I am an Insolvency Specialist (Bankruptcy/Proposal/Receivership)-ask me anything

[AR_Six]

Please analyze the effect that the decision in Ottawa Senators has on the ability of the Canada Revenue Agency to assert its claim to funds in trust for her majesty in the context of a pending arrangement under negotiation pursuant to the Companies' Creditors Arrangement Act.

[Rocky Raccoon]

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[Sr. Mints]

I'm in the midst of an existential crisis, and the notion of juggling my problems while running on the wheel to pay my mortgage, student loans payments, and other debts before I have a heart attack while standing in line for the latest iPhone is quite honestly depressing the #### out of me.

Will bankruptcy save me?

[bizaro86]

Originally Posted by Rocky Raccoon

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What about things like condo fees? I'm on a condo board that has a pretty large lien against someone who hasn't paid his fees for quite awhile. Presumably the caveat on the title of his condo survives bankruptcy? What if there wasn't a caveat on the title, would that debt be affected by bankruptcy?

[onetwo_threefour]

Originally Posted by Rocky Raccoon

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From a philosophical perspective...

The reasons that student loan debt is not forgiven through a bankruptcy relate to a few things, some of which are evident from the 7 year rule <removed>. Specifically, the concern is that young adults coming out of university with high debt loads, little assets, and a long working life ahead of them may see bankruptcy as a quick and easy way around paying back student loans that will otherwise hold them back financially for several years while being willing to take the credit hit knthe meantime that goes away after 7 years. By stipulating that student loan debt cannot be eliminated through bankruptcy for a period of seven years, bankruptcy is disincentivized for recent grads as an easy out. Furthermore, since these loans often are or have been guaranteed by the government, this law somewhat protects governments from the consequences of this type of default since the right to pursue a judgment is preserved. Finally, looking at it from the other side, since student loans are effectively unsecured debt, the interest rates on these loans and the potential cost to the government to guarantee these loans might be significantly higher if the financial institutions handing out the money perceive a high risk of default. Arguably, the exclusion of this type of debt from bankruptcy, should lower that perceived risk for both lenders and guarantor of this debt making the costs for both borrowers and government guarantor easier to manage.

[Rocky Raccoon]

Originally Posted by Sr. Mints

I'm in the midst of an existential crisis, and the notion of juggling my problems while running on the wheel to pay my mortgage, student loans payments, and other debts before I have a heart attack while standing in line for the latest iPhone is quite honestly depressing the #### out of me.

Will bankruptcy save me?

MODERATOR EDIT
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[Rocky Raccoon]

Originally Posted by bizaro86

What about things like condo fees? I'm on a condo board that has a pretty large lien against someone who hasn't paid his fees for quite awhile. Presumably the caveat on the title of his condo survives bankruptcy? What if there wasn't a caveat on the title, would that debt be affected by bankruptcy?

MODERATOR EDIT
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[Rocky Raccoon]

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[Kjesse]

Originally Posted by Rocky Raccoon

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You should be kidding, but guess you aren't. There is an underlying reason for every piece of legislation, and onetwo threefour hit that reason on the head in so much as one would be expected to on a message board.

I'd go a little farther than his answer though and I think that if student's loans were dischargable debt, there wouldn't be student loans. The risk that students would take advantage of the BIA's one-free-ride (the automatic discharge after 9 months) would so great that the interest rate would be high to the point nobody who actually intended to pay it back would take such a loan out, or further, the government wouldn't offer them since it could make them look like loan sharks.

Its not philosophy, its reality.

[Rocky Raccoon]

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[ResAlien]

Seeing how you keep asking people for contact information and PMs are you sure that you want to "help the community" and you're not just trying to drum up some free business?

[Rocky Raccoon]

Originally Posted by ResAlien

Seeing how you keep asking people for contact information and PMs are you sure that you want to "help the community" and you're not just trying to drum up some free business?

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[anyonebutedmonton]

Let's not be too hasty in dismissing a volunteer resource on CP. He doesn't appear to be in it for the $$$, cut him a bit of slack people.

