If anyone has any info for "BS" from the US, she would be most appreciative. Email copied with her permission.
...we both have massive student loan debt to pay off.
Our main concern is that my boyfriend owes much more than I do and his deferment period will end around the time that we expect to move to Toronto. He has also exhausted the income sensitive repayment period that is allowed on his loans.
It's a long story, but he basically consolidated his undergrad and graduate school loans at a time when the interest rate was exceptionally high, so now the amount that he owes is more than double the original loan amount and we're worried that he won't be able to make the regular payments.
It's going to be a tough situation, since neither of us make a lot of money and then there's the exchange rate to consider. We're not flakes and don't want to come off that way, but we need to know what the reality is going to be if he can't pay off his loans and we're living in another country.
Some countries have reciprocal agreements regarding student loan debt, but we haven't been able to find any info online as to whether there's a reciprocal agreement between Canada and the U.S. and I'm not even sure where you're supposed to find this sort of information.
If there is, then we need to know what the details of that agreement are, who takes responsibility for administering the debt, and if there is a possibility of renegotiating the terms of the loan.
If there isn't an agreement and my boyfriend ends up defaulting on his loan, then we need to know what that means for us as Canadian residents, whether it will affect our ability to become citizens, if it will affect our Canadian credit record, etc.
I'd appreciate it if you could ask around or maybe post something about it on your blog. . .
I don't want it to come off like we're moving to Canada so that we can blow off our student loans and live high on the government hog. We just want to settle down in a country that reflects our political and cultural values, and that certainly isn't the United States.
I told "BS" that wmtc readers were unlikely to interpret her question that way. And later, she said...
The most important thing is that we find some firsthand information from reliable sources. Every time the subject comes up with people here, they usually respond with a combination of horror and paranoia.
We've heard everything ranging from sober estimates that we'd have to file for bankruptcy in Canada, to warnings that Canada will deport us if my boyfriend defaults on his American student loans, and even shadowy reports of people being arrested at the airport when they return to the U.S. to visit family, etc. We don't believe any of this, since most of it's ludicrous and the people who've offered this
"advice" have never even step foot in Canada, or have any idea what they're talking about. [Ed note: gee, that sounds familiar...]
We're willing to prepare for the worst, but like I said, we need to know what that reality is before we start freaking out. I'm just amazed that it's been so difficult finding official information on the subject, unless of course we're missing
something completely obvious. Hopefully one of your readers will be able to point us in the right direction.
If you can help, or know someone who can, please give a shout, either in comments or by email. Thanks.
10 comments:
I really don't know too much about this subject, however... I work for the Department of Foreign Affairs (Cdn version of the US State Dept) and I know that Foreign Affairs keeps record of all the agreements between Canada and the US. Have this person call Foreign Affairs Help Desk (613-944-4000) and ask for a list of Canada-US agreements or to talk to an official who knows the subject. Hope that is a start, anyway.
DISCLAIMER:
This is not legal advice. You are not a client. I'm not even an attorney. If you want legal advice, contact an attorney admitted to your jurisdiction's bar. What I am saying here is probably 100% wrong and if you do anything in reliance on it, you are a blithering idiot who deserves whatever bad shit is very likely to befall you.
Now that that's out of the way, I will say that I am a paralegal and have worked in the collections business before. I also have a similar issue with my prospective move to the True North Strong and Free.
First off, anyone who says you'll be criminally prosecuted, deported, or rendered inadmissible because of student loan debt should be ignored for their own good. Neither the U.S. nor Canada have anything resembling debtor's prisons. Hell, I think the Canadian government expects that a certain percentage of people moving there are doing so, at least in part, to start a new life free of old debts.
Also, I have not, despite a thorough and diligent search, been able to find any questions in any immigration paperwork regarding debt or financial obligations of any kind. The only exceptions are sponsoring a family member or the requirement of unencumbered (e.g., the money is not already pledged as collateral) landing funds.
In Canada, the U.S. government cannot employ its typical tactics like "administrative" (read: Sans due process of law) wage garnishment against any Canadian wages you might earn. Now, if you default, they could still garnish any American wages or seize any American property to cover the debt. They can also seize your U.S. tax returns and, incredibly, take a percentage of your U.S. Social Security.
