Ontario

SUPERIOR COURT OF JUSTICE

IN BANKRUPTCY AND INSOLVENCY

COURT FILE NO.: BK-13-1807156-0033

HEARD: December 12, 2014

IN THE MATTER OF THE BANKRUPTCY OF

MALGORZATA PADLEWSKA

OF THE CITY OF OTTAWA

IN THE PROVINCE OF ONTARIO

BEFORE: Master Pierre E. Roger
Registrar in Bankruptcy

APPEARANCES:
Kevin McCart, Trustee
Stephanie Simard, Agent for counsel for the Ministry of Training Colleges and Universities
Malgorzata Padlewska, bankrupt

REASONS FOR DECISION

[1] This is a motion by the bankrupt for an order, pursuant to s. 178(1.1) of the BIA, that s. 178(1)(g) does not apply to her student loans, such that she be released from payment of her student loans.

[2] This matter first came before me on October 10, 2014, at which time I dismissed the motion on a without prejudice basis to filing better evidence, which I outlined in a written endorsement of same date. The motion returns today.

[3] The motion is not opposed by the Minister of National Revenue but is opposed by the Student Financial Assistance Branch of the Ontario Ministry of Training, Colleges and Universities (MTCU).

[4] Section 178(1.1) provides:

“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…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.”

[5] The above relief is discretionary - “the court may”. The onus is on the Applicant to satisfy the court, on a balance of probabilities: (1) that the bankrupt has acted in good faith in connection with the student loans; and (2) the bankrupt has and will continue to experience financial difficulties to such an extent that the bankrupt will be unable to pay the debt.

[6] After reviewing the evidence, I conclude that the bankrupt has failed to satisfy me of the above and order that this motion is dismissed.

[7] The bankrupt’s affidavit does not provide evidence of the bankrupt acting in good faith. This should include proof of some efforts to repay or proof of some efforts to reach some satisfactory repayment arrangement and no such evidence was provided other than to describe garnishment efforts. This would be enough to dismiss the motion.

[8] The loans were incurred to pursue a career in journalism and the evidence indicates that the bankrupt works for CBC/Radio-Canada. Evidence of historical income with CBC is provided, which appears to show: 2010 - $37,249; 2011 - $26,314; 2012 – $40,244; and 2013 - $63,117 and to date in 2014 about $26,204 with CBC and another $1,200 on another contract. The budget provided shows a small excess on stated income of $2,200 per month. The evidence provided does not establish that the bankrupt has and will continue to experience financial difficulty to such an extent that the bankrupt will be unable to pay the debt.

[9] The evidence shows that the bankrupt has made little or no efforts to repay these loans and that the bankrupt should, over time, be able to repay these loans given her ongoing career and demonstrated earning potential. No one expects her to repay these loans forthwith but certainly she is expected to contact her creditors to negotiate satisfactory repayment terms.

[10] For all of these reasons, I attach little weight to the Applicant’s statements that she is struggling. The evidence is not sufficient to establish, on a balance of probabilities, that the bankrupt has and will continue to experience financial difficulty to such an extent that the bankrupt will be unable to pay the debt. To the contrary, she is still employed with the CBC where she earned over $60,000 in 2013. Even if her income is significantly less in 2014, the evidence does not establish that it will continue to be so to such an extent that she will be unable to repay the debt. Other than bald statements, there is insufficient evidence that would enable the court to conclude that the bankrupt has experienced financial hardship and will continue to experience financial hardship to such an extent that she would be unable to pay her student loans.

[11] The motion is dismissed on the basis that this court is unable to conclude on the evidence that the bankrupt has met the test set forth in s. 178(1.1) of the BIA.

Master Pierre E. Roger

Date: December 16, 2014