Question:
I am looking for information on what happens when you default on your Canada Student Loan. I incurred a back injury 3 years ago and have been unable to work since. I have used up my interest relief and my loan has now been sent to a credit bureau for collection.

While there is a provision in the student loan legislation that allows for those with permanent disabilities to apply for relief of the loan, I am unsure if I quality because I am in the process of being referred for out-of-province surgery. Because the process of getting out-of-province medical care takes a great deal of time to orchestrate (to date I have been waiting for a referral since Feb 2, 1996), I am still faced with the problem of not being able to work and unable to pay my student loan. It may take 4-5 months before I get surgery and even then I am not ured of recovery. I would appreciate information on how to handle this predicament. I am interested in legal questions such as: Can the government/credit bureau take my house, seize my bank accounts used to pay monthly bills, etc.? How long will they wait before taking legal action against me?

Does the government have the right to secure ets such as my house and/or personal belongings to repay a student loan? Where can I go to obtain information on my rights in this regard? Are there any "how to" books that may help me through the legal process? Are there government agencies that can give me information on my rights? Would greatly appreciate any useful tips. Thanks

Answer:
You really ought to be more careful. You post this story of being unable to work for three years in one article, and in the very next article, you post a story about having been self employed during 1996, and wondering how you can prove your income so that you can claim CPP. Must maintain consistency if you want to fool the lawyers/creditors/ private detectives.

A Canada Student Loan is not particularly different from any other debt obligation. They can't seize your ets unless they first sue you and obtain a judgment. Like any other creditor, they can't squeeze blood from a stone. However, they CAN squeeze blood from the equity in your home, etc. You should contact your local debt counselling office (if you live in a province where they still exist) or legal aid clinic (ditto) and get some advice about your own situation. Before the government can execute against your property they would have to sue you and obtain judgment against you. If they do get a judgment they can garnish your bank account or put a lien on your home. Usually agents who collect debts will settle for a reduced lump sum payment or some sort of schedule of payment that is considerate of your means. If the amount of your debt is large you should consult with a lawyer.