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.

…and the tax man cometh — dealing with tax, the CRA, debt help and bankruptcy

Every year, without fail, just like snow and temperatures will eventually fall in the winter, mosquitoes will pester us in the summer… every April, the tax man comes. With the deadline for Canadians to pay their personal taxes (by April 30) lets explore the issue of when you OWE money to CRA (Canada Revenue Agency).

Currently we (the trustees at Grant Thornton) are seeing about 50% of our clientele dealing with with some amount of tax debt that is owed to the CRA . While this may seem like a relatively high number, tax debt is not unusual.

One of the major trends we continue to see is people not filing their taxes for fear of owing money – this is not only a mistake, but failing to file your taxes does not get you out of paying the taxes for the year, if you owe, it can actually lead to larger amounts being owed through fines and penalties. We have seen tax debt to the extent where 50% of the amount owed is a build up of fines, interest and penalties over multiple years.

Here are the most common reasons people fall behind on paying (or filing) their taxes:

  • High costs from relationship breakdown – separation or divorce has caused people to incur costs associated with legal bills and support payments, distracting them from focusing on tax filing and remittance requirements
  • Lack of knowledge – this is more common among self-employed people that have been making good money in their respective trade. Often these people may fail to recognize the need to maintain compliance with CRA – they often put aside the matter until it’s too late, or underestimate the amount they need to set aside to pay tax which ends up causing them trouble. Some small business owners simply do not know what is required and have been soo busy working on the profit side of their business, they neglect to care for the compliance side.
  • Procrastination – some people are born procrastinators and just put off dealing with their taxes until they have completely forgotten about them all together. Then one day they are forced to deal with many years of unfiled taxes.

“The biggest mistake we see people make is neglecting to file their taxes year after year, and letting costs build up to insurmountable amounts – frequently, the penalties and interest from either not filing or not paying becomes as much as the tax owing,” says Freida Richer. “People are eventually pushed to resolve their tax debt because of the following reasons:

  • the CRA begins to garnish their wages to a point where they have no choice but to deal with their taxes,
  • the CRA threaten to file writ on the property of their home,
  • they get pressure from family or have a change in their life (birth or marriage) and want to get their finances in order.
  • their is a freeze put on their bank account.

Whatever the motivation, people should know that only a Trustee can help negotiate tax debt with CRA.”

With tax season approaching, now is the time for people to be especially mindful of their taxes and keep in mind that filing them, even if you owe, is still better than neglecting them all together.  CRA is more inclined to work with you if your taxes are filed and up to date than if they find out you have not filed your taxes in years.

On another note, keep your receipts and all tax related documentation for seven (7) years, you never know when/if you will be audited and its much easier to save the information than to try to hunt it down later.

If tax debt has become a challenge that you are ready to deal with, contact one of our trustees where we can review your options. Consumer Proposals allow people to make a fair and reasonable proposal to their creditors, including the CRA, for a revised repayment plan. Often times we are able to consolidate and reduce the overall debt owing and provide and interest-free repayment schedule for up to 60 months.

With multiple locations across Canada, there is sure to be an office near you.

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The oil and gas price wave in Alberta, preparing your finances for whatever happens

It’s been said that most people in Alberta are either working in the Oil and Gas industry or have someone close to them that does.

With oil prices plummeting to the lowest they’ve been since April 2009, many consumers are fretting over the health of the economy and job security. According to Statistic Canada, Alberta’s unemployment edged up to 4.7 per cent in December from 4.5 per cent the month previous. Shell Canada, one of Alberta’s largest oil projects, recently cut hundreds of jobs – striking fear into residents that more lay offs are to come. With this in mind, I thought you might be interested in a story looking at the impact on Albertans’ personal debt and expert tips on how to prevent consumers from falling into a financial crisis during this time.

When it comes to debt in Alberta, the province holds highest average household debt in Canada, sitting at $124,838 –nearly $50,000 more than the Canadian average. A recent BMO Report shows that despite the slump in oil and the decreasing number of jobs in the province, consumers are still spending at an unsustainable rate. Experts are warning consumers to take stock of their financial situation and prepare for the anticipated job cuts.

Average Household Debt
National ATL ON AB BC
2013 $72,045 $47,237 $76,970 $89,026 $79,089
2014 $76,140 $64,120 $67,507 $124,838 $99,834

Bruce Alger, licensed trustee with our consumer insolvency team in Alberta elaborates on his concerns, “Albertans continue to have the highest household debt in the country, and as other expenses continue to hike up such as utilities, property tax, and potentially interest rates, now is the time more than ever for consumers to have discipline and caution in term of their expenses.”

