Student Loans - collection agencies - bankruptcy

The question that prompted this is furher on!

This arrived with some 7,000 other emails while I was away at a wedding in Winnipeg.

I apologize for not acknowledging it sooner. There is no way out of your student loan other than bankruptcy or paying it off.

I likley know of 50 people being chased at the moment. Without exception, they are being treated poorly by the collection office. I tried to make an offer to the collection office for one person twice and did not receive the courtesy of a "get Lost" reply. You did a little better with the Prime Minster's office.

The following may help. It was publishd in the Western Investor in February, 2004 - I wrote it about me. The Western Investor Article did not contain a lawyer's name - I used Murray Morisson in Surrey at 200-10351 150th Street, Phone 604-930-9013 - He is a very real specialist in bankruptcy law.

I did not use a trustee because I was put into bankruptcy by the CRA and to my knowledge am the only Canadian ever put into bankruptcy by the CRA. If I was going to do it myself, I would use Gerry Foran at Sands and Company (604) 684-3030.

The CRA used Deloitte and Company an organization which left a vile taste in my mouth. Although the support staff were pleasant, they mised the mortgage on the house in their report even though it was in my declaration. When I pointed that fact out, the principal arrogantly told me I was lying about the mortgage my wife had been paying for 17 years that he had personally checked and it did not exist. But the silliest thing was that earlier, when the principal walked in to the room in his immaculate suit, immaculate hair, and 'haute' attitude. He literally looked down his nose at me and said, "Mr Ingram, aren't you ashamed to be here?" That was the first of many mistakes made. The funny part was that I wasn't ashamed or embarrassed at all. I was relieved that the whole mess was about to go away. Some one had finally made the decision for me. I have been able to help many people make the decision since.

From the tone of your letter, I bet that you should consider bankruptcy. This is the Western Investor article.

BANKRUPTCY – or How I Found Freedom in an Unfree World

I have just received my discharge from bankruptcy. It isn’t completely over. I have to pay $800 a month for 36 months starting on Feb 7th, but that is a lot better than the $4,853,000 income tax bill that started it with no assets.

Well there “were” family assets. But over a period of 21 years I went from a positive “paper” net worth of $4,800,000 to a negative $4,800,000 because of an income tax bill that I fought in court and lost and then got stubborn.

If I had to do it again, I would have walked into a bankruptcy trustee’s office 15 years ago and would have been able to get on with my life. Instead I got stubborn and decided I would go to my grave owing the CCRA as much as the tax bill increased to before I died.

So the house was in my wife’s name, the cars were in my wife’s name, the motorhome was in my wife’s name and the business was in my wife’s name. I owned nothing and was quite enjoying the position. After all, what else could anybody do? Well, there was one thing someone could do. In the middle of the bankruptcy my wife left (with all the assets) but that is another article.

Thankfully, the CCRA finally gave up on collecting it and hired a trustee to put me into bankruptcy. I understand that I might be the first person that the CCRA put into receivership in Canada. No trustee I have talked to had ever handled a receivership where the CCRA had put an individual into bankruptcy. Oh sure, there were thousands where a taxpayer had declared bankruptcy because of a tax bill. But no one knows of an individual out into bankruptcy by the CCRA.

Now you have to know that I have sent a couple of hundred people to go bankrupt over the years. Their situation was hopeless and bankruptcy was the only solution. And I had even had an appointment to see a bankruptcy trustee on July 22, 1999 but luckily, broke my arm and leg in a motorcycle accident the week before and never made the appointment. But I should have rescheduled and got on with my life three years earlier because it took the CCRA three more years to put me into bankruptcy and I could have done something with those three years. You see, this article is meant to encourage you to see a trustee and pull the plug if you are fighting a losing battle, particularly if the major creditor is the CCRA.

If you have money problems for any reason that could include divorce, separation, unexpected tax penalty, leaky condo, company downsizing, illness, an accident or any combination of the above, you will need help.

