offer a free consultation to discuss your options, what bankruptcy would mean for you and to help you make a fresh start! Grant Thornton Limited provides advice and solutions to individuals and businesses experiencing financial difficulty.

For answers to frequently asked questions about bankruptcy, visit our website.

For a free, no obligation consultation, in person or by phone, contact one of our offices:

Alberta | Manitoba | Northwestern Ontario | Quebec | Nova Scotia | New Brunswick and PEI

Having an honest talk about finances before getting married

With wedding season approaching and the focus on plans for the “Big Day,” it’s important before tying the knot to set aside time to review where you stand financially as individuals and as a couple, and have an honest discussion about how your finances will impact your marriage.

Whether you are entering into a marriage or a common-law relationship, this is a partnership that will benefit by having an open discussion about your finances prior to getting married or living together. Debt or disagreements about money issues are one of the top reasons for marital and relationship breakups.

Discuss finances with your partner

Here are some important points for you and your partner to discuss:

  • Share your credit ratings and credit reports with each other.
  • Talk about your past spending and use of credit behavior.
  • Discuss whether you should have a joint bank account or separate accounts. There is no one solution here. Many couples keep a joint account for shared expenses, then each person also keeps his or her own separate bank account.
  • Tell your partner about the amount of debt you are bringing into the relationship.
  • Budgeting for the wedding is a great exercise in prioritizing together and making compromises.

Am I responsible for my partner’s debt?

Although you are not responsible for the debt your partner brings into the marriage or common-law relationship, you are responsible for the debts you incur as a couple.

A party can only be held responsible for repayment of a debt if they have signed a contract, loan agreement or credit card application. If your spouse or partner never signed a contract or requested a credit card, they cannot be held responsible for the debt. In Canada, marriage alone does not make you responsible for your spouse’s debts.

With respect to credit cards, there are two ways in which the second party can be held responsible for repayment of the debt. One is where the individual actually requests a secondary card and signs an agreement saying they accept full responsibility for current and future debt. The other is where the credit card company sends a card out in the second individual’s name with the primary cardholder’s number and the second individual actually signs and uses the card. Use of the card may hold the secondary person responsible for not only their own, but all purchases made on the account by all cardholders.

Definition of a Common-law partner

This applies to a person who is not your spouse, with whom you are living in a conjugal relationship, and to whom at least one of the following situations applies. He or she:

a) has been living with you in a conjugal relationship, and this current relationship has lasted at least 12 continuous months; in this definition, 12 continuous months includes any period you were separated for less than 90 days because of  breakdown in the relationship.
b) is the parent of your child by birth or adoption; or
c) has custody and control of your child (or had custody and control immediately before the child turned 19 years of age) and your child is wholly dependent on that person for support.

More about common-law partners from the Government of Canada’s web site.

Related Videos

Contact a Licensed Insolvency Trustee

If you or your spouse / partner are in debt and need to discuss your options, contact one of Grant Thornton’s Licensed Insolvency Trustees in Canada. We offer a free, confidential meeting – in person or over the phone – to review all debt solutions, including debt consolidation, a consumer proposal, or bankruptcy.

Contact one of Grant Thornton’s Licensed Insolvency Trustees in Canada:

Alberta | Manitoba | Northwestern Ontario | Quebec | Nova Scotia, Newfoundland and Labrador | New Brunswick and PEI

Licensed Insolvency Trustees

The Office of the Superintendent of Bankruptcy Canada has recently issued a new directive changing the designation of a bankruptcy trustee, or “Trustee in Bankruptcy” to Licensed Insolvency Trustee (LIT). This designation will help individuals struggling with debt identify those who legitimately provide government programs such as Bankruptcy or a Consumer Proposal to eliminate debt from consultants who are not licensed by the federal government.

The designation of Licensed Insolvency Trustee instead of Bankruptcy Trustee is more indicative of the wider range of insolvency and debt restructuring services that these professionals provide. In other words, Trustees assist not only in filing bankruptcy but also consumer proposals and other debt restructuring services. The new designation may also help to alleviate the fear people may have in talking to a “bankruptcy” trustee and make it clearer to individuals that Licensed Insolvency Trustees can provide a variety of debt management solutions.

