Bankruptcy doesn’t save military cook

by Starman Mon 25 Feb 2019, 7:42 pm

Bankruptcy doesn’t save military cook from student loan payments

Andrea Gunn (agunn@herald.ca)
Published: Feb 25, 2019

Bankruptcy doesn’t save military cook B97888472Z.1_20190225184714_000GH4NG8QR.1-1_large

Should a 30-year-old man with no dependents and a secure job with the Canadian Armed Forces making approximately $60,000 per year be relieved from $9,100 in student loans, carrying a minimum monthly payment of $435?

According to bankruptcy registrar Raffi Balmanoukian, the answer is a resounding no.

His written Supreme Court of Nova Scotia decision released Monday rules on a case filed by Nikolas Robert McCrossin, a cook with the CAF stationed in Alberta. In 2011, McCrossin took out loans to attend culinary arts school but only completed the first year.

According to Balmanoukian’s decision, McCrossin filed for bankruptcy in 2016. At the time, his student loan balance was a little more than $8,000 out of a total of $21,687 declared unsecured creditors. His student loans were not included in his bankruptcy discharge, however, as they were not within the dischargeable loan timeframe laid out in the Bankruptcy and Insolvency Act. McCrossin then went to the courts for further intervention.

The clause dealing with student loans in the act allows for further intervention by the courts either by granting or refusing relief. That involves examining two factors: good faith, and present and continuing financial difficulty. Additionally, the court can use its own discretion to grant or refuse relief in unique cases.

“In my opinion, Mr. McCrossin ... fails all three tests,” Balmanoukian’s decision said. “He has not demonstrated present and continuing financial difficulty ... his actions and own words fall short of the ‘good faith’ required; and in the event I am wrong about either or both of those factors, I would not exercise my discretion in his favour on the facts of his case.”

Balmanoukian said McCrossin’s income is more than enough to cover the monthly payments laid out in his loan terms, and with a military service commitment extending to 2021, it will be for the near future.

Part of McCrossin’s submissions to the court included a budget, which Balmanoukian said includes “notable discretionary expenses.”

“Mr. McCrossin uses a vape; he has a $785/month auto expense; he has items like ‘date night,’ as well as ‘entertainment’ ($55/month) and $100 for savings,” Balmanoukian said. “I do not mean individually to criticize any specific item. I mean to illustrate that Mr. McCrossin does not live the life of an ascetic.”

Balmanoukian also noted McCrossin seems to have considered the status of his student loan in bankruptcy as a type of reverse onus. In his submissions, McCrossin said that it was always his intention that the student loans would form part of the bankruptcy filing, and wrote to the authorities asking for his balance to be reduced to zero “per judgment of courts.”

“In effect, he seems to have been of the belief that he could impose his understanding on the authorities, to achieve a conclusion in law,” Balmanoukian said. “That is not how it works.”

As for good faith or lack thereof, Balmanoukian highlights McCrossin’s evidence — that he paid “approximately $1,000, all voluntarily,” under the indebtedness prior to his bankruptcy, and that he has agreed to pay $50 per month in order to stop “constant” collection calls.

“I have found his approach to this indebtedness and unwillingness to service what is serviceable (except to ‘stop the ‘harassment’) to be wanting.’” Balmanoukian said of the evidence.

Because McCrossin fails tests of good faith and financial difficulties, Balmanoukian said he must refuse the relief request.

“In the present case, Mr. McCrossin is admirably making use of his education; he doing so in taking a living wage in the form of the Queen’s shilling through his service to Canada in our Forces,” Balmanoukian said. “He has the means and corresponding obligation to repay the advance Canadians have made to him, in the form of his comparatively modest student loan.”

https://www.thechronicleherald.ca/news/local/bankruptcy-doesnt-save-military-cook-from-student-loan-payments-287489/