Carol: Student Loan Debt Bankruptcy or Consumer Proposal?

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‘Carol’ a Case History: Overwhelmed by Student Loans

In 2000, Carol (not her real name) came to David Sklar & Associates (DSAI) with major debt issues.

As a young, single mother in Scarborough with two small children, Carol found herself buried in unsecured debt from credit cards, bank loans and student loans. Working with Rhoda Lewis, an Estate Administrator at DSAI, Carol was able to declare Bankruptcy and erase her credit card and bank loan debts. Unfortunately, her student loans could not be discharged in a Bankruptcy, as it had only been 5 years since she had been a student. Although Carol had attended university for several years, she had been forced to withdraw before finishing, due to lack of funds and the demands of motherhood.

Finding a good job without a degree was a challenge, but Carol was able to work her way up from receptionist to a senior clerical position for a large Scarborough company.

Her children, while a blessing, were also a strain on her tight finances. As a single mom, she found herself unable to pay for her children’s needs – and to make all of her student loan payments.

Carol tried several times to negotiate lower payments, but without success. Eventually, her student loans went to collections – and Carol began to deal with ongoing pressure from collection agents. Her tax refund was seized by the Canada Revenue Agency for the federal portion of her student debt – and her life became much harder.

Carol did her best to pay back her loans, but was not able to make any headway. Finally, unable to handle the strain, she decided to get help.

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Dealing with Student Loan Debt

Carol came back to David Sklar & Associates (DSAI) in 2006 – and requested that Rhoda Lewis once again act as her Estate Administrator. Together, they closely reviewed Carol’s finances and options in detail. Because it had been more than 10 years since Carol had been a student, she was eligible to discharge her student loans debt in a Bankruptcy. Note: In 2008, the length of time before student loans could be discharged with a Bankruptcy was reduced to seven years after ceasing to be a student.

Carol learned that a second bankruptcy would stay on her credit history for 14 years. That a Consumer Proposal would most likely run for five years at the end of which, it would stay on her credit history for three more years.

Carol did not want to file for Bankruptcy again and she sincerely wanted to pay back as much of her student loans as possible, so she decided to file a Consumer Proposal. At the time of the filing, Carol’s net monthly household income was $3,200 (salary plus child tax credits). Her only unsecured debt was her student loans of $30,000, and she had no non-exempt assets.

Proceeding with a Consumer Proposal

Working with Rhoda and the Trustee, a Proposal was written up – and filed by DSAI. The Proposal was for a repayment of less than the total outstanding loans – with monthly payments of $325 for a period of 60 months.

The Consumer Proposal was accepted by Carol’s creditors – and the collection efforts ceased immediately. Carol was to make monthly payments to DSAI who would then distribute the money as per the terms of the Proposal.

Carol’s Consumer Proposal has been running successfully and should be completed in 2011. Carol remains pleased with her decision to pay as much as possible on her student loans.

To protect our client’s privacy, details of this case have been altered.

Take Your First Step Towards A Debt Free Life

If you are overwhelmed by debt, call us at 1-844-962-9200 to book a FREE, confidential appointment. We will review your financial situation in detail and discuss all of your options with you. Alternatively, you can fill out the form below and our team will reach out to you. 

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The team at David Sklar and Associates Inc are very professional and are willing to help you get out of debt. Highly recommended.
Melissa MacKenzie
12:35 29 Mar 23
I would like to thank the team at David Sklar and associates inc. for all the time and effort they put in to support this process for me. This topic can be challenging to disclose but a big thank you to Christine for going above and beyond in guiding me through all my options and supporting me through the decisions. I cannot recommend this group enough , as they have shown me compassion , knowledge , and understanding throughout the entire process. I look forward to the next step of this process and learning how the proper way of becoming financially educated through the support of their financial counselling team. For anyone who is struggling , just know that there is a wonderful group of educated professionals at David Sklar who are available to help!
Michelle Plouffe
18:45 14 Mar 23
It took me awhile to get up the courage to contact David Sklar but I’m so glad I did. Trina walked through my options with me and provided the knowledge I needed to make a decision to help turn my financial situation around. She is patient and empathetic and answered any and every question that I had. Trina provided me the reassurance I needed that I was making the best decisions for me and my family. I’m so happy that I reached out and now have a plan to get back on track.
M. Mackenzie
19:59 12 Mar 23
Trina was very helpful and thorough.
Sam M
15:26 12 Mar 23
Christine was very helpful, kind, and understanding. She explained everything thoroughly, answered any questions I had, and was responsive to any concerns I had. 100% would recommend
Katherine Campbell
17:29 08 Mar 23
Jackie Stanley is excellent she took the time to explain everything to me and I am so grateful to her for giving me a fresh financial start so if you have any doubts don’t and go see her if you want to achieve financial freedom!
Heather Helfield
21:24 06 Mar 23
Amazing friendly staff that knows what they are going. They make a difficult situation not so bad. Would give 10 stars if I could.
alie Balan
22:37 25 Feb 23
Very helpful and kind and gave me all the available options before helping me decide which one was best for me. I would definitely recommend Jackie
Alison Rivard
01:01 21 Feb 23
Great experience i was in financial trouble and someone of my friends recommended this company. Cori is a wonderful and welcoming person she did a very good job and came up with a smooth and flexible monthly payment after the reduction. i highly recommend this company. Thank you David sklar and special thanks to Cori.❤️🙏🏻
Jasmine Joseph
22:08 13 Jan 23
Met up with Mr. Jason Sklar to discuss more in person, very thorough and clear. He is very kind and thoughtful, I will be referring anyone with the same situation to David Sklar & Associates.
Ariel Domingo
02:33 29 Dec 22
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