Financial Assessment

As I mentioned before I was meeting with a bankruptcy trustee. First off I want to say that I should not know more about the process and the law then the person doing the consultation. While researching options and what it would mean if I do file for bankruptcy I had discovered that the laws regarding student loans had changed. If you were out of school for 7+ years then your loan would be automatically* discharged (See note later on about this) and then if you had been out of school for 5-7 years then you could apply to have it discharged based on undue hardship but it was up to the court to decide if there really was hardship and if even after the bankruptcy you would not be able to repay it. But when I was doing the consultation she told me that my student loan would not be affected and I would need to contact them after the bankruptcy was discharged to apply for loan forgiveness. Now I thought maybe that part of it hadn't gone into effect yet so I let it go... But when I looked at the Bankruptcy and Insolvency Act later on it was listed there.

No real surprise they were recommending that I file for bankruptcy. After all I am now unemployed and even when I was working I was losing money every month. But it's not like you just file for bankruptcy and wipe the slate clean. I can't afford to pay my bills (and am now behind on a few credit cards and my student loan) but I can't afford consolidation or bankruptcy. Bankruptcy costs $1800 in total so $180 month. They said that they would work with me as far as payments go at the moment but I would still have to make up those payments for it to be discharged. More importantly then the cost is how long it stays with you. For 9 months my credit report would show an undischarged bankruptcy and then it would stay on my credit for 7-10 years. Now it's not as bad as it once was... You can get pre-paid credit cards if you do need a credit card for something... or a secured credit card. But it's still bad. This one comes into play more because I am job hunting at the moment.... It also impacts your ability to be bonded. Sure I would pass the criminal check and there is nothing in my background about fraud or anything but the bankruptcy could hurt me... Just think about all the jobs that involve handling money that I would have difficulty getting: Banks, Retail, Call Centres... most jobs that I can think of. So if I am going to do it then I want to make sure I either have a job or am going to be waiting and hoping that my most recent job does recall us. Obviously not an easy decision but I need to do something.

I am supposed to meet with the trustee in a week or so. I will definitely be finding out if they are aware of the recent changes in regards to student loans and if they are not fighting to have my student loans discharged then I will not be making use of their services. I am also going to touch base with them about the issue of bondability. Then I will actually make a decision.

*NOTE: While the Bankruptcy and Insolvency Act does say that the student loan would be automatically discharged after 7 years every creditor has the right to oppose the discharge and can claim that you did not make a reasonable effort to make a proposal. And from what I havve heard that is exactly what is happening. They challenge the discharge and will then prolong the length of time you are bankrupt for AND the student loan may not be discharged at all.