Gilbert (Re), 2013 NSSC 404

IN THE SUPREME COURT OF NOVA SCOTIA IN BANKRUPTCY AND INSOLVENCY Citation: Gilbert (Re), 2013 NSSC 404 Date: December 10, 2013 Docket: 37251 Registry: Halifax District of Nova Scotia Division No. 1 Court No. 37251 Estate No. 51-1237718 In the Matter of the Bankruptcy of Krista Gilbert _________________________________________________________________ D E C I S I O N __________________________________________________________________ Registrar: Richard W. Cregan, Q.C. Heard: December 6, 2013, in Halifax, Nova Scotia Counsel: Krista Gilbert, self-represented Kelly Peck for the Respondent, Deputy Attorney General of Canada

I. This is an application under subsection 178 (1.1) of the Bankruptcy and Insolvency Act , R.S.C. 1985, c. B-3 (BIA). II. The Applicant, Krista Gilbert, attended Saint Mary’s University from 2001 to 2005 where she received a Bachelor of Arts in Psychology and Dalhousie University from 2006 to 2008 where she received a Bachelor of Social Work. She is registered to practice by the social work profession regulatory authority. III. To finance this education she received a full student loan. Part of these borrowings were from the Newfoundland program. On her graduation it was forgiven.

However the bulk of her borrowing was under the National Student Loan Program. When she completed her education in May of 2008, she owed $45,668.46. The present balance is $45,000.00. IV. She was granted interest relief from May 13, 2008 to May 31, 2012, as her income was insufficient for regular payments. Since that date she has been paying $177.94 presumably the minimum required payment. V. She made an assignment in bankruptcy on July 24, 2009. Her total debt then was $87,024.00. She was discharged on April 26, 2010. VI. Since ceasing to be a student she has been employed with Homes for Independent Living.

First, she was paid $15.84 per hour as a Life Skills Coach; from November 13, 2009, she was paid $16.30 per hour as an Outreach Worker; from November 2, 2011 as a Program Coordinator $44,783.96 per annum; and from April 2013 to the present as the Program Coordinator, $51,553.06 per annum. VII. The following is her statement of monthly income and expenses: NET MONTHLY INCOME AND EXPENSES MONTHLY INCOME: Gross Earnings $ 3965.62 Total Monthly Income (net) $ 2605.58

EXPENSES (AVERAGE/MONTH): SHELTER Rent $ 650.00 Electricity 95.38 Cell Phone 90.59 Cable/Internet 216.06 Apartment Insurance 17.91 TRANSPORTATION Car Lease $ 378.73 Auto Insurance 92.91 Gas/Operation 200.00 OTHER LIVING EXPENSES

Groceries $ 400.00 Clothing 50.00 OTHER Student Loan payment (interest) $ 177.95 Credit Card Payment 100.00 Banking Fee 14.95 Entertainment 40.00 Miscellaneous 50.00 TOTAL MONTHLY EXPENSES: $2574.48 TOTAL NET - TOTAL EXPENSES $2605.58 - $2574.48 = $31.10 VIII. She is required by her employer to have her own automobile to perform her responsibilities which include driving clients from one place to another. This requires extra insurance. Note that automobile expenses total $671.64. A portion of this would relate to personal use. IX. One might question her media expenses. However, one needs a telephone.

Cable and internet are a generally accepted requirement. X. If relief is given in this application, the student loan payment of $177.95 would cease. The other payments are clearly reasonable. XI. Her net monthly income is $2605.58. The Superintendent’s Standard for one person is currently $2006.00. If she was required to pay surplus income it would be $600.00 rounded. She would be expected to pay half of that monthly during the currency of bankruptcy. She is now discharged. However, the Superintendent Standards are a good guide as to what can be expected of one to be able to pay to the benefit of one’s creditors.

It is thus a useful guide in application under subsection 178 (1.1) . XII. However, she has to have an automobile for her work. It costs her over $600.00 per month. This, in effect to the extent

that the cost is allocated to her work is an expense, like a business expense, and should be subtracted from her monthly income, whichbrings it down by $300.00, if one can attribute half to work and half to personal use. This would bring the amount which would bepayable in a surplus income situation to $150.00 per month. XIII. These calculations are not exact and there are certain assumptions, but the net result is that with such payments she mightbe reasonably expected to make, the principal owing would not be significantly reduced. XIV.

To pay $45,000.00 off in 15 years at 5%, monthly payments of $354.66 would be required. XV. Ms. Gilbert has not found work which requires the professional skills her education provided her. It is difficult to saywhat the future holds. At least now she has reasonably good income, but it certainly is not enough to allow her to make any significantpayments on her student loan debt. To be able to do so would require a very substantial increase in her income. There is no reasonablebasis to expect that such will happen in the foreseeable future. XVI. Counsel for the Attorney General referred me to two cases.

One is a decision of mine, Pyke, Re, 2005 NSSC 33; theother, Fournier, Re, 2009 CarswellOnt 3522. XVII. In the first case I said at paragraph 59: There is a principle underlying the Act that except in special circumstances one shall not be subject to the penalties of bankruptcy for along period of time. I have repeated this point in a number of cases. XVIII.

Counsel also noted my reference in this case to Burke, Re (1992), (NS SC), 14 C.B.R. (3d) 216(N.S.T.D.), in which Saunders, J. said at page 218: The responsibility rests with the student to honour that obligation after she or he has completed the education which the taxpayersbenevolence has provided. XIX. In principle, I agree with this, but the difficult task is to apply it after twenty-one years of amendments to the BIA on thispoint and the continued developments of social and financial policy. XX.

The other case concerned a debtor whose circumstances were significantly better than that of the present applicant. Itdoes not help me. XXI. Section 178 (1.1) has two tests. First, she must have acted in good faith with respect to the debt. This is not contested. Second, she must satisfy the Court that she: has and will continue to experience financial difficulty to such an extent that the bankrupt will be unable to pay the debt. XXII. It is obvious that it would take many years, fifteen, twenty, hard to say, to reasonably expect her to be able to pay thissubstantial debt.

She might well be able to make some contributions over the years, but that is not an option. I have no authority toimpose a reasonable compromise. It is an either/or situation. XXIII. I am satisfied that considering her present circumstances and reasonable expectations, and considering the remedial purpose

of the BIA , it is proper to conclude that Ms. Gilbert meets the second test. XXIV. An Order will issue granting her the relief sought. R. Halifax, Nova Scotia December 10, 2013