Alger offers some tips to consumers in Calgary to brace their financial situations:

Plan for the worst and start an emergency savings fund if you haven’t already – the goal is to get to several months of living costs put away in case of job loss

  • Seek out where you can easily cut down on every day costs and apply the saving against debts or your emergency fund
  • Talk with a financial expert, like a licensed trustee, who can offer free advice on how to deal with any mounting debts or debts that have the potential to become a problem.

So our question to you is, has the price of oil affected you or someone you know? Have you started to take a review of your finances and developed a plan to ride out the oil and gas wave?

If you or a family member are facing financial struggles or would like some help with managing your debt, one of our professionals is available to discuss your situation. There are many options available to help and you may not need to go bankrupt. Contact us for a confidential, no-obligation, complimentary consultation. Call us toll free from anywhere in Western Canada 310 8888. Visit us online at BC: www.GTDebt.ca or AB: www.GT.Alger.ca.



No gifts? Yes, really; it’s a good idea.

If you have elderly parents who may be struggling financially, now’s the time to suggest they don’t buy gifts for the grandchildren this holiday season. Sound radical? We think not.

Here’s why:

First, consider the reality of many older Canadians. In 2013, Statistics Canada found that about one-third of retirees have debt. Among those 55 and over who are not yet retired, two-thirds are in debt. While half of retirees with debt owe less than $25,000, Stats Can found that about one-sixth of them say they’re in hock to the tune of more than $100,000.

Blake Elyea, a senior vice-president with our team in Vancouver, says he sees a growing number of seniors as clients; those 65 and older made up 9.5% of all insolvency filings in 2013 (up from 9.2% in 2012 and 9.1% in 2011), according to Industry Canada. This trend is seen across Canada.

“The common thing that I see is either poor planning or no planning for retirement and maintaining your pre-retirement lifestyle. Then when your income changes, the shortfall is being backstopped with credit cards and a line of credit,” Mr. Elyea says.

Consider too that many seniors live on fixed incomes; they lack the means to aggressively address debt repayment. The knock-on effect can be that adult children have to pitch in and help their parents financially. That’s often a recipe for stress for both generations.

Secondly, do our children really need more video games or designer duds – and are the grandparents the ones that should be buying these expensive gifts?  We believe there are many more quality gifts we can give this year, the gift of time being the most valuable!

What we all crave over the holidays (including the kids) is rest and less stress. So, tell the grandparents they are off the hook for gifts. Their wallets will get a break and they can skip the shopping hassle. Instead, suggest some ‘old fashioned’ fun together as a family. Game nights, cookie-making or gingerbread house building together; share stories and family reminisces. Maybe start a family tree project together.

The holiday season at its heart is intended to be a time of togetherness and appreciation, and yes, even your kids – could be the happier for it.

http://business.financialpost.com/2014/12/06/indebted-seniors-need-to-discover-their-inner-scrooge/



Meeting with a Bankruptcy Trustee is no scarier than dinner with your in-laws.

When you’re struggling with unmanageable debt, we know everything else in your life can suffer. The thousands of people we have helped over the years share similar stories. They’ve told us of struggling to pay the minimum amount on credit cards, borrowing from one card to pay another, liquidating assets to pay bills and still being overwhelmed with day-to-day financial obligations. We know this can happen to anyone. Suddenly a change in your work, health or personal situation can take you from managing—to being in serious financial difficulty.

 

The idea of meeting with a Bankruptcy Trustee can perhaps be intimating or feel like a blow to self-esteem. As you might imagine though, we have met with men, women and couples from all walks of life; all ages, occupations and backgrounds. Ultimately: anyone can find themselves with debt problems and that’s when we can be of help.

 

Meeting with a Trustee, here’s what to expect:

  1. Call or email us to schedule a confidential, no-cost, no-obligation appointment. We have several locations where we can meet and flexible office hours. You will be asked to bring along (or know) some of your financial details such as monthly expenses, debts (and to whom) and your monthly income.
  2. The Trustee will review the information you have provided and go through the options available to you, what may happen, the costs and timeframe surrounding your options. These might include Informal proposal, consumer proposal or bankruptcy. (Only a Trustee can help you file a consumer proposal or bankruptcy)
  3. If we cannot help you, we will recommend options to you and refer you to someone who may be of assistance.
  4. You will always have time to review and consider your options. We will not pressure you to make a decision. You will have a better understanding of the options available to address your debt problems and you will understand the next steps and implications.
  5. If you enter into a formalized process to address your debts, and documents are signed, then garnishees and collection calls will stop.

Remember, debt problems can happen to anyone. A Grant Thornton Trustee can be a source of important information and guidance to help you toward solutions—and peace of mind.

If you are facing financial struggles or would like some help with managing your debt—one of our professionals is available to discuss your situation. There are many options available to help and you may not need to go bankrupt. Contact us for a confidential, no-obligation, complimentary consultation. Call us toll free at  (your area code)310 8888.