The role of a Licensed Insolvency Trustee remains unchanged. They will still:

  • Meet with you, during a free initial consultation, to review your debts and your financial situation in order to help you find the best available debt solution. That may or may not include any type of insolvency proceeding under the Bankruptcy & Insolvency Act. The role of a Licensed Insolvency Trustee is still to help you consider all of your options.
  • Collect information from you and prepare the necessary documents to be filed with the government, whether you are filing personal bankruptcy or a consumer proposal.
  • Notify your creditors, accept and review all claims, and otherwise administer the insolvency process.
  • Ensure you complete all necessary duties and apply for your discharge or completion certificate.

It’s important to know that the person you work with is licensed and has the training and experience needed to help you get out of debt. Licensed Insolvency Trustees are just those experts.

Learn more about Grant Thornton’s Licensed Insolvency Trustees in Canada:

Alberta | Manitoba | Northwestern Ontario | Quebec | Nova Scotia, Newfoundland and Labrador | New Brunswick and PEI

Albertans Using Credit During the Downturn


Our own Freida Richer, a prominent Edmonton trustee and proposal administrator, was recently interviewed by the CBC on how Albertans are coping with the economic downturn. Unfortunately a number are turning to credit at a time when they can least afford it.

“According to Industry Canada data, insolvency rates in Alberta were up 8.3 per cent during the first quarter of this year compared to the same time in 2014. Richer says that increase has translated into more people struggling to make their minimum monthly payments and turning up at offices like hers looking for help. She blames easy access to credit and the “buffet” of available cards, each with its own incentive and rewards.”

Click here to read the whole article.

For  a free consultation, if you are facing peronal financial difficulty, call us toll free at 310-8888 or visit us at www.gt.alger.ca. to get more information on consumer proposals, personal bankruptcy and other debt solutions.

Bruce Alger



In debt – how do you know where to get help?

The Alberta Debt Crisis: Making the trusted choice for consumer debt relief

Debt. We’re all in it, and the issue only seems to be getting worse – especially for Albertans. Alberta holds the highest consumer debt in Canada, nearly $50,000 more than the national average.  The oil and gas rich province continues to see growing job losses which only adds to the increasing consumer debt  – so how do you know where to turn to for help?

Credit counseling, debt consolidation, consumer proposals, bankruptcy – these are all terms that have been tossed around and advertised to us, but what do they mean to an indebted consumer? What options are best for your situation?  Who can you trust to handle your finances and bring you out of the red zone?

Consolidation loans

Often times the first method people consider is a consolidation loan, whether from a bank or other lender. The great part about a consolidation loan is the lumping of all of your debt into one new revised payment. On the downside, this revised payment is 100% of the debt owing wit interest. While a new payment is tempting, often times there can be many extra steps in qualifying for a consolidation loan and the new payments may not be all that much more affordable.  More on debt consolidation.

Credit Counselling

Before determining what options are best suited for you, you need to understand the debt relief landscape and who the players are. Credit counsellors have become more prominent over the last decade, mainly fueled by debtors’ desires to avoid the big bad “B” word – bankruptcy. Toted as a non-profit agency, credit counsellors require you to make regular payments to them under a debt repayment plan, and they in turn make payments to your creditors, while holding back a certain percent of your payments for their fees.

Often when consumers are choosing to eliminate their debt by way of credit counseling, they are choosing one of the most expensive methods available.  When choosing credit counseling the consumer must pay 100 percent of the outstanding balance, pay fees to the credit counseling agency, and may have to pay interest on their debts included in credit counseling.

Consumer Proposal

An alternative to credit counsellors is the more trusted and trained option of licensed trustees who are regulated by the Office of the Superintendent of Bankruptcy, typically have their accounting designation, and have been through rigorous training in bankruptcy and law.  Operating under a Code of Ethics, trustees tailor their debt solution approach to each consumer’s situation, and assist debtors into filing a bankruptcy, or the more preferred option – a consumer proposal.

A debt relief method that has become increasingly popular over the last few years (increasing 53% in Alberta from 2013-2014) is consumer proposals. Consumer proposals are attractive to people all across Canada because they allow a debtor to consolidate all of their debts into a fair proposal to their creditors to pay back all, or a portion, of the debt owing under new terms. It allows for debt consolidation, interest free terms, and flexible payback periods and allows the debtor to keep ownership of assets – your home, vehicle, tools of your trade, or potential inheritances are all protected.

Licensed trustees are the only professionals who are able to administer a consumer proposal.

As the debt landscape in Alberta continues to worsen, consumers need to be aware and informed of their options for debt relief.