Student Loans Debt Relief Case Study

The average Canadian graduate’s post-secondary school with $25,000-$30,000 in student debt. That’s already a significant debt load to start your adult life with. This level of debt is above the average Canadian debt load. More and more we are seeing clients still struggling to tackle this debt later into life. In this case study, you’ll see how this consumer was able to use a consumer proposal to reduce their debt from $54,000, which included $34,000 in student loans, to a mere $16,200 with an affordable monthly payment.

Background

When the client contacted us, they had a total of $54,000 in consumer debt. The largest share of this was a student loan of $34,000. The rest was a combination of several credit cards with very high-interest rates. The client had been making payments of $200 per month for 8 years towards the student loans but was still years away from paying it off. Meanwhile, the balance on their credit cards kept growing. Making the minimum payments of approximately $100 a month on each card was doing nothing to reduce the principal balance.

As the client had a long-term goal of purchasing a home in the future, we knew they would be better to avoid the long-lasting credit impacts that bankruptcy brings. Providing a plan for credit rebuilding would also be critical.

Our Plan

When meeting with the client to get a clear idea of their situation, we reviewed all available options and were able to come up with a plan for reducing their debt. Together, we determined their best option would likely be a consumer proposal. A consumer proposal would serve to reduce their debt but has less severe credit impacts than a bankruptcy. After some time spent collecting documents, verifying information, and helping them structure a proposal in their best interests, we connected them with a Licensed Insolvency Trustee, to administer the proposal. We walked the client through the whole process start-to-finish to make sure they were always clear about what their options were and what they could expect.

Results

Fortunately, we were able to assist the client in structuring a proposal that was accepted by their creditors. This left them paying back $16,200 over a period of 60 months with a monthly payment of $270. This was much more agreeable than paying back $54,000 with no end in sight. This left them more room in their monthly budget to set aside an emergency fund, save for a down payment and they no longer had to use credit cards for unplanned expenses. Because they were able to avoid bankruptcy, they could begin looking at purchasing a home two years after paying off their proposal.

During their counselling sessions, they were able to ensure all errors on their credit report were corrected, they got the education they needed on how the credit system works and obtained carefully selected credit rebuilding products to begin repairing their damaged credit. They also had the opportunity to learn money management skills that would help guard against future insolvencies.

Conclusion

It can be hard to believe that education can be a poor investment, but student loans can become burdens that weigh you down for decades. If you’re struggling with student loans or any other kind of debt, reach out to Halifax Debt Freedom. A consultation is free, and we’d be happy to take a look at your options with you.

This article was written by David Moffatt, a Debt Relief Expert. He has helped assist in creating plans that have helped save Nova Scotia residents over $30 million dollars of consumer and tax debt since 2015. We believe that no consumer should have to struggle with the stress of overwhelming debt. Our debt restructuring strategies can help you cut your debt by up to 80%.

If you are struggling with debt please reach out. It hurts to continue to suffer financially. Halifax Debt Freedom services Halifax, Dartmouth, Bedford, Sackville the entirety of HRM, and all of Nova Scotia.