Beaton (Re), 2012 NSSC 281

IN THE SUPREME COURT OF NOVA SCOTIA IN BANKRUPTCY AND INSOLVENCY Citation: Beaton (Re), 2012 NSSC 281 Date: July 24, 2012 Docket: B 36430 Registry: Halifax District of Nova Scotia Division No. 01 - Halifax Court No. 36430 Estate No. 51-1522379 IN THE MATTER OF THE BANKRUPTCY OF STEPHANIE JEAN BEATON _________________________________________________________________ LIBRARY HEADING __________________________________________________________________ Registrar: Richard W. Cregan, Q.C.

Heard: July 13, 2012 Written Decision: July 24, 2012 Subject: The Applicant sought relief from her student loan debt under Subsection 178(1.1) of the Bankruptcy and Insolvency Act . Issue: She had a number of well paying positions subsequent to completing her studies in 2006 and had been faithful in making payments on her loans. However, in the past year she has had serious personal problems and has only been working at a part time job which does not allow her anything to pay against her loan.

Result: Her application for relief was refused because the Court was not satisfied that her current financial difficulty would continue long into the future. THIS INFORMATION SHEET DOES NOT FORM PART OF THE COURT ’S DECISION .

QUOTES MUST BE FROM THE DECISION, NOT THIS LIBRARY SHEET . IN THE SUPREME COURT OF NOVA SCOTIA IN BANKRUPTCY AND INSOLVENCY Citation: Beaton (Re), 2012 NSSC 281 Date: July 24, 2012 Docket: B 36430 Registry: Halifax District of Nova Scotia Division No. 01 - Halifax Court No. 36430 Estate No. 51-1522379 IN THE MATTER OF THE BANKRUPTCY OF STEPHANIE JEAN BEATON __________________________________________________________________ D E C I S I O N __________________________________________________________________ Registrar: Richard W. Cregan, Q.C. Heard: July 13, 2012 Counsel: Jonathan Shapiro, representing the Department of Justice Canada Stephanie Beaton, representing herself

[ 1 ] This is the application by Stephanie Jean Beaton under Subsection 178(1.1) of the Bankruptcy and Insolvency Act , R.S.C. 1985, c. B-3 ( BIA ) for relief from her student loan debt. [ 2 ] Ms. Beaton began her post secondary education by taking a Business Administration Diploma from the Nova Scotia Community College. She then attended Mount Saint Vincent University beginning in September 2003 where she completed the requirements for the Bachelor of Business Administration degree in August 2005.

This was followed by studies at Universite Sainte-Anne in Church Point, Nova Scotia, where she obtained in June 2006 an Advanced 2 Certificate in French Immersion. [ 3 ] To finance this education she received National and Nova Scotia student loans. The outstanding balances in June 2006 were $18,972.87 for the National loan and $10,200.00 for the Nova Scotia loan. The current balances are respectively $9,897.57 and $2,857.73. She currently is on Interest Relief which expires July 31, 2012. [ 4 ] In July 2011 she left her spouse and became responsible for a large portion of their accumulated debt.

She made an assignment in bankruptcy on July 26, 2011. Her debts totalled $199,970. She was discharged on April 27, 2012. [ 5 ] Since graduation she has held several contract positions, full time in nature, and mostly lasting for a year at a time. They have been mostly in the Economic, Business and Social Development fields. Salaries have ranged from $28,000 to $43,000 per year. Currently she is working part-time (17 hours/week) at a rate of $16 per hour as a Volunteer Navigator in the Social/Community Development field with the Lunenburg Queens Volunteer Centre.

She now has an average monthly net pay of approximately $1,000. [ 6 ] She is looking for additional employment to supplement the present arrangement or for a full-time position in her field. She says that such positions are scarce. She has living arrangements where she is only required to make a small contribution. However, she has nothing to spare. She anticipates significant legal expenses in her pending divorce. [ 7 ] Ms. Beaton seeks relief under Subsection 178(1.1) , that is, she asks for a finding that her student loan debt should be deemed discharged.

In order to grant such relief the Court must be satisfied that two tests are met. I quote the Subsection. At any time after five years after a bankrupt who has a debt referred to in paragraph (1)(

g) ceases to be a full- or part-time student, as the case may be, under the applicable Act or enactment, the court may, on application, order that subsection (1) does not apply to the debt if the court is satisfied that (

a) the bankrupt has acted in good faith in connection with the bankrupt’s liabilities under the debt; and (

b) the bankrupt has and will continue to experience financial difficulty to such an extent that the bankrupt will be unable to pay the debt. [ 8 ] Her good faith is admitted. Consequently I need only consider the question of financial difficulty. [ 9 ] Until a year ago Ms. Beaton was able to manage her debts. This changed with the breakdown of her marriage which necessitated bankruptcy. Her current income does not allow her to make payments on the student loan debts. However, she has obtained Interest Relief which is effective to the end of July. If her financial circumstances do not improve, she may be entitled to additional interest

relief. [ 10 ] Paragraph (

b) of the Subsection requires proof that the applicant has experienced financial difficulty and will continue to experience financial difficulty. It is clear that she has experienced financial difficulty, witness her bankruptcy and her current limited income. The question is whether this experience will continue. [ 11 ] It is quite understandable that she is now in a constrained financial situation, considering the personal difficulties of the past year. But, as Counsel for the Department of Justice urged, there is good reason to believe that her circumstances will be better in the reasonably foreseeable future.

She has a good education. She has made good use of that education. She has had good paying positions. [ 12 ] Her situation is not like most applicants for relief under Subsection 178(1.1) . There is no reasonable hope for them ever, or at least in the next five to ten years, being able to address the outstanding debt. Many have no prospect of ever making significantly more money. Many have children to support. The outstanding student loans of many are very substantial, $40,000 and more. They are stuck in their present circumstances. [ 13 ] Ms. Beaton has only herself to look after.

She has earned a good salary in the past. Her outstanding balance is only about $12,000. [ 14 ] I suggest that phrase “ will continue to experience ” used in Paragraph (

b) implies that one ’ s overall outlook for the next several years must be considered. [ 15 ] I am not convinced that she is stuck in her present circumstances. There is good reason to hope that with the efforts she is making she will in due course find a better position and be able to pay off the loans. [ 16 ] She has not satisfactorily proved that her present financial difficulties, which make her unable to pay these loans, will continue as contemplated in Subsection 178 (1.1) . The application is therefore dismissed. [ 17 ] However, I would suggest that she continue to seek interest relief.

As well, if despite her efforts over the next two or three years, she is unable to significantly improve her situation, she will be at liberty to make a new application. R. Halifax, Nova Scotia July 24, 2012