That help may be as simple as taking an adult education course in family finances at your local high school. Most adult education courses include such a course and even though I taught them for years, it did not keep "me" out of that $5,000,000 bankruptcy after three of the above events occurred.

If you need more immediate help and you happen to live in Greater Vancouver, contact a credit counselor. There are lots around. Look in the Yellow Pages. If you want a referral, send me a request to [email protected]

As one credit counsellor's pamphlet suggests;

"Budgeting involves more than just arithmetic. It takes determination. People experiencing financial difficulties need objective, unbiased neutral information."

That statement applies to your finances when you have an income and bad spending habits. It does not cover the financial disasters that I seem to see on a daily basis. I am talking about the $186,000 income tax reassessment for something that happened five years ago. I am talking about the leaky condominium crisis where the debt is $100,000 and you would have to earn $190,000 and pay $90,000 income tax to have $100,000 left and that is not counting interest accruing while you are doing it.

In this case, you need to consult competent help that does NOT start with a bankruptcy trustee, a night school course, a credit counselor or an accountant.

Now, you need a lawyer and not "just" any lawyer. You need a lawyer like mine who specializes in Bankruptcy law and will work for you and give you and your family the advice it needs to preserve any assets possible and tell you what you can do and cannot do.

BUT, why not save a couple of dollars and go directly to the trustee.

The simple fact is that the trustee does NOT work for you. When you sign that paper, the trustee that you searched out, the trustee that you found in the yellow pages, the trustee your banker, hairdresser, mechanic, best friend or worst enemy recommended is not working for "you".

The trustee is working for the creditors. Their job is to get the most for the creditors following local federal, state or provincial guidelines that have different limits in each province and each state.

To access all these limits click on the best site I know of:

British Columbia Exemptions are for instance:

Equity in a home in Greater Vancouver and Victoria = $ 12,000. In the rest of the province = $ 9,000;
* Equity in Household items = $ 4,000;
* Equity in a Vehicle = $ 5,000; The vehicle exemption drops to $2,000 if the debtor is behind on child care payments (to facilitate the enforcement of Maintenance Orders)
* Equity in work tools = $ 10,000;
Equity in essential clothing and medical aids is unlimited

Alberta shows its agrarian roots with much larger exemptions as follows:

Food required by the debtor and his/her dependants during the next 12 months;
* Necessary clothing of the debtor and his/her dependants up to a value of $4,000;
* Household furniture and appliances up to a value of $4,000;
* One motor vehicle not exceeding a value of $5000.00;
* Medical and dental aids required by the debtor and his/her dependants;
* Where the debtor is a bona fide farmer and whose principal source of livelihood is farming 160 acres if the debtor's principal residence is located on that 160 acres and that the 160 acres is part of the debtor's farm;
* The equity in the debtor's principal residence, including a mobile home, up to a value of $40,000.00;
* If the debtor is a co-owner of the residence, the amount of the exemption is reduced to an amount that is proportionate to the debtor's ownership interest;
* Personal property (i.e. tools, equipment, books) required by the debtor to earn income from the debtor's occupation up to a value of $10,000;
* Where the debtor's primary income is from farming operations, personal property required by the debtor for the proper and efficient conduct of the debtor's farming operations for the next 12 months.
Saskatchewan Exemptions and agrarian routes are even more generous:

For Non-Farmers:

Household furniture and personal effects to a value of $4,500 per person;
* Tools of the trade to a value of $4,500;
* A motor vehicle, if required for employment;
* $32,000 equity in your home ($64,000 if jointly owned);
* Certain life insurance policies;
* RRSPs, RRIFs and DPSPs are exempt from seizure (effective March 4, 2003);
* Certain pensions.
For Farmers:

Furniture, furnishings and appliances to a value of $10,000;
* The cash equivalent of produce sufficient to provide food and fuel for heating until the next harvest;
* All livestock, farm machinery and equipment, including one car or truck, necessary for the next twelve months operations;
* One motor vehicle, if required for business or profession, but not in addition to the one above;
* Tools and equipment to a value of $4,500 used by a farmer in his trade or profession;
* Equity in personal residence to a value of $32,000 ($64,000 if jointly owned);
* Seed grain equal to two bushels per acre of land under cultivation;
* RRSPs, RRIFs and DPSPs are exempt from seizure (effective March 4, 2003);
* Cash equivalent of crop equal to:
* unpaid harvesting costs;
* living expenses to next harvest;
* necessary costs of farming until next harvest.
The homestead;
* Certain life insurance policies;
* Certain pensions
MANITOBA Exemptions are a little light:

Furniture, household furnishings and appliances not exceeding total value of $4,500;

Necessary and ordinary clothing of the debtor and family;
* Food and fuel necessary to family for period of six months or cash equivalent;
* If debtor is a farmer:
* animals necessary for farming operation for 12 months;
* farm machinery, dairy utensils and farm equipment necessary for ensuing 12 months;
* one motor vehicle if required for purposes of agricultural operations.
* Home quarter.
* Tools, implements, professional books and other necessaries not exceeding a total value of $7,500 used in practice of trade, occupation or profession;
* One motor vehicle, if necessary for work or transportation to and from work, not exceeding $3,000 in value;
* Articles and furniture necessary to performance of religious services;
* Seed sufficient to seed all land of debtor under cultivation;
* Health aids, including wheelchair, air conditioner, elevator, hearing aid, eye glasses, prosthetic or orthopaedic equipment, necessary to debtor or family;
* Chattel property of municipalities and schools;
* Actual residence of the bankrupt, equity of $1,500 each if in joint tenancy, or $2,500 if not in joint tenancy.

Talk to a bankruptcy lawyer first. If you want a reference, email me at [email protected] Get your law straight. Learn what you get to keep and what the limits are. In BC for instance you can have $5,000 equity in a car. However, The Bank of Nova Scotia (for one) will insist on seizing your car even if you have never missed a payment if the car loan is with them. Arranging for someone else to take over the loan before you go bankrupt could make the transition easier.

Other assets you can keep (for a total of $31,000 if they all exist are:

I advised one lady client to go bankrupt at this time last year for a $140,000 tax bill (which was unjust, unfair and illegal in my opinion) that we had fought for two years. (Canada decided to tax her retroactively on her income for five years even though she was an American living in the states. They decided she spent too much time in Canada and she had since moved to Canada officially - Bankruptcy was the only way to get rid of it and start over.)

I was blindsided by the Bank of Nova Scotia's new policy of not allowing anyone to keep a car. Luckily, a friend paid out the bank and loaned her the money and she kept her car. It would have been far easier if we had known that in advance. Her Bankruptcy Trustee was blind sided as well. It was also the first one he had seen.

After you have made a decision, you need a trustee. Remember, they are all working for your creditors.

The best site I know of to get information about trustees is at: If you can't make up your mind, send me an email to [email protected] and I will give you someone in your area.

Trustees might not like me saying this but you do not even need money to go bankrupt. The trustee can be paid from your assets, tax refund or might not even get paid until after the bankruptcy. While I was actually writing this, another client who I had sent to go bankrupt came in to return some material I had loaned him. I said thank you and suggested that he must have his discharge by now. He did not have it. He only had a conditional discharge because he still owes the trustee $1,500 which he expects to have very soon. Another client is in the same position. However, they do not have a dozen creditors phoning looking for money.

Hope this helps. Remember - see the lawyer first - before you see the trustee. And only talk to a lawyer who deals regularly with bankruptcy and appears in court for bankrupts protecting their rights. That means one in 100 lawyers. There is little chance that a lawyer you are already dealing with would be the one you would use because a bankruptcy lawyer is likely too busy to do anything else.

david ingram [email protected]