2016 NSSC 307, 2016 NSSC 307

CANADA PROINCE OF NOVA SCOTIA ESTATE NO. 51-1940926 COURT NO. 40329 NSSC 2016 307 IN THE SUPREME COURT OF NOVA SCOTIA IN BANKRUPTCY AND INSOLVENCY IN THE MATTER OF THE BANKRUPTCY OF DANA RENEE NELSON Cite as: Nelson (Re), 2016 NSSC 307 DECISION Revised Decision: The text of the original decision has been corrected according to the attached erratum dated November 15, 2016. Judge: The Honourable Justice Patrick J.

Murray Heard: September 1, 2016, in Sydney, Nova Scotia Written Decision: October 14, 2016 By the Court: Introduction [ 1 ] The Applicant, Dana Nelson, is 28 years of age and resides at home with her parents at 28 Foreman Street, North Sydney, Nova Scotia. [ 2 ] In 2009 and in 2010, Ms. Nelson furthered her education at the Island Career Academy in Sydney. She completed a program in Community Residential Worker for 10 months in 2009. In 2010 she completed a program as a Community Care Assistant for an 8 month period. [ 3 ] In both years, Ms. Nelson borrowed under the Canada Student Loan program.

She presently has total loans outstanding in the amount of $13,309. as of the date for her application, which was filed August 17, 2016.

[ 4 ] Ms. Nelson is asking this Court to discharge her from the obligation to repay these loans to the Canada Student Loan Service. Background [ 5 ] Ms. Nelson filed an affidavit with the Court in support of her request. Following completion of her CCA course on September of 2010, she worked in private care until April, 2013. Her pay during this time was approximately $700 biweekly.

Following that she worked for 10 months as a casual CCA during which her pay ranged from $100 - $800 biweekly depending on how much work she received. [ 6 ] She returned to school in September, 2014 to study Office Administration with medical terminology. She graduated from NSCC in June, 2015. She worked for the summer at a local motel and was hired in October of 2015 with the Nova Scotia Health Authority. With the Health Authority she first worked 12 hours biweekly, but was awarded a permanent part-time position at 37.5 hours bi-weekly.

Her take home pay is $477 biweekly after deductions, medical and pension. [ 7 ] Ms. Nelson provided a monthly statement of income and expenses, which shows minimal disposable income, of $94.81. Her monthly car payment including gas and insurance of $519.77. [ 8 ] Ms. Nelson’s T4 income for 2015 was $19,401 at line 150. Ms. Nelson does not have dependants or income from another source. [ 9 ] The date of Ms. Nelson’s bankruptcy was December 9, 2014.

She was discharged from bankruptcy in April of 2016, according to her application. s. 178(1.1) Legal Test for Order for Discharge of Student Loan Debt [ 10 ] Under s. 178(1)(

g) of the Bankruptcy Insolvency Act, and an order of discharge does not release the bankrupt from student loan debt where the bankruptcy occurred:

i) before the date in which the bankrupt ceased to be a full-time or part-time student as the case may be, or ii) within seven years after the date on which the bankrupt ceased to be a full-time or part-time student. [ 11 ] In Ms. Nelson’s case she ceased to be a full-time or part-time student, for the purpose of the loans in question in September of 2010, and so her bankruptcy of December 9, 2014 did occur within 7 years of her ceasing to be a student.

As a result her discharge did not eliminate the obligation to repay her student loans. [ 12 ] Section 178(1.1) sets out the test when the bankrupt may apply for an order that subsection (1) does not apply, with the result that the loan would be discharged. [ 13 ] The

section sets out a two (2) part test that must be met, when the bankrupt is seeking to have the loans discharged. The first

part is to establish that the bankrupt has acted in good faith in connection with their liabilities under the debt. Secondly, the court must be satisfied that the bankrupt has and will continue to experience financial difficulty to such an extent that they will be unable to pay the student loan debt. [ 14 ] In terms of good faith, the Trustee, Mike Connor, has indicated that Ms. Nelson was always available to them and explained her situation. He feels she has acted in good faith.

