Not being able to pay back LOC

[Brisingr1502]

Hi everyone,

With interest rates rising this much this year, I fear I might not be able to afford paying back my student LOC. I will be contacting a trustee soon, and see if a debt settlement could be reached. I first wanted to ask if anyone on this forum has been through this?

 

Edit: I think it would be good to add that I already work another job on top of being a lawyer.

Edited September 21, 2022 by Brisingr1502
provide more details

[Brisingr1502]

@Pantalaimon I know it might be corny, but thank you for the hug mate. It is rough out there.

[Pantalaimon]

No problem, least I could do. Wish I had experiences to share but I can't imagine. Good luck!

[BlockedQuebecois]

Have you tried discussing this with your bank to see if you can reach some kind of agreement to extend the term of your loan or otherwise reduce your payments? 

The interest rate increases have only added about $200/month to repayment on a fully maxed out, $150,000 PSLOC. While I appreciate that isn’t chump change, adding another year to your amortization would cut that down to $100/month extra and adding two years would reduce it to your pre-rate increase payments.

If you end up looking at your options, make sure you speak to someone knowledgable about your professional obligations and err on the side of reporting your status to the LSO (or equivalent outside of Ontario). 

[realpseudonym]

59 minutes ago, BlockedQuebecois said:

Have you tried discussing this with your bank to see if you can reach some kind of agreement to extend the term of your loan or otherwise reduce your payments? 

1 hour ago, Brisingr1502 said:

Hi everyone,

With interest rates rising this much this year, I fear I might not be able to afford paying back my student LOC. I will be contacting a trustee soon, and see if a debt settlement could be reached. I first wanted to ask if anyone on this forum has been through this?

Edit: I think it would be good to add that I already work another job on top of being a lawyer.

I did have to work something out with my bank when COVID hit, I'd just started a practice, and I wasn't able to make money in May and June 2020. I went to the trustee and the first thing they asked me was whether I tried reaching out to the bank, which, in my case I had. I agree, it probably makes sense to at least reach out first. There can be fees associated with trustee work, and if your end goal is to save money, you want to be careful about paying those unnecessarily.

If you are trying to negotiate with the bank with a trustee, your leverage is ultimately the possibility that you'll file for bankruptcy. Make sure you understand any implications that bankruptcy and consumer proposals can have on your law society obligations and practice before you agree to take action with a trustee. Trustees may or may not be well-versed in lawyers' obligations, and they may or may not be forthcoming about the consequences in advising you.

Edit: didn't read that BQ had advised the same thing about LSO obligations. I am just agreeing with him again, I guess.

Edited September 21, 2022 by realpseudonym