To come after any of your assets in Canada, though, they would have to (1) sue you in the U.S. and then attempt to domesticate that judgment in Canada, or (2) sue you in Canada based on the U.S. contract.
As to (1) that is what you're thinking of by "international agreements regarding student loans." It has to do with countries recognizing civil court judgments from other countries, not student loans per se.
As for (2), they could do that, but you would be able to raise defenses under Canadian law like, possibly, expiry of the statute of limitations.
From what I've read, I doubt they would do either (see above). It depends on how much you owe and who you owe it to. If they did come after you as described above, you would have the option of declaring Canadian bankruptcy. The Canadian Bankruptcy and Insolvency Act exempts only *Canadian* student loans from discharge. It does not address loans from anywhere else. Now, they could possibly oppose your discharge, but at least you would be in a position to negotiate at that point. That's far better than the one you probably find yourself in at present.
Another thing to keep in mind: American credit does not carry over to Canada. I have had three different reps from three different banks tell me this. As I said, "some would look at this as having to start all over again from nothing. Others would look at it as a new lease on life."
Well, I hope this helps, but read carefully the first paragraph. And read it again.
J.
Thanks very much, J and Karen. I'm sure BS will find this very useful.
Another thing to keep in mind: American credit does not carry over to Canada.
Oh yes, that's well documented in these pages. :-)
I was wondering how that would effect BS's situation. Hopefully to the positive.
Thanks guys! We'll see if more people weigh in as well.
Hi BS-
I have US student loans also. I would suggest that your boyfriend calls whatever organization (or check the website) and ask for/research "forbearance" qualifications. The system is set up so that no one should ever have to default on a student loan.
My loans are through the William D. Ford Federal Direct Loan Program
but I'm reasonably certain other organizations offer forbearance also--and let me tell you, the qualifications are not that stringent.
You need to be aware that interest will continue to accrue during forebearance period which is NOT pretty, but it's better than defaulting. What ther others say about credit scores not carrying over is true, but I was also told at our bank that my old credit scores would be looked at "for reference" whatever that means.
You may want to research getting the interest rate lowered also--might not be possible but it's always worth a try.
Oh and another source/forum for people moving to Canada is:
http://www.geocities.com/
canadian_immigration_club
Join the online forum and post your questions there. This is a very helpful group of people who are currently or who have recently immigrated to Canada.
Hope that helps. Good luck!
I have looked into this issue as well. If you have massive student loan debt with no change of paying them off short of winning Power Ball, Canada appears to still be a solid option. I agree with everything Dick said about domestication of a local law suit. One additional point to add...I believe that in terms of enforcement of a US judgment, the loan company would only be entitled to as much as they may have gotten had then been able to pursue their case in the jurisdiction of default. As that is the case, living in the best US jurisdiction could be advantageous. There are a few states that don't allow wage garnishment and have more pro-consumer laws. I now SC is one such state and I think there are maybe 2 or 3 others.
Also, if you move to Canada but file a US tax return (which you are legally required to do if you are a US citizen, debt collections companies can use a service called skip tracing to find you. Basically, the IRS sells you address to the creditor so they can track you down. Not sure the best way around this one except that I don't think you are required to file a tax return if you would not have otherwise owed any tax. Therefore, maybe the foreign income deduction may take care of this problem?
Northbound, US citizens are required to file tax returns with the IRS whether or not they owe any taxes. However, most do not. Most people who have permanently settled in another country file after they move, but then stop at some point.
How are you going to just "move" to Canada? I'm always astounded how Americans think it's easy to move to Canada. I'm a Canadian citizen with dual citizenship and I can tell you that it's not easy to just move to Canada; it takes years and years of paperwork and requirements.
Wendy, I see you spent a lot of time at this blog before posting - NOT! Your criticism is so hilarious I'm going to make a post about it!
I don't know why you find my comment hilarious. As a Canadian, I find it odd that you would discredit someone who has experience with this. Anyhow, good luck.
Wendy/Mondlicht, you don't understand why everyone who reads this blog found your comment so hilarious? (And you've come back months later to ask about it?)
Perhaps you should read my response.
Perhaps you should TRY READING ONE FUCKING WORD OF A BLOG before you criticize it.
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