I have little other information on that aspect. [ 15 ] Among the things the Court must consider in terms of the first part of the test are whether the money was used for the purpose loaned, and whether the bankrupt completed their education. In this instance, it is clear that Ms. Nelson derived a benefit in the sense of gaining employment in an area related to the education. In addition the loan was used to finance her education. [ 16 ] Other considerations are whether reasonable efforts were made to pay the loan or did the bankrupt make an immediate assignment in bankruptcy. [ 17 ] Ms.

Nelson indicated she paid a total of $11.47 on the loan and took advantage of interest relief options. Other than having a car payment, a necessity for work, there is no suggestion that Ms. Nelson is extravagant or irresponsible with her finances. [ 18 ] With respect to the second part of the test, there is little disposable income remaining after the payment of Ms. Nelson’s monthly living expenses, which are shown to be at a minimum. [ 19 ] Accordingly to the trustee if working full-time Ms. Nelson would be “under the guideline” if for example she cleared $2,000 per month.

In other words, she would be entitled to be released absolutely, as there would be no surplus income. [ 20 ] Ms. Nelson states that the student loan service began contacting her in June of 2016 and are asking for a monthly payment of $399 per month, which she says she cannot physically pay. She fears being put into collection. Decision [ 21 ] I have considered Ms. Nelson’s circumstances. Because she returned to school for her education in 2013, she has been in the workforce since only October 2, 2015. She has since been awarded a permanent part time position.

In her affidavit she states: When I left my position as a CCA in 2013 and decided to return to school my goal was to hopefully one day be able to secure employment with the Nova Scotia Health Authority where I could find job security and a pension. Even though I am only working part time hrs I know some day once people begin to retire and my seniority status gets higher I will be able to secure a full time job and staying in my home of Cape Breton and not leaving.

[ 22 ] Ms. Nelson has no dependents, at this time. There has been no evidence of any attempt to repay the loan, other than the $11.47. While I understand her current inability to repay, I am not convinced that Ms. Nelson has been in the work force long enough to have made reasonable efforts to repay. She stated she has called student loan and explained her situation, but has not stated whether she discussed a repayment schedule, or whether one was proposed. [ 23 ] Further, I have been advised by the trustee the difficulty for her at this time, is due to the lack of permanent jobs in the area.

I understand this but once again, Ms. Nelson has been employed for just over one year with the Health Authority. [ 24 ] By her own admission, she admits her financial situation will likely improve, as people begin to retire and her seniority status gets higher. She feels she will be able to secure a full time job. [ 25 ] Ms. Nelson has in my view, not been in the work force long enough to receive the full financial benefit from her education.

She is now on the road to accomplishing that, according to her own evidence. [ 26 ] In the result, although it may now be difficult for her to repay the loan, I am not satisfied, for the reasons stated that reasonable efforts have yet been made to repay the loan, nor am I satisfied that Ms. Nelson will experience financial difficulty to such an extent as to be unable to pay the debt at some point in the future. [ 27 ] For these reasons, I am denying Ms. Nelson’s application to be discharged from the loan based on hardship, pursuant to s. 178(1.1). Murray, J.

CANADA PROINCE OF NOVA SCOTIA ESTATE NO. 51-1940926 COURT NO. 40329 NSSC 2016 307 IN THE SUPREME COURT OF NOVA SCOTIA IN BANKRUPTCY AND INSOLVENCY IN THE MATTER OF THE BANKRUPTCY OF DANA RENEE NELSON Cite as: Nelson (Re), 2016 NSSC 307 DECISION

Judge: The Honourable Justice Patrick J. Murray Heard: September 1, 2016, in Sydney, Nova Scotia Written Decision: October 14, 2016 Date of Erratum: November 15, 2016 ERRATUM: In paragraph 5, in the 4 th fline, change the word “causal” to “casual.” In paragraph 14, change Mike. Connors to Mike Connor.