[ResAlien]

So sorry Rocky Raccoon. I feel horrible for asking. You obviously have nothing but the most noble of intentions. Please accept my most sincere apologies. I hope I haven't offended you in any way.

[Rocky Raccoon]

Originally Posted by ResAlien

So sorry Rocky Raccoon. I feel horrible for asking. You obviously have nothing but the most noble of intentions. Please accept my most sincere apologies. I hope I haven't offended you in any way.

MODERATOR EDIT
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[onetwo_threefour]

Originally Posted by Delgar

You should be kidding, but guess you aren't. There is an underlying reason for every piece of legislation, and onetwo threefour hit that reason on the head in so much as one would be expected to on a message board.

I'd go a little farther than his answer though and I think that if student's loans were dischargable debt, there wouldn't be student loans. The risk that students would take advantage of the BIA's one-free-ride (the automatic discharge after 9 months) would so great that the interest rate would be high to the point nobody who actually intended to pay it back would take such a loan out, or further, the government wouldn't offer them since it could make them look like loan sharks.

Its not philosophy, its reality.

Thanks. Your further reason is a fleshed out version what I was trying to say in my last sentence, but I was getting a little obscure in my explanation by that point.

In my own defence, I thought the original question was exactly what I answered. "Why doesn't the government want to let you off the hook on student loan debt through bankruptcy compared to other debt?" is the most obvious interpretation of the original question in my opinion. I did say I wasn't trying to be pedantic (although as a solicitor, being pedantic is my job), I was trying to answer the actual question. If the cop-out thing was offensive, I'll take it back, I honestly didn't think anyone was looking for an answer of "You can't do it, because the law says you can't." Otherwise, why ask "in comparison to other debt?"

At any rate, I certainly don't want to start some sort of conflict, I really just wanted to flesh out the details becasue if I had asked that question, that's what I would have wanted to know. I personally wouldn't get offended by the 'cop-out' remark, so if you feel the need to use it with respect to an answer I give, feel free. Anyobdy who volunteers professional advice or education, including Rocky, should be commended, and why not try to develop some business as well? Of course if you do throw info out there in the wild, youhave to expect others to comment on or even critique what you're saying.

[AR_Six]

Originally Posted by onetwo_threefour

I honestly didn't think anyone was looking for an answer of "You can't do it, because the law says you can't." Otherwise, why ask "in comparison to other debt?"

This is fine but when a professional starts an AMA like this one it's presumably in the context of a willingness to provide practical information to people who may have straightforward real-life situations to address. He didn't start it to have a philosophical debate as to the rationale behind legislative policy decisions. I.e., "if I'm in X situation, should I do Y or Z?"

I mean I could have a couple hours' long debate about the 2009 amendments to the BIA and CCAA and why for example the requirement that all debt must be satisfied before a payment can be made to equity stakeholders runs completely contrary to the purpose of restructuring statutes, or whether all liquidation proceedings should be carried out under the BIA to the exclusion of other legislative schemes, but I don't because it ain't that kind of thread.

... Which is why my Ottawa Senators question wasn't entirely serious and I'm surprised he answered it.

[Rocky Raccoon]

Originally Posted by onetwo_threefour

Thanks. Your further reason is a fleshed out version what I was trying to say in my last sentence, but I was getting a little obscure in my explanation by that point.

In my own defence, I thought the original question was exactly what I answered. "Why doesn't the government want to let you off the hook on student loan debt through bankruptcy?" is the most obvious interpretation of the original question in my opinion. I did say I wasn't trying to be pedantic, I was trying to answer the actual question. If the cop-out thing was offensive, I'll take it back, I honestly didn't think anyone was looking for an answer of "You can't do it, because the law says you can't."

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[Rocky Raccoon]

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[chemgear]

^ Kudos for the reasonable discourse above - even in the face of potential misunderstandings. I'm just lurking but am interested in learning more from the thread.